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    the church of my fathers is behind the bar..., 2009-03-17 12:14:40 | Main | everything is illuminated..., 2009-03-20 12:46:58

    semantic equivalence:

    People realize that, like, "Christopher Dodd" and "Financial Sector" mean the same thing, right? Who is surprised that the completely toothless executive salary caps do not apply to past contracts, made before compensation agreements could be designed to loop around them? I don't see how this can take up an entire week of national media attention, and on such an idiotic level, when the cost to taxpayers of unnecessarily salvaging our present basketcase financial system is many orders of magnitude larger than a measly 100 million, an amount already enough to bootstrap an entirely new financial system.

    The one reason we should be paying any attention at all to AIG Financial Group's "retention bonuses" is that they're an outward sign of the systemic looting that has been going on in the financial system for years as the hot potatoes have been handed off to the next sucker in line. Last in line, and the only suckers left, are you and me:

    When a bank’s insolvency is ignored, the incentives for normal prudent banking collapse. Management has nothing to lose. It may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution—nomenklatura privatization, as the Russians would say—through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own.

    The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?


:: posted by buermann @ 2009-03-19 11:48:39 CST | link





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