It's been a long time since I posted some outrage about the financial system, mostly because there is a whole lot of nothing new going on.
But here's something new.
The news has been swarming around the tremendous about of "OUTRAGE" people feel over the AIG bonuses for the last couple of weeks. Of course, most of the folks I actually know don't know the difference between these bonuses and any other particular parcel of the bailout money, but hey, the media and the politicians say we're outraged, so we must be.
What is new is that a couple of AIG employees have responded in open letters to the public and their management. First Jack DeSantis' open letter of resignation [from AIG FP] was published in the NYT, and now "a letter purporting to be from en employee at AIG's Financial Products", posted on The Business Insider's blog Clusterstock. (Though there is no name on the second piece, it seems most are considering it legit. Also, I must "hat-tip", as they say in the econo-blog world, to FT Alphaville, for pointing me towards these interesting specimens, as they never fail to do).
These letters exhibit the good old OUTRAGE of employees who were told they would be paid a fee, which they have recently learned will not be paid because the gov'mint finds it expedient not to pay them. This is besides the fact they were not specifically responsible for the cartwheeling down-in-flames failure issue AIG seemed to have, and because they were hired to stay on after the failure to wind down the business. So they say.
But what I find really interesting is the tone of these two pieces. These voices are not the whinings of bankers who are crying as their car services and country-club memberships are torn from their claws, or those shredding documents and packing gold bars of US Treasury money into attache cases (though their salaries do make me want to spit). These are not the Wall Street class we see in the political cartoons, spending taxpayer money while the rest of us head to unemployment (though they may have had to cancel their drug and hooker delivery services with pain in their heart).
Despite who these men might actually be, these letters are from men who are pissed off, because they are trying to work a complicated system, which nobody seems to understand or acknowledge--especially the government charged with saving the system.
Here are some choice bits:
"I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you [Edward Liddy, CEO of AIG], 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. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down."
"have spent over 15 years waking up at 5am and coming home late at night, playing by the rules, making thought-through, ethical and conscientious decisions in the framework of an industry that has existed for thousands of years and currently employs hundreds of thousands of people in the major financial centers. None of What I did was illegal, none of what I did was unethical, none of what I did keeps me up at night. I will happily stand in front of congress and justify every deal, every mark, every decision I made."
"The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press."
"What is happening in the US political system today is a travesty of fairness, basic rights and transparency. Where was this congressional outrage and mob-baiting over abu-ghraib, guantanomo, the failing educational system, the failing health care system, the incredible inequality of opportunity and outcome in the US, the illegal war in iraq and I'm sure this list can go on? This outrage is manufactured by the very politicians, Barney Frank, Chris Dodd, Andrew Cuomo and others who supervised the system, who took it's fruits as campaign contributions, to hide their own far greater culpability in the creation of the mess we are in. The crisis is systemic and the leaders of the system are trying to blame it on 10 guys in connecticut. Please, you should feel insulted to your core that the US political establishment tries to lie to you again."
"After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself."
"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."
"My team contained a Slovak physicist who in act of great courage and wisdom, defected from the eastern block during the cold war. A French civil engineer who would like to build bridges but couldn't resist the lucre of finance. A Russian-Jewish immigrant who has worked his way up from busboy in a brooklyn diner to key member of the the commodities business and an indian graduate of IIT who fixes his own broken electronics gear on his desk at work.. These people are not corrupt. They have earned their success. Their stories are even testament to the simple fact that anyone could come get a job in finance and succeed. If anything, the tragedy is that so many talented people worked in finance when they and society would have been better off with their efforts focussed else where."
"I am not shocked. I am an observer of US foreign policy. I see how the US corrupts, betrays, its principles lies, mis-names its deeds and turns on its allies all over the world all day every day. That this rot and corruption are now being evidenced domestically in the form of a McCarthy like witch-hunt of "bankers" is much less shocking than that they would kill a million Iraqi's and then declare victory for democracy. I am not shocked that in a country where only 30% of the population can name the three branches of government (but 70% can name an America Idol judge) that it does not seem important that congress is trying to pass ex-post-facto taxes or secure bills of attainder. It flows naturally that the vitiation of contract law doesn't seem worthy of remark. THE ENTIRE US SYSTEM IS COMMITTING SUICIDE. And why?
Because congressman only really care about the next election and care nothing about the long term. The same crappy incentive scheme that has destroyed finance is destroying the US government."
Whoa. I haven't heard many citizens that pissed off.
It strikes me that #2 is right--the entire system is crashing and burning. Not for the usual reasons: the sell-out nature of the capitalist system, the inequalities of materialist culture, or the contradictions of commodities. It seems to me, in the words of God Speed You Black Emperor, "The car is on fire, and there's no driver at the wheel." It used to be assumed that government was inept and do-nothing, but at least we had our strong market economy as the gears. Well, those gears slipped, and what we're finding out is that there is nobody, but nobody who can figure out how to put humpty-dumpty back together again.
Sure, folks can understand how derivatives work. Really, its just a complicated contractual give-and-take. There are even people who are fairly good at developing algorithms to track how these contracts are functioning, and determining worth, for lack of a better term. But for goodness sake, there is no fucking wheel on this ship. Nobody can steer the thing. How can you have direction, how can you have "growth", if there is no way to determine your heading? The boat tends to head west, with allowances for cyclical turns to the north, south, and east?
This is our system.
Nobody has confidence, because it is headed in the direction of failure. If we whip round again, some people will be confident. But when will people start to ask for a better boat? Are we really not capable of making one? We went to the fucking moon! Or are we just too scared to try, because we are worried about preserving our concept of "ownership", because goddamn it, the minute it's not "mine", someone is going to rip it out of my hands.
Well, I'm not going to solve that problem here.
But here is something else worth mentioning: in addition to no one knowing how to steer this thing, we barely even know starboard from port. The information is all locked up. These two letters divulge more about the finances of AIG than we know about just about any bank right now--because even if we can find the information, we don't know whether or not they are lying. You want to know whether or not we're headed west? [Paints arrow on deck, pointed forward, labeled "WEST"/enacts PPIP] There! We're heading west!
Letters like these are what we need. Alphaville called for a banker "Truth and Reconsiliation Commission" before things really get out of hand. I think they are right. Our new era of "hope and openness" or whatever is most likely not going to provide it, because "hope and openness" seem to actually mean "gloss and boundless optimism".
You know, right now I would settle for anyone who would say these things:
This is exactly what is going on
This is what I think it means
This is how we're going to fix it
And this is how we'll make sure it never, ever happens again.
The only people who are saying anything like this are the guys now resigning from AIG, because at least they've got the first two down.
We need a oral history team to Wall Street now, while all these guys are still pissed off. Otherwise, in another mess of years we'll be in the same place again.
Predictions for 2012
5 years ago