Who hasn't read or heard about the US$165 million bonus which AIG executives took for themselves. Whether it is capitalism gone mad, plain excess or ineptitude in the light of the current GFC doesn't really matter in the end. AIG and that bonus is etched in people's minds.
As Governments around the world grapple with excessive remuneration for executives - many of them plain duds and even getting a "packet" when they walk away from the wreck - the way the Obama administration has dealt with the AIG debacle has, rightly, attracted criticism. Now the US wants to tax excessive bonuses or payments at 90%.
In his usual way Nobel Prize [for economics] winner, Paul Krugman, puts it all in context in this piece in the NY Times:
"Preliminary thoughts on the tax bill:
1. It’s not the way you should make policy — it’s clumsy, and it will punish some innocent parties while letting the most guilty off scot-free
2. But — there wasn’t much alternative at this point. And for that I blame the Obama people.
I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.
This was bad analysis, bad policy, and terrible politics. This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism."
As Governments around the world grapple with excessive remuneration for executives - many of them plain duds and even getting a "packet" when they walk away from the wreck - the way the Obama administration has dealt with the AIG debacle has, rightly, attracted criticism. Now the US wants to tax excessive bonuses or payments at 90%.
In his usual way Nobel Prize [for economics] winner, Paul Krugman, puts it all in context in this piece in the NY Times:
"Preliminary thoughts on the tax bill:
1. It’s not the way you should make policy — it’s clumsy, and it will punish some innocent parties while letting the most guilty off scot-free
2. But — there wasn’t much alternative at this point. And for that I blame the Obama people.
I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.
This was bad analysis, bad policy, and terrible politics. This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism."
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