I will yield to few people in my tubthumping (great disc, btw) populism, and my belief that we’re as screwed up as we are because of regulatory capture by the wealthy and powerful.<\/p>\n
And yet I want to take most<\/a> of the commentariat<\/a> [who are breathless over the AIG bonuses]<\/i> out behind the woodshed with my 1-3\/4″ Kramer horsehide belt and see that some attention is paid.<\/p>\n Why?<\/p>\n Because they are, collectively being idiots. And when I hear about Obama<\/a> being “sick” over it, he’s being an idiot too. Look, it’s like this. Now I’ve been involved in a lot of workouts, and I know a lot of people who do workouts for a living, and there’s always a key problem – which is how you preserve key assets (or defend against key liabilities) which usually involves spending money on things that you might not otherwise do.<\/p>\n In the case of AIG, the case made by the CEO who was put in to clean the place up seems pretty compelling to me. If you simply break all the contracts, you have two problems – you’ve now broken a lot of enforceable contracts, and you’ve pissed off the human capital that you need to work things though without doing a firesale liquidation.<\/p>\n You can always break or remake contracts – simply threaten to go out of business otherwise.<\/p>\n But the reality is that even in this market, a bunch of the people we need to unwind the mess will probably take a hike – and that’s going to cost me money. You too, if you care.<\/p>\n There is, of course a fine line between paying what you have to in order to keep the wheels turning and looting. I’d like to see a case that someone makes, with real data, that supports looting.<\/p>\n And even if there is looting to the tune of forty or fifty million – how do you balance that against the $100 billion or so that we’re all at risk??<\/p>\n And to people<\/a> who crow about automaker union concessions, I’ll suggest two points: 1) that there is a small but important difference between prospective and retrospective changes in contracts; and 2) that the prospective pay of the AIG employees is being cut as well.<\/p>\n Fewer pitchforks, more calculators please.<\/p>\n edited for clarity<\/b><\/p>\n And go see Tom McGuire’s great posts<\/a> on the subject<\/a> (ht Tim Oren).<\/p>\n –<\/p>\n","protected":false},"excerpt":{"rendered":" Armed Liberal is frustrated at all the people frustrated with the AIG bonuses.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"_links":{"self":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts\/2024"}],"collection":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2024"}],"version-history":[{"count":0,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=\/wp\/v2\/posts\/2024\/revisions"}],"wp:attachment":[{"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2024"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/marcdanziger.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
When you’re doing a workout, you have two choices. Close the doors and let the creditors collect what they can, or do a workout. When you do a workout, you accept the obligations of the entity and work to negotiate what you can, accept what you must, and try and either arrange an orderly dissolution or the transformation of the company into a viable ongoing entity.<\/p>\n