[Krelus]

From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.

That just makes me smile.

[Bob-san]

From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.

That just makes me smile.

But the issue is that these contracts are clear and concise. Does government have the power to alter contracts between two individuals? I think not. In fact, if the Federal Government granted itself the right to alter contracts, I trust that the vast majority of people would be in open revolt. Anyways--if their contracts say the bonus will $xxx,xxx amount and the individual only receives $xx,xxx amount, then the contract has been broken and the individuals effected by it can, again, sue for the value of the contract. And most of them would.

[iamzack]

From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.

That just makes me smile.

But the issue is that these contracts are clear and concise. Does government have the power to alter contracts between two individuals? I think not. In fact, if the Federal Government granted itself the right to alter contracts, I trust that the vast majority of people would be in open revolt. Anyways--if their contracts say the bonus will $xxx,xxx amount and the individual only receives $xx,xxx amount, then the contract has been broken and the individuals effected by it can, again, sue for the value of the contract. And most of them would.

They aren't really changing the contract. They're just taking a big bite out of the monies being paid.

I kinda like that 90% there. A $100 million bonus becomes $10 million. And the poor overtaxed executive can cry all the way to the goddamn bank.

[Inquisitor]

[Grizzly]

The point is not how MUCH bonusses, the point is that there where any bonuses given at all.

[Topgun]

This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.

[IronBeer]

This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.

The ends don't always justify the means. But in this case they do. I disagree, sir. I'm not going to support that argument, by the way.

[Bob-san]

This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.

I think very much true. The issue here is that the government overstepped its bounds by interfering with contractual agreements. Do realize that many of these people are being fairly compensated for the work they do--not all of these guys are baddies who ran their company into the ground. And realize the reasons that the companies have been run into the ground... lending standards across the board plummeted. Either join in or piss off your investors. That's the only issue really--the stockholders would be pissed out when these companies don't perform "at par" with other banks. And then the other thing is they're taking risky investments almost everywhere. Not all risks are bad risks. They did make a good bit of profit while at the height of the bubble, but I don't think it was solely their fault and I don't think we should now punish their employees. Have an inquiry for God's sake and try to determine WHO was at fault for so much of this. AIG is solvent and so are basically all other banks--they'll stand until the market unfreezes and people feel that it will only go up. We're not at that point right now, but that point IS approaching.

[TrashMan]

If we didn't bail out any companies at all, think about how many jobs would be down the tubes.

And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.

that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.

[SpardaSon21]

If we didn't bail out any companies at all, think about how many jobs would be down the tubes.

And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.

that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.

Correct TrashMan.  And that company would learn from the other, failed company and not do as badly as the other one, or it would go under like the one before it.  And that company that didn't go under would be paying people to work for it.

I'll be honest and state capitalism is a brutally Darwinian process by which only the best, most successful businesses survive.  And the best, most successful business offer lots of paying jobs.  I'm not in favor in a monopoly by any means, since a monopoly is a distortion of the free market and an inhibitor of competition.  And competition makes sure the best survive. 

An important thing to remember here is that demonizing Big Business is like shooting yourself in the foot.  They are the ones who provide the well-paying jobs and make the foundations of a successful economy possible.  By paying people to work for them, and then they go out and spend money, which goes to pay for other people's jobs.  And if it wasn't for the tax income corporations and small businesses provide, not just in the form of tax income on them, but on taxes on all their workers' income and taxes on their products, the Federal and state governments would have almost no money on which to operate.

[BengalTiger]

TrashMan and SpardaSon21, welcome to the Republican school of thought.

If not for the global crisis, I'd enjoy watching AIG shrink, and dozens of other companies grow beyond what they even dreamed of to fill in the void it left behind.

[Black Wolf]

If we didn't bail out any companies at all, think about how many jobs would be down the tubes.

And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.

that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.

Good plan. They can use all the expansion capital that the worlds banks are going to be super willing to lend them. After all, the biggest player in their sector just went under - that's a brilliant time to forge a partnership with a junior looking to expand by lending them millions and millions of dollars.

So clearly, everyone would walk out of jobs with AIG and into jobs with these newly massively expanded smaller companies who'll be crying out for new staff. It's not like there'd be months or even years of delay between the closure and the expansion during which all those workers would be unemployed.

Finally, someone with good common sense and a firm grasp on the realities of the all knowing, all forgiving, all loving realities of a market economy.



The problem, you see, with taking a purely darwinian, red in tooth and claw view of a situation like this is that a company isn't some nebulous idea that money flows in and out of, where the consequences of its failure are limited purely to the effects it will have on other companies. They're people - employees, subcontractors, clients, etc. etc., not to mention the families and dependednts of all those people. You let a big one die and yes, sure, it'll probably let other, possibly better managed companies grow and expand to fill the market void. But it takes a lot of people down with it. And those unemployed people in turn can't afford to pay their bills, or buy stuff or participate in the economy in a meaningful way. There's a domino effect that can have serious repercussions, especially with big companies. Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd have to choose between exposing themselves to lawsuits or stopping work, and a lot of them would choose to stop. Another great big ripple efect from that too. There're dozens of things like that to consider - there's so much more that pure market darwinism to consider.

[BengalTiger]

@ Black Wolf:

Why do you assume that all AIG employees would sit on their @$$es and do nothing for many months until another company takes AIG's place and rehires them?
It's not like they're incapable of working anywhere else. 
Hell, many would probably leave the insurance industry for good and be happy about it.

I do agree with the second part about contractors, subcontractors, etc. who would have trouble if a big company fails (at least until they find new customers).

Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd ...

... go to someone else to buy insurance, and be back in business the next day. Hell, they'd start hiring AIG's former contracters/subcontractors the next week (month maybe) too.



P.S. One more thing I've noticed- I remember a lot of people being pro-Obama here because he promised raising taxes for the rich big companies.

Now everyone supports giving the same big rich companies something that could be described as an anti-tax.

[karajorma]

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the 10th man gets hit by a bus on the way into the bar.

The other 9 men walk past him bleeding on the floor and say "**** it. I never liked him anyway" and carry on to the bar. They're all confident that when they get to the bar they'll find another five guys a bit poorer than him to drink with them.

So the nine sat down and had beers without him. But no one else showed up that night. When it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how the bail outs work.


----------------------------------

Thought I'd put it in a language you'd understand.

[Rick James]

To everyone saying that government intervention = bad:

I live in Canada. Government regulations are a fact of life for all industry and trade here. And ya know what? That hasn't caused any of the big corporations which invest here to pack their bags and leave. Despite the current recession (thank you for that by the way, Subprime Loans) our economy's not doing as bad as America's.

Mixed economies for the win.

[Nuclear1]

Yeah but the average  American school of thought:

Mixed economy = socialism

Socialism = Union of Soviet Socialist Republics
OR
Socialism = evil haughty liberal Europe

Thank you Cold War propaganda. Seriously, guys, it's reasons like these when you have private businesses making ****ing stupid decisions with money and loans that we need government to keep them in check and not **** us all over.

[Bob-san]

There are more and better ways to stimulate the US economy. The first way is taxes; lower them and you encourage business and consumers to participate more fully in the economy. The second is government spending; many of these projects will need to be completed by contracts, but the issue is that the pork-barrel spending is much more than necessary and goes to the friends or the friends of the friends of our Senators and Congresspeople. Every company needs profit to survive, but these companies don't need 2/3 of their construction project to be nothing but profit. That's why I don't like these pork-barrel ear marks... they don't make sense when you can spend half as much and get exactly the same thing. Many of these defensive projects and construction projects (the most "popular" forms of government spending) make so that the USA continues to develop the bleeding edge in technology with our smartest and have everyone who's not "fortunate" (also known as lower class and lower-middle class) with a job if they want it.

[Roanoke]

As we've seen, none of that matters untill banks start lending again. It's amazing, banks reckless lending started most of this and now their lack of lending is making it worse.

[Solatar]

I still think that this would have blown over and been a mild recession at worst if the media hadn't spent 6 months convincing everyone the world was going to end...

[BengalTiger]

----------------------------------

Here's the proper version:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. The bartender says one day that he's going bankrupt and needs the 10 men to give him money, $50 each, so he can keep his business afloat. That is a bailout.

Let's say the people say 'No!'. The bar bankrupts and goes out of business, and the 10 men, along with all other customers go to different bars the next day. Within a week other local bars hire more employees to keep up with the greater amount of customers. That is free market.