Is there a "other side" to this AIG bonus fiasco?

[Anaconda]

Quote from jficquette:

Those bonuses were based on agreements signed at the end of 2007 for 2008 payable in 2009.

You don't have an employee working under an agreement and then tell them too bad but we can't pay what we agreed too because its not politically correct.

Its all a smoke screen anyway. Now we now why AIG is getting all of this money. Rather then pay off the foreign banks and wall street directly the Government is funnelling it through AIG to pay out in insurance claims.

If you want to break agreements, tell GS and Dueste Bank and other parties that they can't have their insurance payoffs and save hundreds of billions.

Why is this a very difficult concept.

These firms are inherently BANKRUPT!!! No bank would lend them, there is no bond market for them, these is no fund raising via private investors or stock sales (not enough to keep them afloat).

Please use your wonderful logic and please explain exactly how an employee would be able to demand the rest of his annual salary & bonus if the firm goes bankrupt and is illiquid.

 

[Anaconda]

Quote from TGregg:

In finance, it's different. Part of the job offer is a guaranteed bonus. It says right in the offer letter something like "This offer includes a guaranteed bonus of $xxx,xxx to be paid yearly in mm."

No, it does not work like that.

Whatever you want "guaranteed" becomes a salary. You're simply promised a bonus, which may not be to your liking when you get it and would cause you to leave the firm. Lately, the contract implied a range for bonus, but there is no guarantee.

Even the salary has no guarantee, neither does an employment contract in cases of force majeure, which I think this situation falls into.

 

[texrex2002]

Quote from trendlover:


You are saying all the bets should not be paid, and make all the swaps contracts no good for everyone? All bets off?

No. I am just pointing out mental hypocrisy. Fullfilling hundreds of billions of dollars worth of "legal contracts" isn't spawning nearly the outrage as fulfilling a much smaller number ($165million) of "legal contracts."

Both sets of contracts were entered into foolhardily by one or both parties.

There is conceptually no fundamental difference between fulfilling one or another "legally binding obligation."

 

[Anaconda]

Quote from trendlover:

You are saying all the bets should not be paid, and make all the swaps contracts no good for everyone? All bets off?

That is essentially what happens when an insurance company fails.

 

[texrex2002]

Quote from TGregg:

It's like paying for a cab ride from New York to LA and bitching about a toll fare of $2.

I like the analogy, but its' really like someone forcing you under penalty of jail to pay for someone else's cab ride from NYC to LA. The person forcing you to pay for it then suddenly begins feigning tremendous disgust and outrage at the sheer gall of the cab driver to use one $2 toll road, and directing public and media attention to the toll (slyly distracting from the cab fare).

And the worst part is that it works, and you are somehow uneasy but generally supportive of the cab fare (because you don't really inderstand what happened), but all riled up about the toll...