by von
There has been a great deal of outrage — both here and elsewhere — regarding how much blame should fall on folks working in the financial sector (e.g., "Wall Street [types]", the "Masters of the Universe," etc.). Many harsh words have been directed at AIG. A lot of those harsh words were deserved. But some were not.
Jake DeSantis' open letter of resignation from AIG's infamous financial products division gives the unpopular view–the view that this whole mess is more complicated than casting villains and heroes. I encourage you to read the whole thing, but here's a snippet:
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
….
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. ….
….
My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.
….
You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.
As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.
Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.
There's a lot of blame to go around. There are good reasons for outrage. But, as I've argued, some of the blame–probably, most of the blame–for the current financial mess falls on us. You, me, your neighbors, or the folks down the block. We bought houses we couldn't afford; we expected the bubble never to burst; we took on too much risk; we relied on credit instead of savings (we haven't been saving enough for years). After the shocks in the oil market, a recession was all-but-inevitable.
It's satisfying and comforting to blame someone else; to make a scapegoat out of someone you've never met. Even better if that someone is rich and lives far away. Unconstrained by personal knowledge, you can fill in the important details however you like. But, ultimately, it's not right.
A few sidenotes:
Publius implicitly argues that some scapegoating is necessary. He might be correct. But I have the luxury of sitting in the peanut gallery. I'll choose to shoot a different spitball.
This post indirectly responds to a series of posts by Hilzoy. I want to be clear that I largely agree with Hilzoy's specific points. I am responding to certain broad statements of outrage made by her and our commentators (and, mostly, our commentators). Your outrage is understandable and, in part, justified–but it's now obscuring the real story. It's starting to cause harm.
UPDATE: Added a clarification to the "we" statements. UPDATE 2: Apparently, I'm too-clever-by-half. The point of the "we" statements is that, if you are going to generalize, generalize correctly: include yourself in the group. We're to blame for this mess; not some group of faceless folks who aren't "us".
some of the blame–probably, most of the blame–for the current financial mess falls on us. You and I.
bullsh!t.
“You and I. We bought houses we couldn’t afford; we expected the bubble never to burst; we took on too much risk; we relied on credit instead of savings (we haven’t been saving enough for years). After the shocks in the oil market, a recession was all-but-inevitable.”
Sorry, but this is nonsense. A recession may have been inevitable, a catastrophic failure of major banks and being on the brink of economic Armageddon were not. When a company like AIG was literally making hundreds of billions of dollars of bets with their company as collateral, the main problem isn’t people who bought houses that turned out to be more expensive than they could afford when the economy went bad.
And I’m saying this despite the fact I agree the issues of bonuses at AIG were largely a side show, and the response at best excessive.
von, isn’t part of the US’s negative savings rate a correlation between the flat incomes for most Americans and the housing bubble that kept making houses more expensive? Hell, just the flat incomes is enough to explain much of that.
And no, most of the blame does not fall on “you and I” who “bought houses we couldn’t afford”. Why did people buy houses they couldn’t afford? Why were houses that expensive? Why were incomes flat and so savings were vanishing? And WHERE did the money go, that wasn’t going into regular people’s wages?
The answers for this lie much closer to the “Masters of the Universe” than to “you and I”.
As for the guy who resigned? Sorry, when people in his division were setting things up that cost millions of people their jobs, retirement savings, homes, security, health, and yes, even their lives, I’m not gonna be too worried about how hard he’s worked and how much he “deserves” his retention bonus. His bonus was about 750K. That’s about 15 times the average annual income for Americans.
The credit default swaps wasn’t the only funky business at AIGFP.
Von, in all of your retorts, you keep saying that “we” are to blame. And I have to ask: what do you mean “we,” kemosabe? I’m a renter–I have been since I left home. All my debt is federal student loans. What did *I* do to cause this mess? What did people who have reasonable mortgages do? Go ahead, blame yourself if you want to take some of the blame off the financial services industry. But leave me out of it.
As for the guy who resigned? Sorry, when people in his division were setting things up that cost millions of people their jobs, retirement savings, homes, security, health, and yes, even their lives, I’m not gonna be too worried about how hard he’s worked and how much he “deserves” his retention bonus. His bonus was about 750K. That’s about 15 times the average annual income for Americans.
Why does the amount of the bonus affect whether it’s right or wrong to demonize Jake DeSanis? And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done: got a degree from MIT, rose impressively through the ranks at AIG, did his job responsibly.
So, if you and I hadn’t bought those overpriced houses, we wouldn’t be in this fix. Or am I supposed to be demanding that we stop fixating on our mortgages because the percentage involvement of our house loans, like the AIG bonuses, is just a tiny fraction of this mess, so it is making us lose sight of the really really big picture. Confusing stuff.
Sorry, but this is nonsense. A recession may have been inevitable, a catastrophic failure of major banks and being on the brink of economic Armageddon were not.
The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn’t itself the cause.
Von, in all of your retorts, you keep saying that “we” are to blame. And I have to ask: what do you mean “we,” kemosabe? I’m a renter–I have been since I left home.
“We” in the general sense: the American public. (My house is cheap, my loans are paid, my savings rate is impressive.)
I would also like to point out that the promised bonuses are comparatively quite small: if AIG had been bailed out for $100.00, the bonuses would amount to about 10 cents of those hundred dollars.
This outrage over a piddling amount is distracting us from the real problem – Geitner’s bailout plan, which is a huge giveaway, and will cost as much as 1 trillion in direct costs plus FDIC loan guarantees. The direct costs are somewhat less than the AIG bailout – it’s the 850 billion in FDIC guarantees that has me worried; the FDIC doesn’t have that kind of money, so we will ultimately be on the hook for it.
jdkbrown, I changed the wording slightly to make the point clearly.
The catastrophic bank failures were caused by the bursting of the housing bubble
we went through this yesterday.
Why does the amount of the bonus affect whether it’s right or wrong to demonize Jake DeSanis? And why should we concerned whether Mr. DeSanis makes more than the average worker? If we believe his account, Mr. DeSanis has done things that the average worker has not done: got a degree from MIT, rose impressively through the ranks at AIG, did his job responsibly.
That’s debatable. For one, if he was doing his job responsibly and working in the financial products division where the CDSes were, there’s a decent argument to be made that he should have known monkey business was up, and told somebody about it.
And the amount matters, because most of those “irresponsible homeowners” you’re trying to demonize are already being punished by losing their homes, retirements, savings, jobs, etc. And this guy’s going to resign and head home to his wealth he already extracted from AIG, legitimately or otherwise. Boo frickin hoo.
And none of that addresses the fundamental issue, which is that American families have watched their wages stay flat, while housing prices went through the roof, and all that GDP that didn’t go to average workers was either imaginary or siphoned off to, say, executives at financial companies who made six figure bonuses over the last decade.
The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn’t itself the cause.
Given that we’re up over $10 trillion having been allocated for this, and we probably could have bought every bad mortgage issued in the last five years for 1/10 of that, I’d say you’re wrong.
So before I decide whether to feel good or bad about DeSantis, could he tell us exactly how much money he’s saved AIG over the last year?
“Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid.”
Apparently, that agreement to work for $1 was done knowing he would never have to actually work for $1. All other content in his letter aside, the sanctimonious hypocrisy of this statement is staggering.
some of the blame–probably, most of the blame–for the current financial mess falls on us. You and I. We bought houses we couldn’t afford; we expected the bubble never to burst; we took on too much risk; we relied on credit instead of savings (we haven’t been saving enough for years). After the shocks in the oil market, a recession was all-but-inevitable.
Let’s try a simple analogy: if one electron jumps two feet to the left, that’s just the random motion of electrons. But if every electron in your shirt jumps two feet to the left at the same moment, you’ve got to ask why they all did the same thing at once. Any one of them could do it, but it defies the laws of probability that each of them just happened to take the same bounce at the same time.
Same with people. If one person stops saving, or buys an overly expensive house, or whatever, then that’s one person’s bad decision. But if a whole society does it, one has to ask what forces are acting on everybody at once, because it’s ridiculously unlikely that everybody just happened to make the same set of bad decisions at the same time.
So let’s put “personal responsibility” where it belongs – on the people who’ve done their best to turn us into a society of consumers rather than citizens, who have gone out of their way to hold down our wages, who have gone out of their way to sell us houses we couldn’t afford (even though they were supposedly the experts in what we could and couldn’t afford), who have pushed for punitive bankruptcy laws to come down on us like a ton of bricks if we can’t pay off our credit cards, who have fought, tooth and nail, against reasonable regulations that might’ve kept this bubble from being such a bubble, and that might’ve constrained the use of these derivative financial instruments that really blew the game wide open, and so forth.
I’ll cheerfully take the responsibility for the bad effects that any of my decisions have had on my own life. But it’s those whose political pull and economic clout ruined the lives of thousands and millions of people who have to take the hit for our larger crisis.
DeSanis’ letter is really irrelevant to that reality. The only thing I have to say about his letter is that his point that “None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house” is idiotically oblivious to the renegotiations that were forced on, say, auto workers. If he can explain why a contract is a contract if the Masters of the Universe are its beneficiaries, but not if the guys on an assembly line in Detroit are, I’ll listen. Until them, screw him too.
It’s impressive whining; almost as good as the recent Paterico/Jeffy Goldstein Twister party gone wrong.
Almost.
DeSanis’ complaint is similar to those who whine about affirmative action: ‘my ancestors never owned slaves…’
While DeSanis may or may not be responsible for AIG’s financial misconduct, it cannot be denied DeSanis benefitted from them. Therefore, asking him to share the pain is not just reasonable but quite just.
Who’s-to-blame aside, I don’t understand DeSanis’ excoriation of Liddy. I thought Liddy was highly protective of AIG execs. His only sin that I can see from DeSanis’ POV is that he allowed that maybe there were some still around that might have had something to do with AIG’s downfall.
He may in fact have been wrong about that, but as he didn’t name names or anything (in point of fact, refused to name names even when hard-pressed by one-termer Alan Grayson) I don’t see what the big outrage is.
I will thank you to speak for yourself from now on.
I get what you’re trying to do here, but you and the others pushing this line of bullsh1t need to understand that you’re employing an even worse generalization than the one you’re complaining people at AIGFP are enduring.
Did you buy a house you knew you couldn’t afford? Did you push or mislead someone into doing it? No?
If not, then no, you are not responsible for this mess, and neither am I, so stop using this rhetoric of inclusive guilt as if it contains any substance.
It’s worth noting that you could’ve made the point you seem to be trying to make and pointed out this open letter without trying to make everyone here feel as if they’re just as guilty as the unscrupulous lenders, borrowers and financial voodoo artists who actually /did/ materially contribute to this mess.
As for the clarification…
This is a cop-out for lazy writing. Blaming “the American public” for something is about as useful or meaningful as blaming Ukrainians or space aliens. You may as well just write “some people did bad stuff” and it will contribute about as much to the subject.
von,
We are to blame?
We were to blame when a windfall made I and my wife’s dream of a new home possible, to start a new life with the boys we were trying to adopt.
We were to blame when that adoption fell through, keeping us from putting our old house on the market before the housing bubble popped.
We were to blame when we undercut the realtor’s suggested selling price by 10% to ensure a quick sale.
We were to blame when we finally, in fits and starts, dropped the price 32% from the starting level without getting any offers in a year and a half.
We were to blame when we kept paying our bills, our taxes, and our mortgages until I lost my job.
We were to blame when our income was too high to qualify for Chapter 7 Bankruptcy, but too low for the repayments required under Chapter 13.
We were to blame when the utilities and the equity loan on our old house kept chasing us even after the foreclosure.
We were to blame when we didn’t pursue all of our options to save our home, including, as suggested by the equity bank, the Lottery and Oprah.
We were to blame when, contacting our mortgage companies prior to any missed payments, they stated that they could not help us until we did miss a payment. Or that we did not qualify for higher levels of assistance until we missed more than one (although that could trigger a default and foreclosure proceedings).
In the net, the only mistake we credibly made was when we didn’t decide to hold back when we were getting close to the edge, as opposed to at the edge. If we had stopped making payments to our card companies, mortgage companies, and utilities when we had $50K in the bank, as opposed to $10K, we could have negotiated our cards payed off at 40% of balances or less, kept our current mortgage current, and not gone through financial hell while hoping that either of our 8+ year old cars won’t fall apart while we struggle to stay in a home that is now worth less than we paid for it, despite a 20% down payment.
Basically, if we had gamed the system, we would not be asking for help. Then you could not blame me.
But then, I would blame myself.
But the ones who sat atop this financial sh!tpile, who aggrandized their earnings, the boards who let them run rampant to keep their options and payouts flowing, I can’t blame them?
I think not.
Really, every CEO of the top 10-20 banks/financial institutions (pre mergers, so include Bank One, BofA, Countrywide, etc.) for the past several years should be sat down in a courtroom while they explain what they knew of their company’s financial wizardry, and when they knew it.
If they claim they didn’t know, then they should be fined equal to their compensation for the past several years and sit in jail for false financial statements for a few years.
If they did know, then they should be wrapped up in fraud suits and charges with the finest public defenders they we can afford to back them up, and locked away for dozens of years.
They knew, but they did it anyway, and got rewarded. That’s the value of their position in society.
I didn’t knew, but did it anyway, and have been ransacked like an Irish monastery. That is the value of my position in society.
I think the values system needs to be reversed.
“it cannot be denied DeSanis benefitted from them.”
In much the same sense as the trash hauler hired to clean up after a fire benefited from arson: He got paid to clean up the mess.
Oh, wait, he got told he’d be paid for cleaning up the mess. Then he got cheated out of his pay.
If “we” are to blame, it’s because “we” elected a government that didn’t believe in regulation, oversight, or white collar law enforcement, and basically has encouraged widening economic disparity during the last decade. I’m not anxious to blame individual bankers (even though they may have benefited), and certainly don’t blame individuals who found themselves overextended. Greed (or desire for comfort and wealth) is a part of human nature, and it has to be regulated.
Brett: And what about the autoworkers’ contracts? Are they as sacred as those of highly paid financial execs?
Clearly the ranks of bloggers eager to sing the Songs of Pity for Misunderstood Members of the Ruling Class are thick indeed. I wonder whether von’s oh-so-even-handed ascription of responsibility for this debacle to all of us would extend to the folks who played by the rules but got crushed by debt, like FG. I agree with him: what are the values of folks whose hearts bleed for a guy like DeSanis but who want to blame the rest of us for moronic decisions made at the top of the ladder by the financial elite? Not values I recognize or respect. My reaction to DeSanis’s article: Boo fing hoo, and go peddle this stuff somewhere else.
Let DeSanis haul trash; perhaps, he’d have a better perspective on the nature of hard work.
DeSanis claims to have worked for AIG for 11 years. During that time, he was (presumably) handsomely compensated via the proceeds AIG reaped during their economic terrorism. Now, we are to feel sympathy because he was asked to give back a bonus from US taxpayer funds AIG was to use to keep them from going under? IOW, the only reason DeSanis has a job to resign from is because the US taxpayer is performing CPR on it.
To paraphrase a Wonkette commenter, the term ‘go f#ck yourself’ was created for sanctimonious people like DeSanis.
If I’m an “irresponsible homeowner” then that poor executive VP at AIG (Insurance) is “one of those bastards”.
How can you have collective blame at the low end and not at the high end?
In any case, to sort this all out we need a good round of floggings – as per my previous suggestion, one lash of the whip per $100,000 blown.
The guilty parties will feel expiated (or dead) and all of us will have a jolly good time!
If he can explain why a contract is a contract if the Masters of the Universe are its beneficiaries, but not if the guys on an assembly line in Detroit are, I’ll listen. Until them, screw him too.
Posted by: low-tech cyclist |
You don’t come in as new management, wait until the contract has been performed and then say, surprise we’re not paying.
To be comparable, suppose Congress does provide more $ for Detroit. Says will honour contract; people work for 6 months, then say you’ve been overpaid, give us back some of your wages.
Please note the word “bonus”, as I understand it, is misleading a dodge to lower corporate taxes (which is a different issue).
The catastrophic bank failures were caused by the bursting of the housing bubble (with an assist from various energy shocks and other instabilities). The unregulated derivatives market exacerbated the problem, but wasn’t itself the cause.
Von,
Your argument is terrible. Institutions that are crucial to the functioning of the economy risked 30 times more money than they had, either because they thought housing prices would rise forever, or because they knew that they would be bailed out by the government when housing prices returned to historical levels. In reality there was almost certainly a mix of the deluded and sociopathic running and working in these firms. (And the willfully ignorant, one of whom seems to be the writer of the op-ed: don’t think that he didn’t profit handsomely during the last five years, whatever division he was working in.)
The financial crisis was precipitated by these excessive risks. Housing bubbles burst all the time, and they cause recessions, as the commenter upthread notes.
Honestly, your reasoning is really poor here.
You keep saying things like this with absolutely no justification whatsoever. None.
What evidence do you have that this individual was worth being paid even $10K for a year of work?
Anything? Anything at all?
As usual, it’s not the truth or falsity of the initial premises that is questioned, it’s the internal contradictions.
“I don’t understand DeSanis’ excoriation of Liddy.”
Posted by: Slartibartfast
I do. For 5 months employees have been assured their compensation agreements will be honoured by the Liddy regime. Until hours before his testimony the “bonuses” were OK. Suddenly Liddy decides they are excessive and asks for 50% back.
An honourable man would have maintained his position and offered his resignation to Congress if they insisted on playing these games.
I would apply the same logic to whoever in Federal Reserve sat in on the meetings that approved these bonuses and whoever at Treasury signed off on it.
Here’s another thought:
If work in FIRE does not actually add value to the economy, then the money paid to FIRE workers is removing value from somebody else and assigning it to this FIRE worker.
So there’s actually a case to be made that Mr. De Santis’s previous high salary was theft.
I’m totally not a Marxist, but I can sense the scales falling away from my eyes – I can feel my Overton window moving!
Please note the word “bonus”, as I understand it, is misleading a dodge to lower corporate taxes (which is a different issue).
Eh. Live by the tax-dodging semantics, die by the tax-dodging semantics.
And yeah, if he “agreed to work for $1”, with the expectation of $750K as a “bonus”, then he wasn’t really agreeing to work for $1.
ummm, seriously? The division that he worked in and its profitability are a matter of public record. I think your anger is blinding you.
And can we at least spell his name correctly? It’s DeSantis with a t.
Yes, we are to blame. We set up the system. We lauded easy money. We didn’t save. We relied too much on credit. We bought too much house. We: “You, me, your neighbors, or the folks down the block.”
Overgeneralization? Yes, of course. Similar to the overgeneralization regarding bankers? Yes, of course.
You keep saying things like this with absolutely no justification whatsoever. None.
What evidence do you have that this individual was worth being paid even $10K for a year of work?
Almost-PhD-Scent-of-Violets, do you have a belief that it will be worth paying you even $10K for a year of work? Do you have a sense that there is a labor market, and that we can refer to average salaries without having to write 150,000 pages of definitions for that .001% of readers who seem intent on missing the point entirely?
Your argument is terrible. Institutions that are crucial to the functioning of the economy risked 30 times more money than they had, either because they thought housing prices would rise forever, or because they knew that they would be bailed out by the government when housing prices returned to historical levels.
What? You’re going to have to explain your “either/or” proposition more clearly, because it makes no sense.
“What evidence do you have that this individual was worth being paid even $10K for a year of work? Anything? Anything at all?
As usual, it’s not the truth or falsity of the initial premises that is questioned, it’s the internal contradictions.
Posted by: ScentOfViolets
Assuming one has made the decision to windup the AIG FP division and it has $2.7 trillion dollars of something on its books, you are going to need some people to do that.
You will recall that the problems were in credit default swaps. He was in commodities trading not credit default swaps.
You are angry. Yes Wall Street has been greatly overpaid. But if you are going to take revenge, go after the people who agreed to pay the excessive compensation, not those who accepted it.
The parallel is go after those who made the bad mortgage loans not those who accepted them.
“Brett: And what about the autoworkers’ contracts? Are they as sacred as those of highly paid financial execs?”
You mean, should they both be paid what they were promised at the end of each pay period, (For DeSantis it just happened to be 1 year instead of 2 weeks.) and any changes to contract terms should apply only to future renumeration? Absolutely!
If I’m an “irresponsible homeowner” then that poor executive VP at AIG (Insurance) is “one of those bastards”.
How can you have collective blame at the low end and not at the high end?
It’s collective blame for everyone, not collective blame for those on the law end. Which is to say: If you’re going to generalize, do it correctly.
But isn’t this exactly what happened with the AUW and it’s obligations to pensioners who have already fulfilled their obligations? Iow, a contract whose obligations have already been fulfilled was indeed not honored(this happens fairly frequently actually, in this crazy little shack we call ‘bankruptcy court’).
At this two point then, you can say a contract is a contract, absolute and inviolable, or that some contracts are more equal than others. Which in regards to the facts would tend to put you in alignment with other people posting. Where you disagree then is when it’s a bad thing. Not bad for former UAW workers, but bad for AIG workers.
Nate: Eh. Live by the tax-dodging semantics, die by the tax-dodging semantics.
I believe the tax dodgers are the corporations who call salaries bonuses; again not the recipients.
So his salary was $1? I wonder what percentage of the people working there are similarly working for “bonus” only?
It certainly makes the “bonus” payments seem less egregious if in fact that was all people were getting paid.
A.J., I think your absolute stupidity and blind partisanship, not to mention your nasty penchant for slipping in an insult makes you one of the blinder people here.
There.
Now, do you want to continue in this vein, or do you want to talk like an adult? If the former, I’ll wipe the floor with you. If the latter – which I hope – then please refrain from gratuitous bashing liking referring to a posters ‘anger’.
Fair enough?
Assuming we’re going with the latter option, my question is a serious one. And I will say that ‘profitability’ at this point, in this particular market sector, is not an adequate metric. Do you have something else?
DeSantis (note the ‘t’) got screwed. He and his employer agreed to certain terms, he worked hard, he didn’t get what was promised him.
I can understand why he is very pissed off.
In all of this, DeSantis is just like a few million other people.
There are lots and lots and lots of people who are as talented and smart as DeSantis, who work as hard as he has, and who make equally valuable contributions to their companies and the world at large, who will not take home a tenth of what DeSantis has received already, even without his bonus.
Many of them will, in fact, be receiving pink slips, a couple of months of unemployment, and a big fat bill for health insurance.
And no, the fact that DeSantis has a lot of money doesn’t mean he should have been denied his bonus. But lots and lots of folks, rich and poor, are being unfairly denied things they worked for and deserved.
He’s no different than any of them in that regard.
He works for a bankrupt company, and he had the misfortune to have his payday come due at a politically inopportune time. It sucks. End of story.
If he wants to find a villain, he should look at those of his co-workers who bankrupted his company.
As far as the rest of us go, he can thank us for providing his company with the funds to pay the $750K after taxes that he did get, and which he is in the fortunate position of being able to give away.
It’s a sh*tty time, a lot of folks have it a lot tougher than DeSantis. He’s got a lot of money, and he’s had the opportunity to vent his anger on the Op-Ed page of the NYT.
Things could be a lot worse for him.
some of the blame–probably, most of the blame–for the current financial mess falls on us. You and I.
No, von, not you and I. You maybe, I had nothing to do with it.
And the indebtedness of folks who are maxed out isn’t a patch on the leveraged positions of the financial sector.
So please quit trotting this one out.
Scent of Violets,
Your case, Pensioners contracted with the old firm, and when it goes down,they are screwed by the old firm. When new management comes in-whether by appointment of a receiver or the unique AIG situation, it is not the old management that is screwing the workers. The new management has a choice to say renegotiate or leave. This is what autoworkers have been doing in anticipation of govt bailout. But Liddy, effectively the representative of the American taxpayers came in in Sept. Said to the workers, we are going to honour your contracts. Keep working. Workers kept working. Now Americans taxpayers saying not going to honour contracts. I don’t quarrel with the anger over the excessive compensation, but such anger should be directed at Liddy, and/or whoever in Federal Reserve, Treasury who authorized it.
Unless pensioners are being called back into work, told they will keep their benefits, work a year, then told sorry, I don’t see that your example is parallel.
Yes, we are to blame. We set up the system. We lauded easy money. We didn’t save. We relied too much on credit. We bought too much house.
We sold our mortgages to investment banks. We took these mortgages, sliced them up, recombined them, sold them as securities to ourselves. We leveraged them 50:1. We built houses of cards from them. Then We panicked when We failed to live up to the fantasy We had constructed about ourselves.
We suck.
So isn’t this a bit of a contradiction? Particularly when he claims that he had ‘no idea’ what was going on? When someone tells me that, while simultaneously trying to pass off the notion that he’s really qualified to run the division, I really question the gentleman’s actual capacity to perform, yes.
And you sir, are a dishonest little chiseling weasel who would rather die than admit he made a mistake. Some nasty nonentity who’s continual fallback position is ‘if you can’t make me say I’m wrong I win’. You are scum.
There.
I’ll make the same offer I made to aj: we can continue what you started, or you can drop the attitude right now and talk like an adult.
And no, thinking that labor markets are broken, and have been for some time isn’t particularly the sign of an angry person. Although the anger on main street now does seem to stem from that.
Thanks for those who noted the missing “t” in DeSantis. I’ve corrected the error.
A.J., I think your absolute stupidity and blind partisanship, not to mention your nasty penchant for slipping in an insult makes you one of the blinder people here.
There.
Now, do you want to continue in this vein, or do you want to talk like an adult? If the former, I’ll wipe the floor with you. If the latter – which I hope – then please refrain from gratuitous bashing liking referring to a posters ‘anger’.
ScentofViolets, please tone it down. I don’t know which post of AJ’s you’re referencing, but the only person who I see hurling insults is you (which is not helping your claim that you’re approaching all of this will a cool head).
If you can’t answer the question, von, then I can only assume that you don’t know that he’s worth that much.
Which is really what all of this brouha is about.
But, as I’ve argued, some of the blame–probably, most of the blame–for the current financial mess falls on us.
So “we’re” responsible for other people taking out loans “we” knew nothing about while this poor oppressed millionare who can give up $700k in the bat of an eye. Does he feel resposible for what his co-workers did?
“As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings.”
Perhaps once these so-called sophisticated traders who have no understanding of counter party risk take some responsibility and face consequences – no bonus just a pink slip – like everyone else then your argument will be more persuasive, Von.
This is pretty much correct, though I wouldn’t go so far as to call it ‘theft’. I, along with many others, are simply pointing out what most people have known in their guts for a long time: there’s a lot of people out there who are being paid less than their ‘worth’, and there’s a lot of people out there who’s being paid a lot more than their ‘worth’.
If I can’t see what you bring to the table, something tangible like number of rebounds scored, number units assembled that are at par or above for quality, that sort of thing, I am very naturally going to ask for specifics that make your pay justifiable.
I don’t tend to think of ‘show me the money’ as being particularly angry, particularly partisan, or even particularly intellectual.
Just a matter of pragmatic measurement.
Although I’m fascinated by it, it seems strange to me that people are so fixated on “blaming” either the bankers or the overextended homeowners. We (as a society) had the power to prevent this through regulation. Most of the individual transactions that added up to ruin the economy probably weren’t done with malice aforethought (although I’d sure support an investigation into what might have been fraudulent, illegal, etc.).
It’s really counterproductive, I think, to go on blaming the greed of this set of individuals, or the irresponsibility of that set of individuals.
I discovered quite early in my working life that a lot of people get paid way more than they seem to be worth, and a lot of people get paid nothing near the value of their services. The only way to mitigate that is through laws “spreading the wealth around”.
I just don’t really understand how it’s helpful to take names.
I see a framing problem here.
If you understand the bonus money as money that AIG actually earned, and was going to pay to DeSantis until Congress stepped in and started complaining, I suppose I could see (but not necessarily agree with) the point that he and those like him are getting a raw deal at the hands of Congress, or the public, or whoever.
But that’s not what happened. AIG, as an entity able to pay DeSantis’s bonus (and other obligations) out of its own revenues, ceased to exist several months ago. Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding. DeSantis would be way, way down the line as an unsecured creditor. Sucks to be him; he obviously should blame his colleagues.
But the taxpayers did intervene, and saved DeSantis’s job. The problem with von’s analysis, as far as I’m concerned, is that it assumes DeSantis has a right to the taxpayer-supplied “revenue” of AIG that equals, or approximates, his right to the AIG-generated revenues of AIG. I’m not buying that. The fact that the federal government decided to prop up his firm, rather than allow it to go into bankruptcy, doesn’t mean he has a right to be paid as though the firm never collapsed in the first place.
DeSantis is an unsecured creditor to a bankrupt company. Unsecured creditors get screwed. I don’t know why we’re supposed to make an exception for his case.
Really, you mean you didn’t even read the part that I quoted in the same post:“I think your anger is blinding you. “ The part you oh-so-conveniently deleted? Not on purpose of course?
Given these facts, you of course won’t be offended when I think this indicates that you’re a blatantly dishonest toady. Nothing personal of course, just an observation. Since you want to be consistent, von, you’ll agree you have absolutely zero cause to make any further comments on this issue, correct?
Of course, you could just admit that saying someone’s ‘anger’ is blinding them to the true facts while not at all offering up any evidence to this effect is indeed not the way to hold a discussion.
Do you want to go with the last bit? Or must I try to make my point that this really isn’t acceptable commentary again?
SoV,
You might want to take a look at the posting rules. I agree with you on a lot, but I think you’re flirting with a banning, and it wouldn’t be totally unwarranted. One of the things I love about ObWi is the general level of civility, so please don’t f*ck with it.
Really, you mean you didn’t even read the part that I quoted in the same post:”I think your anger is blinding you. ” The part you oh-so-conveniently deleted? Not on purpose of course?
I figured that it couldn’t be that post, SoV, because it provided absolutely no justification for your response.
Of course, you could just admit that saying someone’s ‘anger’ is blinding them to the true facts while not at all offering up any evidence to this effect is indeed not the way to hold a discussion.
Do you want to go with the last bit? Or must I try to make my point that this really isn’t acceptable commentary again?
SoV, a suggestion: take a deep breath, walk away from the computer for an hour, and then come back. We’ll all still be here when you come back. (You’re typing in “grrr, someone is wrong on the internets!” mode, and not making as much sense as you think.)
Vlad: “I see a framing problem here.”
You see it:
“AIG, as an entity able to pay DeSantis’s bonus (and other obligations) out of its own revenues, ceased to exist several months ago. Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding. DeSantis would be way, way down the line as an unsecured creditor.”
But the problem is the US govt sent in new management, working for the new shareholder, the US taxpayer, it was the new management that didn’t say you guys are unsecured creditors. They said we’ll honour your existing contracts because we want you to do further work for us.
Do you see the difference?
“Absent taxpayer intervention, it would exist now only as a bankruptcy proceeding.”
But the taxpayer (Really, the government, we shouldn’t confuse the two.) did intervene, didn’t it?
“DeSantis is an unsecured creditor to a bankrupt company.”
No, he would have been, if not for the bailout.
Hmmmm. AIG wrecks itself, and a huge swath of the banking sector, would cease to exist without our help, gets it, survives. Now the leadership class of AIG complains about not getting its bonuses. If von and other commenters in the “woe is jake” camp don’t seem to see the vicious and unswallowable gall involved in that kind of special pleading, in this economic climate, the moral deficit lies with them, not with the “angry” (oh no!) commenters.
We are to blame? Nationally, only 7% of homeowners are behind on their payments. Are you telling me that 7% of the country being behind on a few mortgage payments is responsible for the collapse of the American economy? Do you even know what you’re talking about???
you of course won’t be offended when I think this indicates that you’re a blatantly dishonest toady.
?!?
Perhaps his mother was a hamster. Or his father smelled of elderberries.
Time to dial it back, I think.
Do you see the difference?
I think it’s pretty clear that DeSantis got hosed on the bonus deal, and that he has reason to be angry with Liddy and all of the other folks who made it politically impossible for the bonuses to be paid.
I’d be angry if I were him.
But I *also* think that von’s comparison of folks in the investment banking industry with people who maxed out their credit cards and took on more house than they ought to have doesn’t really pass the smell test.
If you take on too much house, you go broke. You, personally. The bank takes the house and sells it to somebody else, your credit rating sucks for a period of time, and we all move on.
This is *not the same*, either in nature or scope, with folks who bankrupt not only their own companies, but entire industries, economies, and nations, by engaging in the kind of financial three card monte that lies at the heart of this problem.
Other than the fact that both can be described as ‘stupid’ or ‘irresponsible’, these two things are not comparable.
Johnny and Brett —
You’re not responding to my point, which is that DeSantis’s right to demand that his contract be honored fully died at the same time that AIG as a self-sufficient going concern died. If I understand your argument, it’s that the government’s decision to bailout AIG instead of letting it go under — which has already benefited the DeSantis’s of the world, at considerable taxpayer expense, by keeping them employed — should further entitle them to receive their pre-collapse compensation as though the collapse had never happened. In other words, AIG and its employees don’t just get government help; they get 100% government insurance that they’ll never suffer any of the ill consequences that would ordinarily flow from the fact that AIG collapsed under the weight of its own poor decisions.
That strikes me as a perverse result, to say the least. You’re going to have to do a lot more than talk about sanctity of contract to sell this idea as a matter of either sound public policy or essential justice.
As to the other claim — that AIG management made a post-collapse promise that pre-collapse salaries would continue to be paid — I suppose that gives DeSantis the right to be angry at Liddy. I don’t think it gives DeSantis the right to expect full payment, because I don’t think it is particularly reasonable for any employee of these bailed-out firms to assume that they’re going to make it through unscathed.
By the way, the amount of money being demanded is relevant to all of this. I don’t object to DeSantis receiving a healthy wage; I certainly am not demanding that he work for free. But a $700,000 bonus is compensation that is given only when a firm has substantial excess revenue to distribute to its employees. That’s obviously no longer the case for AIG, and it’s not reasonable for DeSantis to assume that the taxpayers are going to honor a compensation promise that AIG made and couldn’t keep.
“If work in FIRE does not actually add value to the economy, then the money paid to FIRE workers is removing value from somebody else and assigning it to this FIRE worker.
So there’s actually a case to be made that Mr. De Santis’s previous high salary was theft.”
And was the salary paid to the construction workers who overbuilt the houses leading up to the housing crisis theft?
Von,
Financial institutions that are crucial to the functioning of the economy were leveraged 30 to 1. Get it? To be leveraged 30 to 1, they would either have to have been deluded as to the risk of the assets they held, or have to have figured they couldn’t lose, i.e. the government would bail them out, precisely because of the crucial economic functions they perform. They got to reap huge “profits” for five or so years due to this leverage, but then the assets they held went south, then they became insolvent and stopped lending, then financial crisis, then depression. It’s not that complicated. You can argue that imprudent homeowners (which doesn’t include me, btw) were responsible for the housing bubble, but not the financial crisis.
i’m all for letting them have their bonuses. that deal is done.
i’ll do ’em one better, tho: if the Lords of Leverage can find a way to turn AIG back into a stable company, i’d be happy giving them a $10M bonus, each.
make it so, big brains. that’s what you’re there for, right?
Yes, and if we believe Nixon when he said he is not a crook we could avoid our long national nightmare.
Me, I’m not quite as predisposed to believe him or them. Or perhaps not as gullible.
“Although I’m fascinated by it, it seems strange to me that people are so fixated on “blaming” either the bankers or the overextended homeowners. We (as a society) had the power to prevent this through regulation.”
I guess the way I see it is that, at least here on the interwebs, the class of people trying to shift blame onto “us” overlaps extensively with the class of people who argue against tighter regulation of the financial sector, either by arguing against regulation generally, or by paying lip-service to the idea of regulation, but arguing that any specific regulation is a bad one.
Vlad:
I see the bailout as the equivalent of AIG going through bankruptcy and Liddy in the role of the receiver. He’s the new management and could have insisted on renegotiating or cancelling the contract. As I understand often happens, receivers sent in to liquidate a business -as was to happen to AIG Financial Products, will hire existing staff to help them sell off the company’s assets. When he makes the commitment, this isn’t the old bankrupt firm this is the new entity. If a receiver had done it or it was sanctioned by a judge, the contract would obviously be enforceable. This is what I see having happened.
So to your points
” You’re not responding to my point, which is that DeSantis’s right to demand that his contract be honored fully died at the same time that AIG as a self-sufficient going concern died”
-Contracts voidable at that point. Could have said your just another unsecured creditor. Go stand in line.
“it’s that the government’s decision to bailout AIG instead of letting it go under — which has already benefited the DeSantis’s of the world, at considerable taxpayer expense, by keeping them employed — should further entitle them to receive their pre-collapse compensation as though the collapse had never happened.”
Not decision to bailout, but telling these employees that if they would continue to work their preexisting contracts would be honoured. This was the time to renegotiate if you don’t want to honour the contract.
“that AIG management made a post-collapse promise that pre-collapse salaries would continue to be paid — I suppose that gives DeSantis the right to be angry at Liddy. I don’t think it gives DeSantis the right to expect full payment,”
But this isn’t the old AIG management it is new management operating under the supervision of 3 representatives of the Federal Reserve.
“I don’t think it is particularly reasonable for any employee of these bailed-out firms to assume that they’re going to make it through unscathed.”
It was not reasonable until in september Liddy told them they would be unscathed. The Federal Reserve also knew.
Basic principle of contract law: reliance.
The point is the reliance was not on AIG or the old contract but rather on Liddy and the Federal Reserve.
If these people hadn’t worked after these assurances given, I’d cut them off at zero.
But after, do you really want a Government whose word you cannot trust?
Vlad: But a $700,000 bonus is compensation that is given only when a firm has substantial excess revenue to distribute to its employees.
From my perspective all the compensation on Wall Street and CEO’s is obscene. I remember reading in the 1970’s that 20 times was the appropriate ratio between the highest paid and lowest paid worker in a society. So if no one earned over say $400,000 I wouldn’t be fussed.
But if you have a system where the sky is the limit, I don’t think it is right to arbitrarily treat some people differently. Yes, if Govt had said last September, no one will earn more than $X. but Bush/Paulson didn’t.
I think you are also being misled by the word bonus. This was really salary paid at the end of a period not a performance bonus. Calling it a bonus was to make the amount deductible for corporate income taxes.
Calling it a bonus was to make the amount deductible for corporate income taxes.
So we have a fraudulent disbursement, which can be taxed and recovered, yes?
Fraud guy: Have IRS review all corporation’s bonuses. If there is fraud it is on the part of corporations, not their employees.
I’m glad that we’re finally putting the blame for this debacle where it belongs. But how long will it take for the Iraqi people to get the blame they deserve for the actions of Saddam Hussein?
I think Iraqi Kurds and Shiites deserve particular condemnation here. Hopefully von can devote a post to this crucial subject.
I think DeSantis has a right to be angry at Liddy, to the extent that Liddy did come into AIG and, as a representative of the federal government, insist that these contracts would be honored. Really, the “right” thing for the government to do upon installing Liddy would have been to set up compensation limits. Arguably, the fact that Congress floated and then rejected the idea of compensation limits puts DeSantis and his ilk in an even stronger position — as far as contracts go, the government could hardly have given more explicit approval of this sort of compensation.
That said, the reason to honor these bonuses falls pretty squarely under the maxim, “Two Wrongs Don’t Make a Right.” To argue, as DeSantis seems to be, that there was no original wrong — that the compensation itself wasn’t a moral if not legal theft from the public coffers — is laughable.
FIRE = THEFT
And was the salary paid to the construction workers who overbuilt the houses leading up to the housing crisis theft?
Nope, because they added value to the wood, nails, glue, drywall, insulation by putting them together just as they were hired to do.
Now, a building guy who was supposed to add value by deciding what houses to build where and how, he’s on shaky ground with the bubble.
But anyhow I’m not talking about the housing bubble. I’m questioning the idea that anyone at AIG, say, EVER added a hundred million dollars to AIG’s contribution to the economy.
The new Marxism: Labor and Capital versus Finance.
Bah!
The signs of a looming real estate bubble were obvious way back in 2000 after the dot-com bubble was exchanged for an asset price bubble, so I chose to keep renting. In 2003 I canceled all of my credit cards save one (for emergencies), and watched my credit score dropped as a reward for my prudence. I started cautioning my friends not to get too crazy with their real-estate investments, because any fool could tell back in 2004 that the eventual collapse would be a bad one, and the longer it was deferred the worse it would get (and no, being a killjoy does not endear you to your friends).
Sorry, but I refuse to accept any portion of blame for this crisis.
von: when you write that “you and I” are responsible for this I, like others, feel like saying: speak for yourself. I also think that while there are (I’m sure) a bunch of people who took out mortgages they knew they couldn’t afford, there were also a bunch who took out mortgages they would have been able to afford but for the sudden collapse of the economy, and another bunch who took out mortgages that they didn’t understand, and/or that were misrepresented to them.
I’m also not sure what’s gained by trying to push one group or another as “the” people who are responsible for this.
Sorry, not buying it, and even with your update, I find the “we” and “us” highly objectionable, and style choice does not excuse its usage in this instance. I’m not as concerned about DeSantis specifically, but even if we accept that he’s a swell guy that doesn’t begin to address the larger dynamics. I’m also not as concerned about the bonuses compared to AIG’s conduct as a whole, and that of other bailout companies. You’re right that there were irresponsible borrowers. But some of the loans given out would have been illegal a decade or so ago. The lenders had the position of power, privilege and knowledge. Caveat emptor applies far more to the lenders than the borrowers here. The lenders made irresponsible gambles because of greed and because of callousness – they figured if a deal exploded, someone else would suffer. It’s not as if that was ever moral, or that they thought it was. It was never good policy to allow that, and even if that specific scam’s consequences came as a surprise, the aggressive fight to roll back regulation and remove consumer protections has been a very conscious campaign. Tom Geoghegan recently wrote a good piece on usury and lending rates. You may have seen the reports on lenders giving subprime loans even when the borrowers qualified for better. Give blame where it’s due, and proportionately. Don’t ignore the power dynamics. What we’re seeing is the consequences of Reaganomics over roughly 30 years – and Dems deserve some of the blame for that (most notably Rubin, Summers and Clinton, although Phil Gramm probably has them beat). We’ve had class warfare waged by the rich, and it’s hurt the country significantly. They’ve already taken our money, and continue to take it; they’re not entitled to our sympathy. The arrogance and sense of entitlement on Wall Street is ridiculous – and very expensive. Where is the change? Has Wall Street as a whole said, ‘our preferred way of doing things has been disastrous, and we need to change’…? When Wall Street actually proposes reforms and enacts them rather than setting up a hostage situation with the government and the country, maybe such complaints will have some credibility. Times are tough all over. DeSantis may be the exception, but most of the bailout employees should be grateful they have jobs at all. Several of the execs should probably be in jail, and at least merit investigation, even if there are more pressing concerns right now. If you want to say there should be a complete review of culpability, fine, but it’s not as if Wall Street and their proxies are clamoring for that, and it doesn’t seem like you’re advocating that, either – instead, ‘we’re all to blame.’ No. We are not. Nor are the costs of those mistakes fairly distributed – not even remotely. “Most of the blame” lies with those who profited off this mess, didn’t give a damn about creating it, and fought like hell to remove the safeguards that could have prevented it. I’m with Russell, and like Jon Schwarz’ analogy. Hilzoy’s recent post on execs foot-dragging on stress tests remains a much more pertinent and insightful critique.
But after, do you really want a Government whose word you cannot trust?
We get a choice??? I know we’ve got the best government money can buy, but unfortunately, for the most part, its not us doing the buying.
TheWesson — “Now, a building guy who was supposed to add value by deciding what houses to build where and how, he’s on shaky ground with the bubble.”
Yup. And anyone in that boat who claims that they didn’t see this coming is lying. I was working for these people a decade ago and the president of the local division knew back then that the company was overbuilding in the market. He didn’t care because the company was in better shape to weather then crash than the local competitors and he thought the corporation could consolidate its market share after the markets crashed. A crash was part of his plans. He just didn’t realize how big the crash was going to be when it happened.
That was the mistake. Not that he helped cause a crash and hurt the people he was selling homes to, but rather that the corporation and its shareholders got hurt as well.
Forgot to add to my last comment:
Scent Of Violets: You have been warned before about the posting rules. Since you seem to have left now, I’m hoping that you’ve thought better of your previous comments. Next time you say anything uncivil to any commenter, however, I will ban you.
“Liddy regime”? Liddy wasn’t who brought up taking those bonuses back, I think.
When the bears are at your door, sometimes you have to throw them one haunch of elk in order to be able to eat the rest.
An honorable man wouldn’t have taken the job to begin with. So says I, with just as much justification.
I’m sorry, I’m not sure what “the same logic” is pointing to. What logic?
We’re to blame for this mess; not some group of faceless folks who aren’t “us”.
again, bullshit.
the faces in question belong Mr Cassano, Mr Gramm, and Mr Lee: the unholy trinity of bad bookie, bad lawmaker, and bad regulator.
undo what they did over the past ten years, and we aren’t here today.
NPR podcast
This is a link to a podcast on NPR discussing Summers, Rubin, and Gramm and the interrelationship amongst them in preventing regulations. It is an interview with Hirst from Newsweek.
Hopefully the link works…it is my first.
Vlad, you’re just rationalizing screwing these people over. AIG is NOT bankrupt, in fact the freaking POINT of the bailout money is so that AIG can pay it’s creditors, and not declare bankruptcy.
And because they’re not bankrupt, they have to pay their freaking debts. Such as the pay they owe for work already done.
I’m really getting sick of people rationalizing what amounts to a bill of attainder. Is this what we’ve become, a banana republic, where the government can whip up anger against some designated patsies, and then pass laws screwing them over, and the public will applaud?
This is not the country I was born in, anymore. I don’t recognize it, and I don’t like what it’s becoming. I think I’m going to make a point of getting the hell out of here sometime in the next 10-20 years, assuming things hold together even that long: I don’t want my children stuck in the hellhole this country’s on the path to becoming.
von at 1:53 PM: “Mr. DeSanis has done things that the average worker has not done: … did his job responsibly.”
von at 3:12 PM: “If you’re going to generalize, do it correctly.”
von at 1:53 PM, your belief that the average worker does an irresponsible job explains a lot about your attitude, toward this and other matters. I find myself very angry here. Don’t know what to do about it, except hope you have to listen to innumberable, interminable lectures from von at 3:12 PM.
Brett writes: This is not the country I was born in, anymore
Ah, that perfect golden year of 195X(?), when Eisenhower was President, segregation was law of the land, abortion was largely illegal, feminism unknown, the Big 3 controlled the market for cars and contracts by g*d were Honored!
Have fun going Galt. Let us know where you set up shop, and how it works out for you. Good luck in finding a less socialist industrialized country.
As far as I’m concerned, when you work for a company that’s 80% owned by the US taxpayer, you might as well be in bankruptcy. (Congress writes bankruptcy laws; Congress owns the company. There is some distinction in the difference but not much.) So your employment contract got voided. Boo hoo. You took the risk of having a portion of your pay denominated a “bonus” (instead of, say, salary) and now your boss (that’s us, the taxpayer, as represented by Congress) is withdrawing your bonus.
Cry me a frackin’ river.
Yeah, that’s the attitude that’s got me disgusted: The government wants to screw somebody over, what’s the big deal? It’s entitled to!
No, it’s not. There are multiple clauses written into the Constitution with the aim of forbidding the government from just screwing over anyone it decides would make a good sacrificial goat. The bill of attainder clause, the double jeopardy clause, the ex post facto clause.
The government isn’t supposed to be pulling this sort of shit. And your (terrifyingly common) reaction is the most frightening part: You don’t question the justice of it, you just enjoy the smell of blood in the water. It’s not you, after all!
Well, I think it will be, eventually.
Next lifetime I’m coming back as an expert in every freaking field for every job on the planet and reading minds too. Plug my head into an information down loader and voila. Who the hell needs to have any expectation of field expertise from someone else with a degree and expertise in their field.
Matrix baby. We’ll all be experts in every single field in less than 60 seconds. We can spend all our spare time outside of work just being experts in all fields.
On a more down to earth and realistic level, people require guidelines, rules and accountability in order not behave in a corrupt manner. Seems there is a historical adage to that affect. Absolute power corrupts absolutely.
Financial professionals, namely those in corporate finance were given absolute power by the government they lobbied and had unfettered access to. Permission to keep bad debt off the books and zero accountability.
If DeSantis was serious about his commitment to improving AIG why on earth did he not renegotiate such a bad contract that made the company more vulnerable? He could have negotiated a reasonable salary of say 1 maybe 2 million and no bonus until AIG was stabilized. Once AIG was cleaned up, bailout money repaid, showing a profit then a multimillion dollar bonus would have been warranted. He did not do that.
No way would he lambaste his boss so pubicaly without having another position lined up and this exit strategy approved. Liddy takes it on the chin to back up his “everyone will leave” drama, pays DeSantis a nice severance package and DeStantis gets another position with one of AIGs sub parties. The man is not without contacts.
DeSantis is not going unemployed for the sake of hurt feelings. He is not giving up the “love and devotion” to his company because his emotions overwhelmed him.
This is not the country I was born in, anymore. . . I’m going to make a point of getting the hell out of here sometime in the next 10-20 years.
It sure as hell isn’t the same country, Brett. When you were born, the Constitution hadn’t yet been shredded by people you love to come on this blog and defend. When you were born, we weren’t — as a matter of policy — torturers. When you were born, your party was not controlled from head to foot by christianists. When you were born, we had functioning regulatory systems rather than captured agencies. And the list goes on. And on.
But you know what’s exactly, exactly the same? Conservatives — just like you — screeching “socialism” on a loop for the entire tenure of every democratic president, rending their garments like Cibber and lamenting the demise of their once-great country.
Spare us all the sanctimony and man the hell up. Seriously, this hyperventilating pretense of ruptured innocence is unbecoming. It belongs in a Victorian novel. It’s all the more galling because it is so patently fake. You’re not going anywhere. You’re not. You’re not even going to try. You’re not even going to take the first tentative step. The most you’ll do is mention it around the dinner table, or when you get drunk at Thanksgiving, and your wife and kids will roll their eyes (“Dad’s going on about moving to Sierra Leone again”) and that will be that. So spare us all having to pretend that you’re serious.
Or, better yet, go. Please. Please! Please take your Randian dreams and play with them on Turks and Caicos or someplace else nice and warm, where you can’t drag down the entire world down with you into your fantastical hellhole.
Your country will thank you for your brave and noble sacrifice.
The government isn’t supposed to be pulling this sort of shit.
the government hasn’t actually done the thing you’re moaning about. the bill that hasn’t even gone through the Senate yet – Reid isn’t excited about it, and neither is Obama. this thing you’re so agitated about has not happened, and there’s a very good chance it never will.
chill.
The point here, Larv, is that these people aren’t being civil. Attacking the argument is fine. Test it to destruction, that’s the way the process works.
Attacking the person? Calling them angry, and irrationally angry, with absolutely no evidence? That’s not fine.
Not fine at all.
“This is not the country I was born in, anymore.”
Brett,if this were the ’60’s I’d invite you north. Canada got a lot of good American immigrants then. Unfortunately, our present government is less impressive.
Seriously, you are getting a little overwrought. One of the advantages of having a bicameral legislature is that there is time for sober second thought (Canada actually has a Senate, and that is its only justification for continued existence).
I also expect that at the end of the day either the Executive or judicial branches will do the right thing. Maybe it is good every once in a while to see both that some progress has been made since the days of the lynch mob, and that there is still a way to go.
Oh, the injustice! Oh, the humanity! People who work for a company that would be out of business if The Market had its way with it feel screwed because their poor choice of employer will cost them bonus money.
You know what, Brett? Lots of people get laid off without a golden parachute. Not because they personally did a less-than-stellar job, but because they had the misfortune to be signed up to a losing team. These AIG guys are not free agents getting shafted by a mighty corporation or an oppressive government. They are people who threw their lot in with a mighty corporation rather some humble credit union because no humble credit union could offer adequate scope to their exalted talents. They chose to be part of Team AIG, because they thought they were signing up with a world championship squad. Turns out they were wrong. Life’s tough.
If you want to personally make good on their contracts, have at it. But spare me your indignation about “the smell of blood in the water”. If I took you seriously, I’d say LET the damned “financial system” collapse, and let’s see how much The Masters of the Universe bleed in the water, rather than in a taxpayer-funded liferaft that turns out to be less cushy than the yacht they contracted for.
–TP
This doesn’t make any sense to me at all. The claim was that contracts could not be renegotiated after one side had already fulfilled their obligations. But this was also true in the case of the UAW, specifically, the people who had already retired and were expecting their pre-negotiated pensions.
So it is factually false to claim this is the point of difference in the two cases.
I understand that you’re rather angry at having to take so many hits on this one, and that this has made you a bit irrational, but surely even you will admit that the ‘inviolability of the contract’ argument doesn’t hold water at this point. Or at any rate, that people pointed out objective facts as the justification for not being convinced by this line of argument.
von, if you weren’t so irrationally angry at people knocking your post to flinders, you’d see that this is a legitimate complaint.
von. Son. I mean this with only your best interests at heart. I think you need to walk away for a while. Stop posting. It’s clear that your anger – which I entirely understand and sympathize with – has destroyed your judgment.
Just . . . walk away. It will do you a world of good, and maybe you’ll regain some badly needed perspective.
I wouldn’t go so far as to say that Maxism is the new black.
The fact is, a lot of people are not happy with what’s going on because they are capitalists. I’m one of them, as a matter of fact. The feeling is, roughly, that the markets should work to accurately price labor, and that there is a class of people who have worked for years to make sure that this isn’t the case. That they have labored mightily to pay themselves fantastic sums with the justification that they were ‘worth it’ when in reality they were some of the least worthy people.
Does anyone recall seeing Brett and several of the other commentators hyperventilating about the “sanctity of contracts” reacting quite with anything approaching the same severity to things like say, torture, indefinite imprisonment, direct lies to start a war, government surveillance, or election theft? I know von has, but not about the others.
But, y’know, when some rich guy might not get his salary he “cleverly” labeled a bonus because his company went down the tubes and blew up the world economy, then watch out!
Also, speaking of DeSantis, for all that he was “working for $1”, (not counting three quarters of a million in bonuses), I bet he’s got great benefits, especially health insurance. Another thing many regular people are losing because of his company’s actions.
But, as I’ve argued, some of the blame–probably, most of the blame–for the current financial mess falls on us
Us, huh?
“We” in the general sense: the American public. (My house is cheap, my loans are paid, my savings rate is impressive.)
Oh, so by us, you mean a group of people specifically not including yourself. Odd definition of us. Very Clintonian language there.
It’s satisfying and comforting to blame someone else; to make a scapegoat out of someone you’ve never met.
Which is exactly what you’re doing here – blaming “us”, noting very clearly that it doesn’t include “you” (my savings rate is impressive!), but that it includes a bunch of people you’ve never met.
We bought houses we couldn’t afford
That’s BS. An illegal immigrant with no job or assets can afford to take out a 105% option ARM on a McMansion because he has nothing whatsoever to lose on the transaction. But a corporation still made him the loan, and that corporation did have something to lose, because it is now bankrupt. And someone bought the MBS that included that loan, and they had something to lose, because they are now bankrupt. And the government allowed those loans to be made, and the government had something to lose because they are now spending trillions of dollars on correcting the damage.
The loans would have been taken out 20 years ago under the same circumstances if they had been offered. What changed? Find that out and you’ll be on your way to South Blameistan.
we expected the bubble never to burst
No, I expected the bubble to burst, others denied one existed. Who is to blame? Us? Not so much. You are to blame, because of your ideology that would have led you to argue that we couldn’t know it was a bubble when we knew it was a bubble, so we shouldn’t take the intrusive regulatory steps needed to keep it from getting bigger. “We” are not to blame. You are to blame, and I am not to blame.
we took on too much risk
What risk did the illegal immigrant living in the 105% option ARM financed McMansion who never made a payment take on? Leverage a corporation 40 times when that corporation will have to be rescued by taxing working class people, that’s taking on some risk.
He took no risk, he is not to blame. People who could have argued for regulation but didn’t, they’re to blame. And opponents of regulation who – even now – will deny knowledge of the explicit deregulatory steps that were taken that allowed this mess to happen – the laws that were changed, the agencies that were left unstaffed, the transgressions that were ignored – they’re to blame. That would be “you”, not “us”.
Unless there is a mouse in your pocket.
You really don’t feel that denigrating posters by calling them angry, and irrationally angry at that is being uncivil?[1] I disagree, but if that’s what you really think . . . I also think, as do a great many other posters that von is really larding on the sanctimony. Presumably, since other posters have made comments to that effect, this is not a criticism that crosses the line, yes? I haven’t mentioned this because it’s irrelevant to the argument he’s trying to make.
[1]It’s also extremely poor form in trying to make an argument. That was the other point I was attempting to make.
Of course, I made this point last week. But the stated rationale for paying AIG bonuses, was to keep the knowledgeable people working to wrap up the then $2.7 trillion ($1.6)on their books. Now if staff leaves, we may get to see how irreplaceable they are. Must admit if I had $170 billion at stake, I wouldn’t take the risk, but it is your money.
No doubt the same people ranting to cut off the bonuses will be ranting if significant losses are incurred and taxpayers don’t get their money back. I assume Hilzoy will remember, but I suspect most will be clueless if populist anger costs taxpayers extra billions.
Now if staff leaves, we may get to see how irreplaceable they are. Must admit if I had $170 billion at stake, I wouldn’t take the risk, but it is your money
If it was your money, would you trust it to someone who didn’t understand the concept of a sunk cost?
But yes, we must trust these people at AIG, because it was only a few rogue traders in one division that sunk the company, right? Forget, for a moment, that the people in charge of risk management were supposed to be doing risk management…
Bernanke:
Knowledgeable bunch of a**holes, were they? Just one office of one division that caused the problem, was it?
We the people are stupid, but we are not that stupid, and we are quickly growing tired of this BS.
This is absurd. If you’re going to generalize all-inclusively, you socialize both the profits and the losses. Period.
Fortunately, we know that generalization is an error, and can dismiss von’s communist grundwerk for the disingenuous apologia that it is.
It’s worth looking at the history of CDS’s and derivatives, as well. A big part of the blame falls on Phil Gramm, who slipped deregulation of derivatives into a bill at the last minute in December 2000. We can also blame Bill Clinton, who signed the bill, and Larry Summers, who advised Bill Clinton in favor of cementing the de facto deregulation of derivatives into the law.
More than that, we can blame the banks who formed the lobbying organizations that fought the regulation of derivatives and provided the funds and campaign contributions that bought Congress. And we can especially blame the MoU who ran those banks.
We ourselves do not bear a whole lot of the blame, unless we were once Republicans or DLC Democrats) who mindlessly thought that all regulation was bad. Or that this regulation of the financial system was bad in particular.
I also blame the people who lobbied for tearing down the Glass-Stegall act. Yes, that means there are a lot of people to blame… but not the people who bought houses or used credit. The blameworthy are the people who fought regulation and voted for idiots who would mindlessly deregulate.
The nut of the problem is that derivatives are like side bets, and the value of those side bets dwarfs the size of the original loans. So our large banks ended up on the wrong side of most of those side bets, and are insolvent. Period.
They were able to gamble because they got themselves deregulated. Are those of us who fought, who tried to argue for caution and regulation, for conservative prudence, to blame? No, those who argued and fought and voted for deregulation are to blame. Period.
now_what:
“If it was your money, would you trust it to someone who didn’t understand the concept of a sunk cost?”
But it isn’t just sunk cost, you have more at risk.
now_what, indeed!!
TDaulnay: A big part of the blame falls on Phil Gramm, who slipped deregulation of derivatives into a bill at the last minute in December 2000. We can also blame Bill Clinton, who signed the bill, and Larry Summers, who advised Bill Clinton in favor of cementing the de facto deregulation of derivatives into the law.”
Gramm and whoever voted for the bill bear much responsiblity. Do you know what all was in the bill and the implications if Clinton hadn’t signed it? My impression is that the potential problem grew exponentially; so subsequent Congresses had the opportunity to reverse the error.
And then,with AIG the Europeans apparently wanted to regulate it, but Bush administration fought this, claiming the Thrift Office could regulate effectively.
Andrew Sullivan had the following quote from one of those who I assume escapes blame:
‘I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010. I wasn’t around during the 1930’s or the debate over Glass-Steagall. But I was here in the early 1980’s when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness,” – Senator Byron L. Dorgan, Democrat of North Dakota, November 5, 1999.
You still don’t understand the concept of sunk cost.
He’s dead, Jim.
In terms of who’s to blame:
If a bank president goes out and loans the entirety of the bank’s assets to winos, the bank president is the problem, not the winos.
Likewise, when almost every major financial institution makes loans far in excess of its equity to an assortment of speculators and people who don’t know economics, the problem is the financial institutions.
Incidentally, there’s a lot more to the problem than the US housing bubble. There’s also massive bubbles in commercial real estate, leveraged buy-outs, credit cards, and auto loans, and they’re popping away right now. There are similar problems, in different proportions, in almost every major country on earth. It’s ridiculous to blame a worldwide problem like this on foolish people who can’t evaluate investments because we have always had lots of them and probably always will. They didn’t change. What changed was that a lot of financial people were willing to loan them lots and lots of money because of a mixture of delusion and fraud. Those financial people are to blame.
Arguing that AIG isn’t bankrupt is like arguing that a Ponzi scheme is a good investment for everyone involved as long as there’s money coming in.
The source of the bailout was that if AIG goes down, so does the entire economy. If they aren’t around, there’s no one to insure much of anything and the entire economy comes to a halt, because they insure more than financial products, and if they fail to pay out on those financial products that they did insure, those financial entities become insolvent and the financial markets collapse.
AIG is in essence bankrupt. The only money they have is the money we gave them (and continue to give them), and the entire economic system in the U.S. is precariously balanced on the idea that the government won’t let them fail. Nothing more, nothing less. That should be what scares the hell out of you.
Here’s a simple test for you. Take a glass of water and put your finger in it.
Now remove your finger.
Notice the whole you left behind? Neither did anyone else.
Now fill that glass with a trillion in taxpayer dollars and see if there’s any difference.
I could care less whether or not the crooks at AIG get bonuses or not. I’m more concerned about whether or not I can make my next mortgage payment as my business dries up and bills mount.
Oh, and Von…. I’m thinking you can guess.
I take Von’s general point about blame with some equanimity.
But, I would like to know if Von, besides having a small mortgage and an impressive savings rate, passively held AIG stock in his 401K or IRA, and if so, how it is that Von didn’t alert us early on about the financial debacle on the horizon, you know, if people are supposed to be so financially sophisticated and attuned?
But let’s leave aside the idea of blaming the great unwashed [Von and I and everyone else here probably need to wash ;)] who bought too much house for a moment, and ask why it is that many of the great value equity managers in the mutual fund industry had AIG at or near the top position in their fund portfolios?
These are mostly honest financial wizards who know how to read a financial statement but still held AIG stock from its highs as it plummeted to single digits.
How is it that Warren Buffett, whose Berkshire Hathaway holds the equity of banks like Wells Fargo, USBank, and Suntrust, didn’t see this coming, if the rest of us were supposed to.
Lots of reasons, I guess.
But I believe the main reason has to do with the meeting in the middle of, on one side, obfuscating financial reporting and balance sheets amd purposefully opaque accounting turned out in glossy 4-color annual reports (George Bernard Shaw: “Every profession is a conspiracy against the laity”) and, on the other ….
…….. the American Larry Kudlowian glib optimism that accepts American cheating and lying because it is American and better than everyone else’s cheating and lying, and a concerted effort over the past 30 years to make the environment much more hospitable to American cheating and lying by loosening regulation and permitting the monumental edifice of the shadow banking system, which was left largely unregulated and encouraged to grow by the free marketeers over the past many years, to have its way with us.
Tell me the name of one poor schlub, who bought too much house, who could explain how the unregulated banking system worked to provide him with that mortgage money.
The schlub can’t explain it because the shadow banking system was not required by dreaded government regulation to divulge its machinations to him.
Maybe the schlub should have read behind that annoying smirk on Phil Gramm’s face as he was forced to get down off the wagon and take out a mortgage.
“We ourselves do not bear a whole lot of the blame, unless we were once Republicans or DLC Democrats, who mindlessly thought that all regulation was bad. Or that this regulation of the financial system was bad in particular.”
Absolutely right. Looks like there will be a pitch to correct this situation for the future today: it will be interesting who in Congress disputes the need for this new regulatory regime.
I’ve been trying to understand Now_What’s post. He speaks of “sunk costs”. Now “sunk costs are costs which are gone regardless of future events. I don’t know what he means, but perhaps the reason so many want to do what in my mind is irrationally sabetogue the unwinding of AIG is that you think you are talking about sunk costs. I have the disadvantage of having listened to Liddy’s testimony last week, and in absence of hearing anything to the contrary believed him when he said his current expectation was that the remaining AIG Financial Products portfolio could be wound down over 2-3 years at a cost of only $2 billion. (If I recall correctly, selling off the really bad part of the portfolio had cost $30 billion). Minimizing the cost of completing this task should be important, because it lessens the amount AIG will have to repay to US taxpayers.
Johnny Canuck:
It’s only “irrational sabotage” to the unwinding of AIG if you have any reason to believe the people “retained” to do so would do any better at this than say, J. Random Dude walking down the street in Manhattan. Or, more likely, J. Random Financial. While the people currently at AIG could likely do better than J. Random Dude, because they’re trained in finance, but it’s questionable, considering the way they’ve managed it so far. And it’s unlikely they’d do better than some other J. Random Financial, especially if they’re going to whine like this op-ed because they’re not getting paid the “bonus” they were supposed to be paid, when they “agreed to work for $1”. Which, since he was guaranteed a 750K bonus, means he wasn’t working for $1.
Basically, we have no reason to trust any of the yahoos who’ve worked at AIG over the last many years when they say how critical they are.
I’ve been trying to understand Now_What’s post. He speaks of “sunk costs”. Now “sunk costs are costs which are gone regardless of future events
he said his current expectation was that the remaining AIG Financial Products portfolio could be wound down over 2-3 years at a cost of only $2 billion
It would cost 2 billion dollars to sell it off? OK, don’t sell it off then, you’ll save 2 billion dollars, right? No? Sunk cost.
“It would cost 2 billion dollars to sell it off? OK, don’t sell it off then, you’ll save 2 billion dollars, right? No? Sunk cost.”
Liddy testified AIG FP has a $1.6 trillion portfolio. The object is to wind up the business. The US taxpayer has “invested” $79 billion and is exposed for at least a total of $170 billion.
I’ve had people ask why the total amount of exposure is so high, given that it is several times the amount lost in the housing bubble. The answer is quite simple, as explained above. Think of two drunks at the bar making a bet for $100 on which customer the bartender is going to serve next. The value of the underlying transaction is close to zero. But the terms of the bet still have to be honored.
This is also, incidentally, why the housing bubble is not the problem (note that those who say it is more often than not go on to finger the usual suspects, the FF’s and the undeserving poor and greedy.) Some of these people will make the claim then that even if this is true, the larger blowup wouldn’t have happened if their hadn’t been a crisis in the housing markets. This strikes me as a husband who blames his wife for ‘making’ him hit her by making a smart remark.
This is exactly right. While we can’t be sure of the claims in this particular case, we do know that in the past other banks have been unwound from untenable positions by outsiders with no side effects, despite the insistence on the part of those banks that only insider expertise would work. We also know that in some of those instances, the banks making those claims had something more to hide over and above the acknowledged troubles.
I agree, we don’t know for a fact that special expertise isn’t needed in this particular case. But the burden of proof for this claim lies rather heavily on the parties making it – AIG and it’s proponents. Since they are arguing by assertion and nothing more (like they have so many times in the past to other people’s detriment), I’d say they have come nowhere near meeting this burden.
AIG without a government bailout — DeSantis has no job.
AIG with a government bailout — DeSantis has a very lucrative job, but loses his bonus.
And I’m supposed to cry for him because he doesn’t have the third option of the job plus the bonus?
Let me take the flip position of von’s apologetics. I’ve been saying for months now that I have absolutely no objection to bailouts and bonuses save for one condition: that the officials of the company seeking government aid go on live TV and admit that they made mistakes, apologized for those mistakes, and vowed to try to make some sort of amends. Not just one token sin eater who could be denied later, btw, but as many of the responsible people that could be rounded up as possible, even if that number went into the dozens or hundreds.
My thought is that this would have helped craft better responses to the crisis down the road. It’s much harder to argue against the cramdown option when the guilty parties have just gone on TV admitting that they were in fact guilty, to name one example.
Instead – as I predicted then – what has emerged is a self-serving paean of the responsibility of all in this fiasco. All are wicked. All are punished. No one man can thus be singled out if all men are guilty. How convenieeeeent, the Church Lady would have said.
Nate: “Basically, we have no reason to trust any of the yahoos who’ve worked at AIG over the last many years when they say how critical they are.”
They aren’t proclaiming their self-importance. It was Liddy who was testifying to their importance, specifically the learning curve necessary to take over and manage a $1.6 trillion portfolio whose risk needs to be assessed and possibly adjusted each day. He’s the one saying in this 400 employee unit the damage was done by 20-30 people in the credit default swap section; those people are gone.
Liddy is the guy the US govt sent in last September to clean things up. If it is Liddy you don’t trust, get someone else in.
Obama has enough sense so that his efforts to steady the finanical system will not be sabetogued by this kind of advice; would that Congress would stop shooting holes in the bottom of the boat, and train their fire and hearings on the former AIG executives that caused the problem.
Or perhaps asked Senator Dorgan- who was one of the few senators who was warning about the problem 10 years ago- what they should do.
Anyone inside the financial industry is not really in a position to be trusted, ESPECIALLY the executives of big companies. Or the people who sat on their boards. Like Liddy. He’d have to be replaced with somebody from outside the system, because everybody involved in the system has been complicit and profited off the orgy of derivatives. Which brings up the same issues of knowledge versus competence, but the executives are especially implicated in this. I don’t buy any “If only the czar had known!” talk.
So no, I have no reason to trust Liddy in particular, since he’s got a vested interest in protecting his friends, his class, and the system that got them all where they are. OF COURSE he’s going to say everything except CDSs are roses and happiness, and AIG’s books are filled with unicorns. He has no reason to want any kind of major systemic changes, no matter how needed they are.
And no, I don’t know who I’d put in place, but somebody who’d been sitting on the boards of various banks and insurance companies for the last decade, worked to get Bush re-elected and tried to get McCain elected, and got appointed by his buddy Henry Paulson doesn’t come across as unbiased. Which doesn’t mean he’s specifically lying all the time, but he’s certainly got plenty of reason to pretend things are better than they are, and exaggerate.
Sigh. Liddy is working at AIG. What part of “Basically, we have no reason to trust any of the yahoos who’ve worked at AIG over the last many years when they say how critical they are.” don’t you understand?
This type of coy argumentative style strikes me as a rather poor one. Especially since denying the premise doesn’t change the fact that Liddy has excellent reasons(and probably legal ones involving fiduciary duties) for talking up the people on his team.
Hmmm . . . maybe it’s the anger talking 🙂
Plus, doesn’t Liddy get a big fat bonus depending on how well he unwinds AIG? Which should give him incentive to do it well, but also gives him incentive to make things seem not as bad as they may be, and tell Congress (his employers) what he thinks they want to hear?
AIG
See, you guys weren’t explaining it to us correctly. Instead of the AIG people being so invaluable to keep around to wind up business, they were actually so venal and incompetent before that AIG now cannot afford to give the counterparties the slightest excuse to void their contracts and try to take their money. That I can believe.
“I think the values system needs to be reversed.”
No surprise, Fraud Guy, that I agree with your sentiments and was moved by your commentary from yesterday.
Sounds like we have faced similiar predicaments in this economic meltdown, although you’ve had it much worse.
I just signed off on my bankruptcy papers yesterday. A Chapter 7 — the attorney made it clear I qualified easily, which is a sad indication of how low my earnings have been the past six months. (It was also sad, and humbling, that I had to borrow $400 to be able to pay her $1,700 fee, but, thankfully, I have a close friend who didn’t bat an eyelash when I asked.)
I waited until the last possible moment to file, denying to myself that it was necessary; the guilt you feel is tremendous. But once the cupboard was bare, there was no choice.
Somehow, I’ve been able to cobble together enough to continue making my mortgage payments. But it always comes down to the end, and that stress becomes overwhelming.
As bad as things have been, however, I can’t imagine the pain and despair a foreclosure would bring.
I think the reason Von’s it’s-on-you blame is being received so negatively is he is not weighing the overall effects of the economy and, especially, unemployment. He is not showing any compassion.
ScentofViolets: You appear to be in a slightly better mood than yesterday
You say:
Liddy is working at AIG. What part of “Basically, we have no reason to trust any of the yahoos who’ve worked at AIG over the last many years when they say how critical they are.” don’t you understand?
why you think someone who only arrived at AIG last September becomes “worked at AIG over last many years”.
Nate says:Plus, doesn’t Liddy get a big fat bonus depending on how well he unwinds AIG? Which should give him incentive to do it well, but also gives him incentive to make things seem not as bad as they may be.
First part of this makes sense to me. I thought money talked most to these people.
As I previously wrote: “Liddy is the guy the US govt sent in last September to clean things up. If it is Liddy you don’t trust, get someone else in.” I can see force in the distrust because he is Paulsen’s appointment, but would you trust anyone Obama appointed either?
I think the reason Von’s it’s-on-you blame is being received so negatively is he is not weighing the overall effects of the economy and, especially, unemployment. He is not showing any compassion.
It’s on us. (This is also my response to Hilzoy’s comment.)
Really? My mood is no different than yesterday’s. I find your parsing of Nate’s simple sentence extremely odd. When someone says “any of the yahoos who’ve worked at AIG over the last many years “ they are not implying that they have worked there for many years; only that they’ve been employed there sometime in the last several years, with the length of employment unremarked upon. Has Liddy been employed sometime over the last several years? Why, yes. Yes he has.
I understand your anger at being easily countered at every turn, but don’t let your anger blind you to the meaning of quite simple sentence constructions.
Really von? Even if we’ve been excoriating these sorts of practices for years? Still our fault? You don’t offer any reasons why this should be. So you haven’t convinced me that this is the case. But I’ll give you this – I’ll blame you for providing cover for these people. That’s meeting you halfway, I would think.
Predatory lenders used foreign credit to throw money at people they knew could not pay – typically helpless financial naifs. Now these predatory lenders extort money from the government to recoup their shitty loans. The United States is a kleptocracy, and while the individual kleptocrat is merely going along to get along, the entire FIRE sector is built on corruption and fraud. The Chinese would take a sampling of these parasites out and shoot them. Can you do better than that? Your voice of reason is inaudible while you fellate your betters.
Really von? Even if we’ve been excoriating these sorts of practices for years? Still our fault? You don’t offer any reasons why this should be. So you haven’t convinced me that this is the case. But I’ll give you this – I’ll blame you for providing cover for these people. That’s meeting you halfway, I would think.
If we’re going to assign guilt, sure it’s our fault. US savings rates have been extremely low for years. We accepted policies — particularly easy money and mortgages — that advantaged us. They advantaged me, when I purchased my first home after more than a decade of renting.
I realize that as soon as one points out that it’s “our” fault — as much as anyone’s — a thousand hands shoot up. “It’s not me!” comes the cry. (From the Gen-Xers: “whaddaya mean ‘us,’ Kemosabe?”)
John Thullen provides a highly sophisticated version of the argument, above. And John is right: there’s no conscious guilt. I certainly didn’t intend to lose money in virtually every one of my retirement funds. (Cash equivalents is doing OK, but Helicopter Ben is going to change that.) But I made those investments and I benefited when times went well. Now that times have soured and now that my cheap house is even cheaper, I’m not going to create some “other” to blame.
Those who were incompetent or did criminal acts should be punished proportionately. If you’re looking for vicarious guilt or guilt-by-association, however: look in the mirror.
Sure, Von, we all have to take responsibility to a certain extent.
But what about all of the people who have lost their jobs — and then their homes? Shall we dollop a big scoop of blame on that poor sap?
And I guess the subprime mortgage companies never used deception on some of the borrowers who went under.
I guess WE are the reason WE are bailing out all of the banks that got rich selling instruments that are now toxic. I guess we are toxic.
bedtime,
Thank you.
I guess the pain comes from feeling that your home is your future. Even in the move up, move out, and flip world, your home was an investment in that future, if mainly for financial reasons. Losing a home that we once lived in, and whose sale could have stopped our financial tail spin is like having a portion of your dreams ripped out of your skull and trampled on. You know that portion of your future is gone, that your potential and possibilities are that much more constrained, and there is grief in that knowledge.
I recall the news story about the study which found that the most successful traders on Wall Street were those who the least involved emotionally in their investments. In fact, they most closely resembled sociopaths in their inability to worry about the social impacts of their financial decisions, which allowed them to make their trading decisions mainly on the basis of profit.
I choose to be whole, even with the sorrow, rather than missing that part of me, which would be a greater loss.
I guess that is why I take such umbrage over von and similar commenters, who blame everyone for what happened. In a sense, you and I act with the understanding that the worst predatory instincts of business and finance will be kept in check, and that there will be some limits to what they can do. But there aren’t, especially when they, or their sympathizers, are in control of the institutions that watch over them. So their amoral financial schemes run rampant over our futures, the media, entrusted to report, support instead, and the politicians seek their input to insure that there are not too many checks on their ability to minimize the financial damage they caused.
My job is to protect, but I didn’t protect my family. Because I didn’t accept that the game was rigged from the start. So I guess I am to blame, as von says, and I have paid a dear price, indeed.
But the ones who gamed, those who supported them, and those who encouraged them; when in von’s world will they accept their blame, and their repercussions. I don’t see him, or any of those who bring similar claims, bring forth any solution to that problem. Until there is equal weight carried on all of our shoulders, I don’t want to hear blame assigned to Main Street; we have our penalties already. Now Wall Street and K Street, and Pennsylvania Ave have to accept, recognize, and recompense us for their roles in the fiasco.
bedtimeforbonzo, sorry to hear your news. Geographically, are you in a particularly hard hit area?
Rather than just repeating yourself robotically, why don’t you answer my question? I’ve been criticizing the easy money and outrageous lending practices for years. I’ve been prudent with my own finances, have a traditional mortgage, etc. What would I had have done to not be considered guilty according to you? Emigrate?
No, despite your insistence and rote repetitions, I don’t think you’ve won any converts. Though you’ve certainly convinced many people that you’re part of the problem. Why isn’t this enough for you? I suspect that your anger at being duped – quite justified, I am sure – has blinded you and made you behave irrationally.
If you can’t do anything but mechanically recite talking points, why don’t you just step away from your computer and come back when you can do better?
Seriously. Your efforts are only making people hold you in even lower regard than they already do. Stop digging.
SoV — I’m guessing you’re writing in a sarcastic tone rather than a serious one, but just because “someone else started it” doesn’t excuse your tone. I think you’ve made some excellent points on this thead, but you’ve been sidetracked here and there, and it’s counterproductive. Don’t make it personal, regardless of how poor you think someone’s arguments are.
Fraud Guy: I can’t elaborate on your comments without repeating them since we have clearly walked in each other’s.
I see what you mean about looking at your home as your future, but I’d add it is also a big part of one’s past, the memories we’ve made in ours are so vast.
One thing I think this recession shows is that you can play by the rules and still be left behind or forced to play catch-up. (Hence, the outrage caused by bailout-seeking companies that did not play by the rules.)
Johnny Canuck: I live in the Northeast, which I guess is holding up as well as many other parts of the country (although citizens of Rhode Island might differ). But I work in a toxic industry, selling cars for a living. First we were killed by $4 a gallon gas, then banks stopped lending to buyers, now buyers seem afraid to buy. There are signs things are picking up, however: so, fingers crossed.
Those who were incompetent or did criminal acts should be punished proportionately. If you’re looking for vicarious guilt or guilt-by-association, however: look in the mirror.
von, that’s the thing. THEY’RE NOT. The people who are suffering? They’re the people who bought houses. Had jobs. Worked for regular wages. They’re already being “punished” by losing their houses, their jobs, their futures, watching their neighborhoods fall apart around them, and all the rest of the ways the crashed economy is hurting people.
Meanwhile, the people who made the bets, created the “financial innovations”, pushed the mortgages, sliced them up, and bet more than their companies are worth aren’t. They’re crying over lost bonuses worth orders of magnitude more than most people make in a year. They’re crying about “working for $1” with great benefits and a job that’s only there on our dime. They’re whining because people are being mean to them, while they made millions over the last decade+ by setting this crash up.
And now you’re coming along and saying “Oh, don’t blame the people who created and ran the system, the real problem is everybody else!” Even the people who were prudent, even the people who were okay until they lost their jobs, or their house became worth less than their mortgage, or they got sick and their insurance denied them, or any of the other myriad things that can wipe people out in this country. “We” are all already being “punished” for our “mistakes”, even if we didn’t participate, fought them, advised against them, or weren’t even involved. The spleenweasels on Wall Street, at AIG, and the rest AREN’T. How many of them are living in tent cities? How many of them are deciding between rent and preventative health care? How many of their kids are going to have to drop out of college, or graduate with crippling debt and no job prospects? How many of them are going to have to put off retirement because their savings all got sucked down by the financial maelstrom? How many of them are facing criminal charges, discharge for incompetence, or any other consequences for their part in setting up and running this system that fell apart so spectacularly?
Yes, I’m angry. I don’t deny it, I have no reason to. Not only are these people getting away with their ill-gotten gains, the same people who spent decades supporting deregulation, lax enforcement, and “the magic of the market” that got us here are now lecturing us on how we shouldn’t blame the people who made the bets, we should all share the blame, so nobody’s at fault?
@$!# that.
Who’s “creating” others to blame? I wish I had to invent AIG et al. Unfortunately, they actually exist.
And why should someone who was financially responsible, did not work in any of the relevant industries, took out no bad loans, did not support any of the policies that are to blame, and expressed that disapproval to his or her elected representatives be held responsible for this? i don’t see that the fact that that person profited from investments has anything to do with it: are we supposed to have had to choose between being to blame and keeping our money in a shoebox?
No reason you have to answer this at all. But if you do, it would be nice if you’d go beyond rhetoric (“a thousand hands shoot up. “It’s not me!” comes the cry.”) and tell us why that cry is wrong. Because if it isn’t — if the reason those hands shoot up is because the people whose hands they are are not to blame — then there’s no reason to portray them as evading anything, or to lecture them about how they ought to “look in the mirror”.
I’m not following you, farmgirl. I really do want to know why von thinks I am somehow to blame, and what I could possibly have done to shed this accusation.
Hilzoy: I was surprised to see your name at the end of your last comment, the outrage was so raw. (By the way, I mean that as a compliment.)
I am sure I speak for many others when expressing appreciation that you “get it.”
There is a point somewhere in everyting that Von has said, but even if so, I think it would get lost after telling down-on-their-luck folks to “look in the mirror.”
SoV — That’s fine. You’re in good company there, and several others in addition to yourself have put forward well-argued challenges to von’s thesis.
What I was suugesting you avoid in future is criticism *of von* rather than *of his arguments.* You might compare the last 3 paras of your 1:44 post with Nate at 2:01 and hilzoy at 2:03, for the most recent samples among many. (I am guessing that you wrote these with a sardonically raised eyebrow, but the flat text on the page does not contribute to a productive discussion.)
Rather than just repeating yourself robotically, why don’t you answer my question? I’ve been criticizing the easy money and outrageous lending practices for years. I’ve been prudent with my own finances, have a traditional mortgage, etc. What would I had have done to not be considered guilty according to you? Emigrate?
Great. Did you refinance your mortgage? Take advantage of a lower rate?
No, despite your insistence and rote repetitions, I don’t think you’ve won any converts. Though you’ve certainly convinced many people that you’re part of the problem. Why isn’t this enough for you? I suspect that your anger at being duped – quite justified, I am sure – has blinded you and made you behave irrationally.
I never said that I was “duped.” My mortgage is of the standard 15-year variety. Responsible! Indeed — not that anecdotes matter much — I remarked at the closing that we were probably buying at the top of the market. (We weren’t, but that doesn’t mean that we didn’t overpay.)
By the way: I understand and appreciate that my message is unpopular. But, like I said, I have the luxury of sitting in the peanut gallery on this one. I’ll shoot the spitballs that I think are appropriate, even if many folks disagree.
(You’ll note that I’m not responding to your various other ad hominems, chest-thumpings, and insults. I don’t know what you think you accomplish with them, but my policy — when I remember it — is to neither feed the trolls nor reward trollish behavior.)
Anyone inside the financial industry is not really in a position to be trusted, ESPECIALLY the executives of big companies. Or the people who sat on their boards. Like Liddy. He’d have to be replaced with somebody from outside the system, because everybody involved in the system has been complicit and profited off the orgy of derivatives.
Yep. The finacial gurus we all subprime is no big deal, we’re all covered. There’s no problem that need to be addressed, these aren’t the droids you’re looking for.
Then all of a sudden it was give us $700B in the next three days, no questions asked or were all doomed!!!!11eleventyone!!
If it were up to me I’d be bringing in bankruptcy attorneys and forensic accountants (people who have Actual Experience winding stuff like this up) not the deluded financial class and their happy pony stories about how the big shitpile really really is worth something
bedtime — sorry to hear your news. I hope things start to turn around for you now.
We missed you the other night — we’ll have to do it again sometime, or maybe one of these days someone will revive that notion of a national ObWi gathering….
Financial institutions that are crucial to the functioning of the economy were leveraged 30 to 1. Get it? To be leveraged 30 to 1, they would either have to have been deluded as to the risk of the assets they held, or have to have figured they couldn’t lose, i.e. the government would bail them out, precisely because of the crucial economic functions they perform.
Or, the people making the decisions, who had visibility into the leverage, didn’t care if their companies went under. They were getting seriously paid, and knew that they personally would come out just fine if the crap ever hit the fan.
Or, less cynically, they were under pressure to be bringing in as much as the firm next door, and that could only be done by making overleveraged bets.
Hilzoy, I previously criticized you for painting with too broad a brush when you blamed the so-called “Masters of the Universe” for the financial crisis, when individual “Masters of the Universe” were no more at fault than you or I. To answer your question, I need a clarification regarding your position. Does your statement still hold if we include the following strikeout?
farmgirl, thanks for trying. I just wanted to say it “out loud” as it were, so you’d know you had some support.
Repeated nastiness and sarcasm, even when “cleverly” framed as an echo of someone else’s words, are a blight on the neighborhood. There’s always the choice of just not reading comments by particular authors, but that gets frustrating too.
I’ve seen new commenters settle down after a while (in a mild way I was one of them), and I always admire the regulars who patiently engage them with civility, until it starts to appear that civility might be contagious.
It doesn’t alway seem to work, sad to say. Maybe I’m too impatient, but sometimes it seems like life is just too short. The answer to that? — back to work. 😉
Overgeneralization? Yes, of course. Similar to the overgeneralization regarding bankers? Yes, of course.
And have you not just written a post in part attacking such generalizations of bankers? Of course. Can I tell if the initial post was a tongue-in-cheek satire of this overgeneralized blame of bankers, pretending to blame everyone to show how ludicrous the position is? No, I cannot, because you appear to be defending the proposition (ie that we’re all to blame) vigorously. It would be pretty cool if it were though. But if that’s that case, you’ve got to pull back the curtain pretty soon.
Otherwise, if I understand you correctly, DeSantis is *not* to blame for this mess, but the rest of us are. Because we accepted cheap loans from people who then bet the US economy that we’d be able to repay.
[IMO, this is like betting your car on a basketball game and then blaming the team for losing your car.]
Maybe we’re lucky- maybe DeSantis has a morgage on his house, or his vacation house, or his ski condo. Then we could all agree that he had some blame coming to him.
Janie — Thanks, I appreciate you taking the time to say that. (I always do enjoy reading what you have to say on these threads.) I hope to be able to join the crowd next time you have a Boston-area gathering; I’m just over the border in NH.
Otherwise, if I understand you correctly, DeSantis is *not* to blame for this mess, but the rest of us are. Because we accepted cheap loans from people who then bet the US economy that we’d be able to repay.
No, that’s not my point. “Us” and “we” are inclusive of DeSantis. My point is that DeSantis bears the exact same proportion of blame as you and I do. If you want to assign vicarious guilt to folks who work in finance or someone like DeSantis because he worked at AIG (‘tho, importantly, wasn’t responsible for the current mess) you have to cast your net wider. You have to, ultimately, include yourself.
A lot of folks are missing this point, and reflexively assuming that everything has to be us v. them. I’m not. Again, “we” is inclusive.
“Us” and “we” are inclusive of DeSantis. My point is that DeSantis bears the exact same proportion of blame as you and I do.
No, he doesn’t. That’s half the point.
The other half of the point, is for all the talk of “blame”, he’s NOT suffering. While “we” are.
Those are what you don’t seem to get, von.
von: I think that people who did not work in any of the relevant industries, and meet my other conditions, are not responsible. Or at any rate, I might be persuaded to add conditions if they were suggested. But the operative point is: it does not follow from the passage you quoted that I think that everyone who did work in the relevant industries is responsible. Similarly, some people who took out bad loans might not be responsible, e.g. if the loan was for a nickel and was repaid the next day (as the result of an unexpected windfall, so that the repayment does not stand in the way of its being a bad loan.)
I’m on record as thinking that people at AIG who did not work in the financial products group, or in any management position that would have given them the power to help set the course of the company as a whole, are not responsible for this, for instance.
So I don’t really see what you were getting at with your last comment.
If you look back at previous posts by von you will see that I haven’t said anything that he hasn’t already said to me.
Are you suggesting then that in fact, von has been insulting? That maybe he should own up to that and move on?
That’s an honest question.
No, that’s not my point. “Us” and “we” are inclusive of DeSantis. My point is that DeSantis bears the exact same proportion of blame as you and I do.
I can accept that proposition (at least, I can accept that it could be true, I don’t know what he was doing specifically at AIG, and it’s not really important to the larger argument).
My point is related to how much of that blame really goes to ‘everyone’. I would say, almost exactly zero. My point is that the people blaming DeSantis with broad generalizations are doing *exactly* what you’re doing in blaming everyone with broad generalizations. The specifics of the crisis relate to banks making insanely disadvantageous loans (which, unsurprisingly, people accepted, being insanely *advantageous* to them) and then betting their existence on those loans being AAA via some obscure mathematical fertility ritual.
Thus the question about whether this was a particularly clever satire. I was hoping that you’d jump up and say- well, if blaming everyone is crazy as everyone says that it is, then blaming DeSantis is also crazy.
I would like to note I have nothing against this DeSantis guy, other than his being a whiny little prick about his “honorable” “working for $1” while waiting for a $750K bonus. He may not have set up the system, but he made damn good money enabling it. And didn’t try and fix it.
I’ve got this mental picture of a family- they live in an apartment, and the bank comes to them and says “we can get you into a bigger house in a nicer part of town, for less than you currently pay in rent. No money down, no paperwork.”
And the family has bad credit and a bad job history, this is a chance they never thought that they’d have. So it’s a 5-year with a balloon, so what- maybe the house will appreciate and they’ll be able to refinance with the gains. Or maybe they mail the mortgage company a box of dog crap after 5 years of living better and cheaper than they had been. They can’t lose.
And Im imagining this family saying “No, we can’t do that, some batshit bankers might bet the US economy on our ability to pay this back in 5 years. We’ll take our fleabag apartment rather than risk that, it would be selfish of us.”
As it happens, no. This is not answering my question.
Your message is a statement of opinion that is not backed by any discernable facts or reasoning. I and several others have asked you to justify that opinion, and have also asked what we would have had to have done to avoid this blanket criticism. To date, you haven’t made any responses in that direction.
Sigh. von, I have no idea what you are talking about. You have said every one of those things to me and more(notice that I don’t stoop to any silly playing around with people’s online names, as you have.) If they are not insulting when they are coming from you to me, why would you think they would be insulting going in the other direction? I suspect an irrational anger is clouding your judgment here.
Here’s a thought – if you think what I am doing is ‘insulting’, why don’t you admit that you’ve done the same thing, first, and apologize? A novel idea, taking responsibility for one’s own deeds, I know. But give it a try.
Thus the question about whether this was a particularly clever satire. I was hoping that you’d jump up and say- well, if blaming everyone is crazy as everyone says that it is, then blaming DeSantis is also crazy.
I don’t know if it was clever or not — a lot of people are arguing not — but that was my point.
I’m pretty stupid, but I’m not stupid enough to follow a criticism of overgeneralizations with a massive overgeneralization myself without some reason for doing that. Maybe a stupid reason, but a reason nonetheless. DeSantis bears the exact same proportion of vicarious “blame” for the current mess as you and I do.
Hilzoy, I’m a little confused by your first sentence and think that it might contain a typo. Did you mean to write “von: I think that people who did
notwork in any of the relevant industries, and meet my other conditions, are not responsible”?“I’m on record as thinking that people at AIG who did not work in the financial products group, or in any management position that would have given them the power to help set the course of the company as a whole, are not responsible for this, for instance.”
That’s not the only record you have. There is at least one posts of yours that contains a broad attack on the “Masters of the Universe.” But I agree that most of your posts are much more careful, and I believe that the careful posts are the ones that reflect your true thinking on the issue.
Thanks, Janie. If things pick up — with the idea of a Chapter 7 being you get a fresh start — better days could be ahead. The guilt I felt about making this decision, I must admit, was diminished each time another Wall Street entity asked for government/taxpayer assistance. Also, when I hear what Fraud Guy has gone through, I realize things could be much worse.
Last night’s “Nightline” led off with a segment on the growing number of people taking up residence living in motor homes (not the high-end kind) at various camp grounds. One middle-aged guy with a wife and daughter lost his job as an editor at a magazine, lost his home, then couldn’t pay the rent for an apartment, and now is essentially living out of a very big car. (“Nightline” followed that story with a sobering piece on Altzheimer’s. Shouldn’t there be a rule against two depressing segments in a row before bedtime?)
Bernard Yomtov emailed me and made wish I had been at the Boston gathering — I told him I am sure there was room for one more balding/graying middle-age man. Under better circumstances, a train trip from Newark, Del., to Beantown would make a cool trip.
Von: What do you say to the homeowner who lost his/her job and did not find gainful employment in time to save his/her home? Look in the mirror?
I’m sorry, but this is simply false. We’ve already established that saying someone is angry, blindly angry, unjustifiably angry, angry in a way that affects what they write, rather than just addressing the points that supposedly angry person is making is not, in fact, a personal attack.
If you disagree, take it up someone else.
If, otoh, you do agree that this sort of thing is nasty, sarcastic, and out of line, I would appreciate you saying so to a few other people. People who deserve it far more than I by virtue of them saying those things first.
Von: What do you say to the homeowner who lost his/her job and did not find gainful employment in time to save his/her home? Look in the mirror?
Sure: If we’re going to make people guilty for a financial crisis because they profited from the boom-before-crash, then this homeowner is likely included in the group.
Right. And saying that dogs are four-legged animals means that we are excessively generalizing because you can point to three-legged dog.
I don’t buy it. Because you’re not just posting this to a select few people who you think may have committed some sort of imagined infraction. You’re also posting to an audience who may or may not have transgressed. It looks to me like you’re scrabbling for a way out of the hole you’ve dug for yourself that doesn’t make you look too undignified.
Sure: If we’re going to make people guilty for a financial crisis because they profited from the boom-before-crash, then this homeowner is likely included in the group.
Okay, von, seriously, why do you not appreciate the difference, both qualitatively and quantitatively between a homeowner who ended up buying a bigger house than “needed” and lost their job, as well as the value they put in the house, and the people who worked on Wall Street and raked in millions of dollars by sustaining and creating the system that caused this economic crash, and are going to go home and still be enormously wealthy?
I don’t buy it. Because you’re not just posting this to a select few people who you think may have committed some sort of imagined infraction. You’re also posting to an audience who may or may not have transgressed.
Can you explain what you mean by this?
Okay, von, seriously, why do you not appreciate the difference, both qualitatively and quantitatively between a homeowner who ended up buying a bigger house than “needed” and lost their job, as well as the value they put in the house, and the people who worked on Wall Street and raked in millions of dollars by sustaining and creating the system that caused this economic crash, and are going to go home and still be enormously wealthy?
I do appreciate the difference on a number of levels: the case of the homeowner is unfortunate and, no matter how unwise his or her behavior, there is good cause to provide support. What I don’t see why the former is “innocent” of any wrongdoing but the latter is “guilty”.
von,
Imagine you and I are playing blackjack. We are in a dark room, and are blindfolded and in straitjackets.
The dealer plays your cards, and tells you what they are. You decide to add one, or double down, based on what he tells you. So do I.
He may tell us that we win the occasional hand, and if our memories are good enough, we may try to place our bets based on each other’s cards. Sometimes we win, sometimes lose, but at some point, the dealer tells us that we’re out of chips. And when he says this, somehow we know he’s smiling.
The financial instruments are the game, the financial instutions the dealer, the dealer’s voice is the media, and our chips–well, did we ever really have them?
And you feel that the players are as much to blame as the dealer?
Okay, let’s see. I know this has all been gone over before, but here’s one more
First, aiding and abetting a crime is also a crime.
Second, it’s a matter of responsibility. The “Masters of the Universe” lobbied to create the environment that led to this crash, they created and abused the “financial innovations”, they made and profited from the bad loans, bets, and other short-term “profits” for years. Also, part of the justification for people being paid more for some jobs than others is responsibility. Jobs that can cause more damage if not done right tend to pay more. The “Masters of the Universe” were paid QUITE well, and caused nearly unprecedented damage. The average people just took out (maybe) more loan than they could handle, and listened to the TeeVee and the people who were supposed to know these things. Therefore, the “Masters of the Universe” should bear more responsibility for what happened, ESPECIALLY the executives who were in charge of the companies that have bet themselves almost out of existence.
Also, the Wall Streeters, even ones not directly involved, generally walked away with quite handsome payments from the “profits” their risky loans and bets posted. They shared in the loot.
Third, none of the Masters of the Universe have suffered any punishment, or apologized, or admitted they screwed up. They just come begging for cash, and then demanding it, and threaten to crash the entire global economy even more if we don’t pay them more money than an average person makes in a decade.
Oh, and if you want to quibble about “sharing the loot”, I would like to point out that yes, maybe some homeowners made money off the bubble, but the Wall Streeters REGULARLY walked away with MILLIONS of dollars in a single year. Again, it’s a matter of scale.
I don’t expect this to convince you any more than the other times people have said it. But those are some of the main differences, and if you don’t appreciate them, there’s not much point to this conversation.
Note how ‘a broad attack’ is erroneously conflated with ‘attacking everyone who works on Wall street’.
Isn’t the principle of complicity well-known and recognized? If I can identify a particular person in the commission of a crime and I fail to report this, certainly I can be charged with a crime myself. This is not a particularly arcane bit of knowledge, you don’t get to complain that you’re being unfairly punished because even though you knew your husband was selling cocaine (and you were enjoying the high life) you didn’t sell any yourself.
So. Does this DeSantis fellow have a record for speaking out against what was going on in his own company?
Show me that, and I might be moved to cut him some slack.
VON: “If you want to assign vicarious guilt to folks who work in finance or someone like DeSantis because he worked at AIG (‘tho, importantly, wasn’t responsible for the current mess) you have to cast your net wider. You have to, ultimately, include yourself.”
The post closest to my feeling was by: TDaulnay | March 26, 2009 at 12:47 AM
How would you feel about recasting your argument in terms of concentric circles of responsibility?
Starting fairly far out, anyone who voted for a Senator who voted to repeal Glass Steagall?
Sigh. How have I personally benefited from anything that has gone on lo these past 10 years? Where have I criticized everyone on Wall street has being on the take? What would I have had to have done to make me not be at fault, even partially?
You keep ducking those questions, and until you give a straight answer, your defense that this was supposed to be some sort of performance art just doesn’t cut it with me.
I understand how your anger can make you say things that perhaps you didn’t intend to. No one likes to feel that they’ve been duped. But them’s the breaks. After all, no one held a gun to your hand for your previous apologetics for these people. Perhaps you should go away for a while until you cool off and can hold a reasonable conversation.
farmgirl — it was really fun to meet some of the other commenters in person. Someone said that night that we should make it an annual event, but I don’t think there’s any need to wait that long. I had been waiting for a longer trip down here so that there would be a reasonably wide window, and next time I plan a trip I’ll mention it again. Maybe see you then!
bedtimeforbonzo: Picking your brain. I understand that the percentage of fuel efficient cars sold in Canada last year was significantly higher than in US. I don’t remember the numbers but recall being struck (something like 54% versus 18%) Do you have any theory as to why this would be?
I had impression that Americans generally were quite oblivious to the cost of gas, until relatively quickly the price shot up so dramatically. And then the resale value of many gas guzzlers collapsed.
Do you suppose the sudden shock caused buyers to hold back until they could evaluate, or confronted with dramatic depreciation in existing vehicle couldn’t afford to turn and and buy new, or primarily bank credit squeeze?
ScentofViolets, please reading the posting rules and don’t make us ban you.
At this point I would suggest that you take a breath and return to substantive points.
Sure: If we’re going to make people guilty for a financial crisis because they profited from the boom-before-crash, then this homeowner is likely included in the group.
See, this is what makes me think that you’re playing a satirical game. Here, rather than defending a position (ie that everyone is guilty), you’re just pointing out that this position is analogous to the position that all financial services workers are guilty. “If we’re going to” sort of language specifically- it’s the sort of language I expect in a reductio ad absurdum (ie assume a position and then examine the consequences- if you reach a fallacy, then the position is wrong).
But that is not the same thing as actually defending the proposition. Some of the time you seem to be seriously suggesting that someone who took advantage of an inexpensive mortgage actually carries some moral responsibility for the crash(but what should they have done- insisted on a higher rate? put off buying a home for 5 years because they didn’t want the moral responsibilty?), other times (such as this one) you seem to be using this argument to ridicule those who blame everyone who worked in financial services.
If you’re actually assigning moral responsibility, I can’t accept it. Your formulation that the recession brought on the financial collapse puts the moral agency in the wrong place.
To repeat the analogy: if I bet my kid on a basketball game, the players are not morally responsible for my loss or my crime. Even if they made bad basketball decisions that led to the loss, they bear no responsibility because they were not the ones making the bet. As in this case, they may even not be *aware* of the bet.
If it weren’t for the financial wizards and their lobbyists, we might have had a mild recession. It was their bet on our game, not us, that caused the financial meltdown.
I haven’t been following this very long thread, so I apologise if I’m repeating this, but I didn’t see the story about the AIG bosses in Paris quitting when I skimmed through the multitudinous comments above.
It’s well worth reading, but I found this bit particularly interesting, and alarming:
In the wake of their resignations, AIG must replace them to the satisfaction of French banking regulators.
If they don’t, French regulators may appoint their own designee to manage the bank — an outcome that could trigger defaults under the bank’s derivative contracts. The private contracts say that a regulator’s appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes.
Fraud Guy, I sympathize with your situation, but your example cannot be correct. People who get mortgages have an idea of what their salary is, the other kinds of debt they’re carrying, and how much the monthly payment will be (as well as whether it’s fixed or variable). The fact that they might be approved for mortgage X doesn’t mean that they are forced (or should) take mortgage X. You don’t need a PhD to make these kinds of decisions. It’s called life.
That doesn’t mean that there weren’t people who were defauded, that there wasn’t sleazy behavior on the lending side, or there aren’t examples of folks who did everything right but because of circumstance (loosing a job, health problems) lost their home. But, c’mon: a little personal responsibility, please.
Sigh. How have I personally benefited from anything that has gone on lo these past 10 years? Where have I criticized everyone on Wall street has being on the take? What would I have had to have done to make me not be at fault, even partially?
I’ll repeat my question from upthread: did you receive (or refinance) a mortgage in the last 10 years? And I’ll expand: Did you receive a home equity loans? Did you enjoy low interest rates on a credit card?
But that is not the same thing as actually defending the proposition. Some of the time you seem to be seriously suggesting that someone who took advantage of an inexpensive mortgage actually carries some moral responsibility for the crash(but what should they have done- insisted on a higher rate? put off buying a home for 5 years because they didn’t want the moral responsibilty?), other times (such as this one) you seem to be using this argument to ridicule those who blame everyone who worked in financial services.
Carleton, I’d put it this way — and hope that it squares what you seem to think is a circle in my reasoning. “Some of the time you seem to be seriously suggesting that someone who took advantage of an inexpensive mortgage actually carries some moral responsibility for the crash” as an AIG worker like DeSantis. (Italicized addition mine.) Does that make my point clearer?
byrningman,
So on top of everything else, among the side bets that AIG made is one for over $200 billion that they would not lose certain employees, or that they would be able to replace them if they lost them.
Ludicrous; simply ludicrous. I can’t think of an analogy that is not as risible.
Actually, it reminds me of a favorite joke:
How many surrealists does it take to change a light bulb?
—
Three
—
—
—
Two to fill the bathtub with jello and four to paint the house green.
By that token, von, for the Iraq War and all attendant crimes:
Those who were incompetent or did criminal acts should be punished proportionately. If you’re looking for vicarious guilt or guilt-by-association, however: look in the mirror.
You believe that Bush, Cheney and the rest should be tried for war crimes then? ‘Cuz on this issue, the face in the mirror is you, not me.
What? Are you saying this is not ‘substantive’:
Nor have I said anything that I can be banned for. Haven’t we already established that comments like this:
or like this:
or like this:
are perfectly acceptable, not insulting at all. I don’t see anything that’s impugning poster in question, no suggestion that some sort of wildly inferred intentions or emotions are causing the poster to make bad arguments, rather than addressing the arguments themselves, right? No bizarre playing around with a posters handle either.
Right?
So, what, precisely, have I said that is out of line?
Does that make my point clearer?
Actually, I don’t understand what you said there very well, with the italicized bit. I don’t think it parses.
Can you tell me this: do you really think Im morally responsible for the crash because I paid a low rate on my credit card? Should I have demanded a higher rate, or refused to use credit cards so I could avoid this moral stain? Of course, I would’ve also needed to be a precog to avoid this responsibility. And, of course, I’ve always *paid* my credit card bills, so I haven’t made irresponsible decisions either.
Please, don’t analogize to DeSantis’s situation, just argue that point on its own merits. When you use DeSantis, I can’t tell if your actually arguing for the position above or not. It’s like listening to “Just Like Brian Wilson” without knowing who Brian Wilson is, when you analogize to DeSantis’s hypothetical guilt without saying whether you agree with that guilt or not, I just don’t know what you think.
Did you enjoy low interest rates on a credit card?
Due to the South Dakota exemption, rates have gone up in the last few years, but thanks for playing.
In spite of all sorts of reasons given why “us” is not to blame (from Nate and others), you continue to assume this collective guilt nonsense without anything to back it up. So please: give us a more detailed arguement than “you breathed the same air as AIG, therefore you’re just as guilty!” or drop this silly concept.
=============
SoV, whne both hilzoy and Sebastian (or either one alone, for that matter) tell you to tone it down, the correct response is not to argue or whine but to it it the frick down. Capiche?
And I will repeat my answer to your question from upthread:
And though you’re clearly reaching here, I’ll go further and say that I haven’t had a credit card since ’96 or thereabouts.
Now, would you either quit stalling or just admit that you were wrong? You said your piece, now take responsibility for it. No more waffling.
ScentOfViolets, I think this:
qualifies.
No, you didn’t say it to von, but you did violate posting rules.
“So on top of everything else, among the side bets that AIG made is one for over $200 billion that they would not lose certain employees, or that they would be able to replace them if they lost them.”
This is why Liddy figured not renegotiating the “bonus” contracts was a good business decision. Why presumably the representatives of the Federal Reserve thought it was a good decision, why whoever reviewed it at the Treasury Department thought it was a good decision.
And, of course, I’ve always *paid* my credit card bills, so I haven’t made irresponsible decisions either.
And, of course, up until recently the credit card companies considered you a ‘deadbeat’ for such responsible borrowing
Apparently so. But that was yesterday, and for reasons I have already clearly stated. What is being objected to, as far as I can tell, are the words of other people that I am using. The words that I took exception yesterday, and why I wrote what I did above (along with that explanation, and a suggestion that we refrain from those types of attacks.)
Now, I would really appreciate if either:
a)people would get off my back for using the words of other people, who apparently have caused no offense with their use, or
b)at long last finally admit that what others posted and that I responded to was nasty and abusive.
I dislike contradictions, uneven privileges, special pleading, that sort of thing. Either tar us all with the same brush, or tar none of us. Don’t try to pin one guy down while letting the other guy slide. Frankly, I don’t see how this can be construed as anything but fair.
To repeat the analogy: if I bet my kid on a basketball game, the players are not morally responsible for my loss or my crime. Even if they made bad basketball decisions that led to the loss, they bear no responsibility because they were not the ones making the bet. As in this case, they may even not be *aware* of the bet.
This summarizes my view pretty well. If I stupidly bet Tiger Woods that I can beat him at golf my loss is my fault. But if you make a much larger side bet on me, and when you lose find that you can’t pay your kids’ tuition, that’s not my fault. It’s yours. The consequences of AIG’s imprudence are the responsibility of AIG.
As I’ve said before, I don’t really think the poor quality of the underlying mortgages was the major contributor to the problem.
You can make bad side bets on good mortgages also. You can bet more than you can afford to lose on good propositions. You can Or, you might bet a reasonable amount on Woods in my hypothetical match. That would be smart, unless you bet with someone who can’t pay.
What happened here is simple. The financial markets are supposed to price risk. They did a lousy job. Criticize foolish home buyers for taking excessive risks, if you want, but the fact is that the financial markets are supposed to be able to deal with that. It’s a big part of what they are there for.
I think, Sebastian (and Hilzoy, too) that if you’re looking to ban SoV, you really should ban some others here as well. Such as, for instance, von.
And though you’re clearly reaching here, I’ll go further and say that I haven’t had a credit card since ’96 or thereabouts.
Now, would you either quit stalling or just admit that you were wrong? You said your piece, now take responsibility for it. No more waffling.
OK, Scent of Violets, assuming you also don’t own any stock, I give you the official von-blessing: You are in no way responsible for the current economic downturn. You behave irrationally and to your long-term detriment, but, by not doing anything of economic note, you are neither a benefit nor a drag on the system. Hurray!
ScentOfViolets, your post at 5:22 p.m. today is inaccurate.
When a variety of regulars here are telling you that they agree with your views but disagree with your manner of expressing them, someone who has the kinds of credentials and intelligence that you claim as your own should do the math and tone it down. Do it. (This is now an instruction, not a request.)
Uh, Hilzoy? Sebastian?
Could we have a strike against von please? I don’t know how to construe this as anything other than insulting:
It’s also wrong on the face of it of course, seeing as how my ‘irrational’ behaviour has saved me thousands, if not tens of thousands of dollars and not possessing a credit card does not in any way equate with not ‘doing anything of economic note.’
I think, Sebastian (and Hilzoy, too) that if you’re looking to ban SoV, you really should ban some others here as well. Such as, for instance, von.
CJ, feel free to email me at vonofobsidianwings@hotmail.com if you have particular comments of mine that you think crossed the line. I’m receptive to feedback.
It’s also wrong on the face of it of course, seeing as how my ‘irrational’ behaviour has saved me thousands, if not tens of thousands of dollars and not possessing a credit card does not in any way equate with not ‘doing anything of economic note.’
Well, if you live off the grid, as you contend, you are not doing anything of economic note. It’s an observation, not a personal attack. Gandhi, for instance, did very little of economic note in his personal life. He’s not exactly a bad guy.
Gandhi, for instance, did very little of economic note in his personal life.
Kinda depends on whether or not you think that India being an independent country is of economic significance…
“I had impression that Americans generally were quite oblivious to the cost of gas, until relatively quickly the price shot up so dramatically. And then the resale value of many gas guzzlers collapsed.”
JC: In general, you are exactly right. We were oblivious toward the price of gas — less so when it hit $3, then we really woke up when it $4.
At first — last spring, early summer — I noticed a lot of buyers trading out of SUVs and big cars for more fuel-efficient vehicles. Then, in late summer and fall — the worst being in October and November — the credit markets dried up. After that, buyers seemed afraid to make a move, period. And now, they’re being cautious (which seems smart to me).
That 5-2 ratio (purchasing good-gas cars vs. bad) is impressive, but it does not surprise me that Canadiens are more green than we are: Americans have had a long love affair with big cars and trucks and it is not going to end overnight.
I mentioned to Hilzoy the other day that we have seen a significant increase at my dealership in demand for trucks and SUVs the past two months — pickup trucks especially. So old habits are indeed hard to break.
SOV,
So, what, precisely, have I said that is out of line?
In fairness, I think von’s Ph.D bit was out of line, and while von has been patient he also IMO should retract that- the moderators owe a stricter adherence to the rules.
But if you felt that was out of line, you should have merely called von on it. One slight by someone does not open the door to repeated postings of insults in return.
As I pointed out on a previous thread, entire paragraphs of invective are just not going to fly here, no matter the provocation. Likewise, constantly escalating is a very bad thing- your exchange with AJ, where he claimed that your reasoning was flawed by anger, and you claimed that he was stupid and that you could ‘wipe the floor with him’, or your exchange with Johnny Canuck, where afaict you retreated to calling him a weasel when presented with a complex argument about autoworker pensions, using an earlier reference to anger as the pretext.
And frankly, from what I’ve seen, I don’t think anyone who suspects that you’ve got a lot of anger is making a significant leap.
Saying that someone’s argument may come from anger is not a violation of the posting rules, particularly not in the context of a larger discussion. Your incessant name-calling is a violation. Notice that even people who are sympathetic to you are pointing out that you’re coloring outside of the lines.
Nor have I said anything that I can be banned for.
I don’t think you understand how this works. Maybe you were looking for the words “ought to” instead of “can”. You are very close now I think, and you can either really try to understand where these people (left and right) are coming from, or not. If you want to stick to your guns and go down with the ship, so be it.
von: “There is at least one posts of yours that contains a broad attack on the “Masters of the Universe.””
The term “Masters of the Universe” comes from a Tom Wolfe novel, in which one of the main characters, who (iirc) works on Wall Street, identifies himself that way. As I used it, it didn’t refer to every single person who owns a job there, but to people like that character who have a specific, outsized view of their own importance, and their exemption from ordinary standards of conduct.
Note also: I haven’t written a word about DeSantis. Though, for what it’s worth, I don’t buy the idea that he’s not responsible: unlike the rest of us, he worked in a unit of several hundred people one chunk of which was busy making bets that came close to taking down the financial system. At that level of proximity, I think one generally has the ability to see that something is wrong, and to make one’s views known. If I am wrong, and he was working in a hermetically sealed room with no contact with his peers, I will of course conclude that he has no responsibility. Likewise, if it turns out that he did everything he could to get Cassano to stop what he was doing. But there’s no sign of that, and if it were true, I would have expected it to show up somehow in his op ed.
When a variety of regulars here are telling you that they agree with your views but disagree with your manner of expressing them, someone who has the kinds of credentials and intelligence that you claim as your own should do the math and tone it down. Do it. (This is now an instruction, not a request.)
Wow. A site owner/moderating repeatedly poking a poster with a stick, then trying to hide behind other posters when the poked poster actually tries to bite him? Amazing.
Hilzoy re: DeSantis: “At that level of proximity, I think one generally has the ability to see that something is wrong, and to make one’s views known.”
I’m not sure whether this is realistic. I don’t work in the realm of financial wizardry. I have worked in corporations though. Has anyone here worked in a corporation where if one sees something immoral, one can change the dynamics of what’s happening? I’d be interested in some testimonials where anyone was able to save the day, as Hilzoy expects that DeSantis might have been able to do. The fact is, it just doesn’t happen. You play or you leave. If you leave, how are you going to explain to the public at large what’s happening? I’d like to have an example of anyone, here or in the news, who changed the culture of a corporation by “making one’s views known”. It just doesn’t happen.
Von: I think your harsh — black-and-white — stance is not accounting for foreclosed victims who did not fall into the subprime or gimmick mortgage trap.
In this case, I think they truly were victims — losing a job in a down economy, coming down with an illness that prevented them from working, etc.
One thing I think I the Great Recession has shown is the vast amount of middle-class (and lower) workers who are living paycheck to paycheck — and are one downturn away from disaster.
I’m living paycheck to paycheck — things being more tighter the past year than ever — and have been a homeowner for the past 14 years. Does that make me unqualfied to be worthy of a mortgage? Or am I too high risk? You tell me.
wow, no one’s exactly covering themselves with glory here. bicker, bicker, bicker. Can we have a serious debate about serious issues without getting quite so personal?
No, probably not.
Von, you’re using the word “responsible” in a way that very few people are willing to accept.
Did many of the poster here benefit from the cheap money era? Depending on your job and the year you bought your house, it’s quite possible. I, for one, am perfectly willing to admit that much of the work I did over the last several years (entitling land and delivering water in So.Cal.) was directly linked to the boom.
Am I responsible for it? Uhh, no. I had no say in the appointment of Greenspan to Fed Chair and in fact voted against the president who made that appointment. I got no benefit nor am I responsible for the dot com boom and bust which led to the easy money era. I thought the repeal and roll back of banking regulations was a bad idea, but my congresscritter disagreed. etc.
The larger point is that by saying we’re all responsible you’re (not so subtly) advocating that no one is responsible.
That, however, is just false. The current bust is directly attributable to a Republican/DLC philosophy that the government regulation of business is bad, especially in the financial sphere. If we refuse to call out and analyze the particular causes of this bust, then we will fail to prevent it from occurring again.
Since your political philosophy predisposes you to argue against government regulation, your claim of universal responsibility is not surprising.
But it’s also not right.
Since you apparently don’t get it, that is precisely what my schtick is all about. In fact, I have called out the offending parties . . . to no avail. The claim seems to be that what was said wasn’t ‘really’ offensive. Since, in fact, I am only using their words (be my guest and check this out – nothing I have said today that is supposedly out of line was conceded to be so yesterday), there seems to be a slight contradiction.
As I recall that exchange, I was the one pointing out that you had made some rather ridiculous statements and used an ad absurdum argument that most seemed to feel proved the point. Could you be simililarly mistaken in what was said here? Let’s check:
Doesn’t read quite the way you would have others think, eh? Just a sharp reprimand, a warning of the consequences, and an attempt to return to the thread of the discussion. Doesn’t seem particularly angry now, does it?
Right. It’s nothing to do with teaching a lesson. Given your behaviour the last time we talked, you’ll pardon my skepticism.
Okay, challenge. Show us where this ‘incessant name calling’ crops up in anything I’ve posted today. If you look, you’ll see that I’ve been quite careful to say things like “I understand how your anger can make you say things that perhaps you didn’t intend to. “. You know, something that you’ve just said is not an infraction.
Or are you applying a double standard here?
I find it hard to believe you misread what I wrote that badly. I didn’t say anything about ‘oughts’ or the simple power to ban, I said that if one wants to be consistent, nothing I have said is worthy of banishment. You really didn’t see that? Seriously?
Okay, here’s the deal: saying things like that is rude and abusive, even if they aren’t a violation of the posting rules here. Perhaps you’re a bit on the young side, but I recall an occasion when a slightly older, much better dressed woman burst into the break room of our company in tears. Angry tears I should say: she had been in an executive meeting voicing some legitimate concerns only to be told “You’re cute when you’re angry”, which was an occasion apparently for general amusement and some guffaws from the older managment guys.
Yeah, that one’s a real knee slapper all right.
Or how about that perennial favorite one-liner, used on women who are telling you what to do and you don’t want to do it: “must be that time of the month again.”
I’m rolling on the floor laughing, that one’s such a killer. Not nasty or snide or a banning offense at all. Just good, clean fun.
Look, I don’t particularly care if you don’t get this, Carleton, but saying things like that are genuinely offensive. And apparently, more than a few people agree with me.
Finally, I might add that if you cause offense that you didn’t intend, the usual practice(so I was told by my mother), is to acknowledge it, state that you didn’t mean for it to be taken that that way, and say that you’ll avoid making that type of remark in the future.
You don’t ignore those comments, then whine later when those same types of comments are used against you. And frankly, I don’t know why von, et al won’t conform to this simple social convention. Maybe it just comes down to the fact that they really do know that what they said wasn’t kosher, but that owning up would cause some sort of shrinkage(actually, I think that just the reverse is what happens in these situations.)
Well, I’ve said my piece, and that’s the end of it, as far as I’m concerned. I trust that I’ve made my point, and in the future certain people won’t be quite so cavalier in their remarks. Oh, and if I cause offense unintentionally? By all means, let me know. I don’t by the remotest stretch of the imagination believe I am immune, that I never make thoughtless, demeaning remarks. But I think I’m big enough that it won’t cost me to admit that I did so 🙂
For what it’s worth, I think that most people understand the terminology to mean just what you say, rather than ‘everyone who works on Wall Street’. Even if they didn’t read “Bonfire of the Vanities”(not nearly his best, imho), there’s still the movie.
Exactly. And I think that’s what most people have been saying. They’re more than prepared to cut this man some slack . . . but the default assumption is that he was in some manner complicit, if only by his knowing silence. Show me some paper- or email trail that shows otherwise, and I’ll be much more sympathetic. Until then, bupkas.
Iow, the idea that there’s some sort of pervasive, unthinking, and reflexive mob hatred, doubtless a close kin to Bush Derangement Syndrome, just isn’t true.
In fairness, I think von’s Ph.D bit was out of line, and while von has been patient he also IMO should retract that- the moderators owe a stricter adherence to the rules.
That’s probably not my finest moment, true.
In any event, I think that SoV has now been warned by three front pagers (myself last), which seems a sufficient amount of time spent on him/her. Let’s direct the conversation in more interesting ways.
Kinda depends on whether or not you think that India being an independent country is of economic significance…
Hence my qualifier: “personal life.”
Von: I think your harsh — black-and-white — stance is not accounting for foreclosed victims who did not fall into the subprime or gimmick mortgage trap.
I actually thought that there was a great deal of grey in my comment. My point is that you and I are no less — but also no more — responsible for the crash than someone who worked in finance but wasn’t involved in any of the risky trading activity. That’s not an indictment of a victim of circumstances, much less you. It’s a request that we recognize that a group that is being vilified unjustly.
Though, for what it’s worth, I don’t buy the idea that he’s not responsible: unlike the rest of us, he worked in a unit of several hundred people one chunk of which was busy making bets that came close to taking down the financial system. At that level of proximity, I think one generally has the ability to see that something is wrong, and to make one’s views known. If I am wrong, and he was working in a hermetically sealed room with no contact with his peers, I will of course conclude that he has no responsibility.
I work in close proximity with literally hundreds of lawyers. I have no idea what many folks in my practice group in my office are doing, much less what many folks in my practice group in other offices or doing, much less what many folks in a different practice group are doing. (Oh, I general sense about many, but no idea as to the specifics. And the specifics are important.)
This may just be a difference in perspective. I have some experience with academia through my father (who’s the head of a department at a land-grant college). Most senior folks in a department have a pretty good sense of what others are going because (a) it’s a smaller world and (b) it’s their job to try to grow the reputation and evaluate juniors.
(TO)Francis makes an interesting point, which is
Did many of the poster here benefit from the cheap money era? Depending on your job and the year you bought your house, it’s quite possible.
Getting away from looking at mirrors and deciding who is to be judged, perhaps we can agree on the fact that what the financial crisis has done is to make random rewards. So rather than try to determine guilt or innocence from how much someone has benefited, one could simply adopt the notion that the haves need to give to those who have not. I realize that this may reek of class warfare, but by making random the rewards of hard work, we as a society need to make amends. I realize this may be a bitter pill to swallow for those who invoke the mantra of personal responsibility and the necessity of government to permit failure in order to punish bad behavior and create the most efficiency, but you should ask who is making you take your castor oil and take it out on them. And consider that taking your medicine in small doses might avoid you being force fed the whole bottle.
Since I doubt that anyone disagrees with your latest reformulation, you’ve provoked a good deal of trouble to say nothing new. Why didn’t you just say this in the first place? Since nobody is for villifying someone unjustly, this thread could have died a peaceful death after maybe six comments.
SoV, I don’t think that your 8:48 comment either accurately summarizes my point or the debate that we’re having.
Could you then be specific about who’s doing the villifying, what they have said, precisely that leads you to think this is happening, and finally, who, precisely, is being villified? Your characterization of Hilzoy’s words to the contrary, neither she nor anyone else I can see is saying that we should kill them all and let God sort it out.
I submit that this is precisely what has so many people upset. They’re not upset because they’re Communists, or Socialists, or DFH’s. They’re not looking for a whipping boy or a sin eater to take out their frustrations. They’re not practicing class warfare. Quite the contrary.
The’re upset because the so-called free market isn’t working . . . and they want it to work right, not break it or abandon it. That doesn’t strike me as wild-eyed populism.
I actually thought that there was a great deal of grey in my comment. My point is that you and I are no less — but also no more — responsible for the crash than someone who worked in finance but wasn’t involved in any of the risky trading activity.
Ok, so you *dont* think that Im responsible for the crash because I used a credit card in the last 8 years, you’re just using this as a reductio- if everyone who benefitted from the boom is guilty, then we’re all guilty. Do I have it right?
Hence my qualifier: “personal life.”
I was kind of wondering about that. But then, who has had a huge economic impact in their personal life? Most people’s impact involves their professional/political/etc life. I mean, Bill Gates has had a pretty big economic impact, but his personal life is pretty quiet.
“The larger point is that by saying we’re all responsible you’re (not so subtly) advocating that no one is responsible.”
As larger points go, I think (The Orginal) Francis makes a good one, Von.
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SoV: I hope you don’t take this the wrong way because I always like to see new posters and I think they deserve a bit of latitude as being one of the new kids on the block. I also think you have more support than you realize. Sometimes it just seems more civil by toning down the rhetoric a notch. Not that regulars here, yours truly included, have not been guilty of using heated, perhaps over-the-line, rhetoric from time to time — hey, we’re all human, and, to some extent, I see that as healthy. But when it begins to dominate a thread is when I think — and when that’s pointed out by someone as even-handed as Carleton Wu — is when it would not hurt to pull back a little.
von: I dunno. I worked for a large bank once upon a time, and I had a pretty clear idea of what my (largeish) unit was doing. Certainly I would think that in a group in which a whole lot of your money is being made making bets that could take down the company, that fact would not be a total mystery.
You might be right, Hilzoy. My sense is that professionals* (doctors, lawyers, investment bankers, and, I’m assuming, traders) have a great deal of personal discretion. So long as they are making money, sufficiently senior, and not obviously screwing up, they aren’t carefully examined.
*I use the term loosely.
Ok, so you *dont* think that Im responsible for the crash because I used a credit card in the last 8 years, you’re just using this as a reductio- if everyone who benefitted from the boom is guilty, then we’re all guilty. Do I have it right?
I’m not trying to be difficult here, Carleton, but it seems that you’re trying to fit this into a little either/or box when, in fact, it’s both. Yes, it is a bit absurd (and reductio-to) to talk about large masses of folks having conscious guilt for the current economic mess. In that sense, I’m trying to demonstrate that efforts to blame equally blameless folk just because they make a lot of money or work in finance is silly.
But it’s not absurd, to me at least, in talking about each of us bearing responsibly for the current crash to the extent that we participated in and benefited from activities that turned out, in hindsight, to not-be-so-good. It may be that we’re a little too early to start down this path — lots of folks are still hurting — but the easy money that made me very happy when I bought my first home about five years ago is probably a direct contributor to the current mess.
Mmmm . . . possibly. But in my experience, letting people get away with snide little asides like the ones I was drawing attention to is the best way to keep things from going any further in that direction. Trying to pull things back from the edge after letting them slide for a while is a much, much tougher proposition. As just about every beggining teacher finds out to their sorrow.
Now, I don’t expect the offending parties will apologize to me, or even admit to my face that they made a mistake. That doesn’t appear to be in their nature. But I’ll wager that they’ll mind their manners a bit better for a while. Reepacheep, one of Lewis’s Talking Mice had something to say on the subject you might want to look up sometime. It’s in “The Voyage of the Dawntreader” where he spanks Eustace with his sword and the necessity of doing so.
By the way SoV: the folks who are saying you have a lot of support here are correct. I’m definitely an outlier on this site, so if you moderate your tone a bit you will find that people will want to hear what you have to say. Just a suggestion from someone who has been around here a little longer and seen it happen before.
Um, sorry, that was meant to be not letting people get away with snide little asides.
Since you apparently don’t get it, that is precisely what my schtick is all about. In fact, I have called out the offending parties . . . to no avail. The claim seems to be that what was said wasn’t ‘really’ offensive.
This bears no relation to what I wrote. What I wrote was that I thought von was wrong to say that, and that you could’ve pointed that out rather than taking it as an excuse to escalate insults. I did not say “call out”, I said “call him on it”.
Doesn’t read quite the way you would have others think, eh? Just a sharp reprimand, a warning of the consequences, and an attempt to return to the thread of the discussion.
You offered a baseless insult. You can call that a reprimand. But what you do not understand is that you are not permitted here to escalate what you perceive as slights with a barrage of insults. Your recourse is to point out to the person that they’ve strayed, and if it continues to ask the moderators to intervene.
Frankly, it’s also counterproductive. If you’d responded to von’s Phd comment by just reproving him, you’d look like someone who just wanted to discuss the matter and he’d have admitted going overboard. Whereas escalating insults followed by an offer to end the flaming is virtually guaranteed to not produce a reasonable discussion.
Right. It’s nothing to do with teaching a lesson. Given your behaviour the last time we talked, you’ll pardon my skepticism.
When you get banned, it will no longer be my problem. I could sit back and watch that happen. Or, I could try to point you in the right direction. I’ve flirted with banning on a couple of occasions, and I don’t always find the rules here reasonable. But feel free to assign questionable motives if it makes you feel better about being reproved.
Okay, challenge. Show us where this ‘incessant name calling’ crops up in anything I’ve posted today.
I don’t recall saying that you had done nothing but insult people. If that were the case I wouldn’t have bothered trying to help you understand how things work here. And it’s a subjective phrase, so no amount of challenging is going to determine an objective truth value.
And I don’t know why you think Id have a double-standard against you. I admire hilzoy. I disagree with von most of the time but we usually get along. I don’t get along that well with Sebastian, and I *really* don’t get along with Charles. I’ve got no particular reason to support the kitten (other than ‘this place works & Id hate for it to stop working’).
I find it hard to believe you misread what I wrote that badly. I didn’t say anything about ‘oughts’ or the simple power to ban, I said that if one wants to be consistent, nothing I have said is worthy of banishment. You really didn’t see that? Seriously?
Try applying that same logic to my statement, and you might find yourself unearthing meaning of a similar kind.
The rules are the rules. They aren’t my rules, Id probably do things differently. But these rules allow for a pretty good discussion between left and right. They keep things under control. If you don’t like those rules, you can follow them anyway, or you can break them repeatedly and get banned, or you can just leave preemptively. You want to argue about what you want the rules to be, but that is a basically fruitless argument to have.
Look, I don’t particularly care if you don’t get this, Carleton, but saying things like that are genuinely offensive. And apparently, more than a few people agree with me.
I don’t even know what you’re trying to say. You list several sexist jokes that would not be considered acceptable here as examples of what’s wrong with the rules here? Suddenly, everyone (including some women, as you may not realize) are sexists because you can’t make the rules or comply with the ones that do exist?
Back at you, von. Don’t make any snide remarks and you’ll get no trouble from me. I’ve got enough troubles without borrowing more. My philosphy on this matter, honed from life in general, years in the classroom, and now a teenaged daughter is not to let things slide too far before addressing them. If someone makes a smart remark behind your back and it’s only the second week of class, turn around and deal with the offender immediately; don’t let some threshold get established. It will only creep forward until people are arm-wrestling in their chairs when your back is turned . . . and Halloween is still a week away.
“But it’s not absurd, to me at least, in talking about each of us bearing responsibly for the current crash to the extent that we participated in and benefited from activities that turned out, in hindsight, to not-be-so-good.”
“My point is that you and I are no less — but also no more — responsible for the crash than someone who worked in finance but wasn’t involved in any of the risky trading activity.”
Which is it, von? In the example of DeSantis, he was an Executive Vice President at AIG FP. Even if his division was doing everything aboveboard, he was in an executive position, where he should have known what was going on in the rest of his office. And he also participated in, and benefited from, the bets that went on in the derivative market far more than you or I.
And the same goes for many other people at Wall Street. They were in positions to know, and the benefited and participated in what was going on to a much greater degree than everybody else. ESPECIALLY the executives, who are paid enormous sums of money to be responsible, and weren’t. The janitors at AIG? Not so much. Derivative traders, definitely. Junior clerk in accounting? Probably not so much. Senior Vice President in charge of Lobbying? Oh hell yes. Bank teller? Nah. Phil Gramm? Heh.
But which is it, von? Are people all equally culpable for the derivative bets, you and I as much as somebody who worked at a company that made them, in a high level position? Because you’ve said both in the last page. I, and I think many others, have been interpreting what you’ve said as the “we’re all equally guilty”, which is a cop-out to avoid dealing with the people and systems that really are guilty, or are you just saying that not everyone on Wall Street, and not even everyone at AIG is directly responsible for the way their company crashed the economy?
Shrug. It’s over, Carleton. Drop it. Don’t try to stir up trouble all over again. Let’s get back to the topic, okay?
Exactly so. I see that you use the word ‘many’ and not ‘all’ when referring to people working on Wall street. I suspect that is the case for most people. Certainly the ones I have seen are of this frame of mind. They don’t have anything in particular against Bailey Savings and Loan; they do have a few beefs with Countrywide they’d like to discuss out back with the executives of that firm.
I’m not trying to be difficult here, Carleton, but it seems that you’re trying to fit this into a little either/or box when, in fact, it’s both.
Fair enough. I was really doing some head-scratching there, thinking: if he is serious, then it’s not a reductio because the endpoint isn’t a contradiction any more. But then, over here, he seems to be ridiculing those who blame DeSantis using his own argument’s falsehood as the proof. It was like that Star Trek episode with Harry Mudd.
[I just googled to get the name right, but I thought it was “Harvey Mudd”. And what do I find? Harvey Mudd College. I wonder if they teach smuggling and drinking classes? I bet the graduates get that all the time, from boomers anyway].
As far as DeSantis is concerned, I can’t really bring myself to care. Im sure some people in the industry knew that things were rotten. Im sure others lacked the information, or imagination, or foresight, to see that they were. I just can’t care because of all of the raw deals people have got from the economy in the last year, his seems like one of the least possible raw deals. He is very rich, but slightly less rich than he would have been- Im almost certain that I could find someone getting a much worse deal in 15 minutes on a downtown sidewalk here.
It’s not class warfare, I don’t hate the guy or want him to lose money. I just don’t see what the fuss is about, other than the very wealthy class boggles at the idea that it’s possible for them to get occasionally get boned just like ordinary folks, but with fewer bad consequences to them personally.
And over this, Brett is ready to leave the country. Not, say, the results of The Innocence Project- poor minorities wrongfully executed, Brett loves America. Rich guy doesn’t get to keep his bonus because his company ran itself into the ground, Brett wants out.
Carleton: First, thank you for your efforts to improve civility. I thought I could best help by silence on the point, but perhaps I was just being lazy. On reflection, I think yours is the better way, if one has the energy.
second, I was listening to a lecture by the novelist Margaret Atwood (probably best known for the Handmaid’s Tale). In it she mentioned a experiment with 2 monkeys. Both needed to cooperate to get the food treat; if one got the treat and didn’t share, the second monkey would thereafter stop cooperating. Rather punish the other monkey than risk the chance of not getting a portion of treat.
I wasn’t concerned whether people cared about DeSantis. My position has been that self-interest should lead to the payment of the AIG bonuses so as not to jeopardize the unwinding of AIG FP and taxpayers getting their money back.
I guess I am naive to expect rational self-interest to prevail over the opportunity to punish perceived villains.
As to what DeSantis must have known, my experience predisposes me to the same default position as Von and the opposite of Hilzoy. I suspect titles way mislead. In some organizations vice presidents may know what is going on throughout the organization; in others only what the people below them are doing.
But, you see, with tar and brushes, almost nothing gets a completely even coat. Especially the first coat, when the brush is kind of dry and the tar isn’t fully adhered, and the surface being tarred doesn’t have that initial smearing of tar that all subsequent coats adhere to.
This thread is suddenly deficient in pie.
Completely devoid of pie, at this point. Will no one remedy the pie shortage?
Johnny – the second monkey is correct, right? If I withhold co-operation I pressure monkey 1 to share in good faith. If that pressure ends up ineffective, well.. better I spend my time swinging in the trees, than laboring to make some other monkey rich.
One nuance I think we’re skipping is that (from what I read, here and elsewhere) the populist rabble-rousing and bonus outrage started on the *right*, at least at the political level. Republicans trying to throw red meat to the base and saddle Obama with the bad PR of bailing out *their* good buddies on Wall St.
You thought our Democrats were gonna wear both sides of that? Well, maybe a couple years ago you’d have been right.
I guess I am naive to expect rational self-interest to prevail over the opportunity to punish perceived villains.
Despite your expectation that monkeys ought to behave in accordance with your ideology, primate evolution has long had a well-known liberal bias.
A quiz. Which is more to blame for the current financial crisis?
A)
B)
If you picked B, congratulations, you have what it takes to make it in today’s conservative movement! Enjoy this free ticket good for one passenger on the Rush Limbaugh Limousine Ride to Irrelevance.
now_what: I don’t get to choose anything related to our trade deficit? Or the Fed’s refusal to use its powers to regulate the mortgage industry?
*pouts*
So von is a ham-handed postmodernist, and probably should think twice about posts like this in the future.
And Anonymous’ 7:33 post has more than a kernel of truth in it because of that.
MattH, I may be “ham-handed,” but I don’t think my call for personal responsibility is properly characterized as “postmodern[]”. (Even accepting that “postmodern” can mean almost anything ….)
Wrong interpretation of postmodernism, but then maybe I mistook your reason for posting this. If so, I take back the postmodern moniker and any suggestion that you might have been attempting any level of satire beyond a purely superficial one. Too bad Carlton’s viewpoint is wrong then, and Nate’s spot on in everything he’s said.
[In this case, by postmodern, I mean that you took an outlandish position in an attempt to illustrate the absurd position of your opponents, and get them to realize the absurdity of their position, but that only works if you really don’t support said outlandish position. So in this case, Nate “wins” and you “lose”.]