Under construction...dgb, Mar. 31st, 2009.
Let us now talk about the possibity of a dialectical bridge beween Freud before and after his short little essay, 'Screen Memories' (1899), the major turning point between his 'pre-psychoanalytic traumatic and seduction theories' and his soon-to-be 'Psychoanalysis-proper' as trumpeted by the publication of his famous book, 'The Interpretation of Dreams' (1900). If it was the issue of 'sexuality' that became one of the main dividing points between Freud and Jung, then it is to the issue of sexuality -- and the polarity between 'sexual traumacy' and 'sexual narcissism' -- that we must return.
Much has been made of this controversial theoretical and clinical turning-point in the evolution of Psychoanalysis: many -- particularly feminists knowledgeable with what went down here -- would say that Freud basically abandoned women -- abandoned alleged female victims of childhood sexual assault -- and turned Psychoanalysis into a much more 'chauvanist men's club' that suppressed and distorted all evidence of childhood sexual assaults under the guise of 'childhood and adolescent sexual fantasy' -- most particulary, relative to a girl's love for her father.
I remember running into this issue for the first time when I picked up Masson's controversial book in the mid to late 1980s, 'The Assault on Truth: Freud's Suppression of the Seduction Theory' (1984, 1985, 1992). I even remember contacting Mr. Masson in New Zealand by email -- years after he had broken away (and/or been banished) from numerous psychoanalytic societies that he had belonged to (the International Psychoanalytical Association, the Canadian Psychoanalytic Society, the Toronto Psychoanalytic Society, and I believe, the San Francisico Psychonalytic Society. Cited from another of Masson's books, 'Final Analysis: The Making and Unmaking of a Psychoanalyst', 1990,1991.)
My first email to Masson was responded to by Masson with reasonable warmth as he wished me good luck in my work but still he did not wish to re-hash the Seduction Theory Controversy. My second email to him was not treated as warmly -- understandable I suppose in light of all the grief he had taken during those years, and/or also my lack of 'sufficient professional' credentials on the same subject manner.
Now here is the point I wish to make. As much as I loved reading 'Final Analysis' and 'The Assault on Truth' and Janet Malcolm's 'In The Freud Archives'(1983,84), and I probably side closer to Masson's last published points of view, and Freud's pre-1897 point of view rather than Freud's evolving post-1897 point of view: still, most memories -- plain and simple -- from an 'objective' epistemological point of view, cannot be fully or often even at all significantly trusted.
Let us just look at the anectdotal evidence we have here. It has been at least 15 years since I last theoretically invested any time and energy into this remarkable controversy, so excuse me if my own memory is a little rusty here: I said that I picked up Masson's book, 'The Assault on Truth' in the mid to late 1980s. Wrong! I just fished the book out of my personal library here, dusted off the cobwebs, and found out that the last publication date on the book was 1992. That means that I obviously bought the book sometime in or after 1992 but I 'remembered' it to be in the mid to late 1980s. So much for my memory. I read all three of those books that I just cited above but do I remember which book I read when, and in which order, and how far apart the readings were? I am obviously more than a little suspicious of my own memory at this point. Logically speaking, I would imagine I read 'Assault' first, then 'Final Analysis', then Malcolm's 'In the Freud Archives'. But don't quote me on that -- and I certainly would not want to put my hand on a bible in a court of law because if I did, I would probably have to say simply, 'I don't know'. Do I remember what year it was that I emailed Masson in New Zealand. He was working on 'animal psychology', I believe, by that point in time. (Certainly less stressful than 'human psychology' -- especially when it comes to the subject of 'sex' and 'sexuality'.) Maybe one day I will find the email in my own archives here with a date attached to it. But other than that I can only guess that it was somewhere around 1995-97. Again, don't quote me on that because my memory right now is not holding up to the test. It is certainly flawed.
Do I at least partly make my point? A therapist has no right to totally or even necessarily partly trust' the 'objective epistemological correctness' of any memory that a client cites to him or her for the simple reason that it is a 'memory' and memories can easily fail, distort, embellish, discard...in short, they are very narcissistically biased'. To trust a memory in a court of law -- without substantiating empirical evidence and other credible witness reports is downright ludicrous -- putting a man (i.e., it is usually but not always a man who is being accused when it comes to issues of 'past childhood sexual assaults') in jail on the basis of the unsubstantiated memories and testimony of an alleged victim is hugely dangerous and I would even say ethically and legally reprehensible unless these memories and testimony are otherwise substantiated. (And as far as 'narcissistic bias', let us not forget that you have lawyers who are functioning like 'pre-Socratic Sophist mercenaries' who are paid handsomely to deliver fancy rhetoric and persuasive logic that is designed to narcissistically serve their clients goals and wishes regardless of how close or how far their clients' goals and wishes are connected to any form of 'objective, epistemological truth'.
We have come full circle and the epistemological and legal dangers that Freud ran into in the mid to late 1890s when he started to have second thoughts, and then abandon, his infamous Seduction Theory, are as real and dangerous today as they were back then. 'Subjective clinical-therapy memories' have no business being called 'epistemological truths' -- regardless of how 'epistemologically real' they may seem. The same point needs to be made with a hundred times more force when we start to talk about an alleged 'unconscious' and/or 'reconstructed' memory. None of these memories should have any legal force in a court of law unless they can be 'empirically substantiated beyond any reasonable doubt' by other much more credible and stronger forms of evidence. And this does not mean a woman's 'psychological/emotional/physical symptoms' or a psychologist's so-called professional testimony.
Psychologists and psychiatrists can be hugely narcissistically biased simply by the orientation of their training. Who's giving the testimony -- an orthodox, Oedipal Complex believing, Psychoanalyst? Or a 21st century feminist psychologist who may have been sexually assaulted herself and who may be projecting her own situation onto her client (in Psychoanalysis this is called 'counter-transference') and 'subconsciously looking' for evidence of a sexual assault in her client in practically every symptom that she portrays, and in every memory, conscious or unconscious, legitimately told to her or 'interpretively reconstructed' by the therapist. This presents a huge 'epistemological and ethical danger' not only to psychotherapy in general -- regardless of psychological orientation, orthodox Psychoanalytic or the opposite -- but even more so once this whole psychological and epistemological charade moves into a court of law.
Do I believe that guilty men should be held accountable for their 'sexual assaults'? Of course, I do -- if they can be legitimately proven in a court of law -- and allowing for the fact that there is a very big difference between 'inappropriately making a pass at a woman' and 'rape'. They should not be treated the same -- and even as I speak there are many men terrified of making a pass at a woman, even having sex with a woman for the first time without the petrifiying thought that she could ruin his life just by 'turning on him' the next morning.
The laws for 'sexual assault' and nowadays 'domestic assault' are getting broader and broader, with less and less 'empirical evidence' needed to get a legal conviction.
In effect, this means that we are now getting more and more of the opposite kind of problem than we used to have. Now, instead of far too many men get away with serious sexual crimes that they should have been convicted of with significant sentences, now we are convicting men and throwing men into jail left, right, and centre, on the basis of laws that are narcissistically biased in favor of women and on the basis of 'narcissistically biased evidence' that would never have been considered 'empirical evidence' back before our domestic and sexual assault laws started to change.
In effect, the Seduction Theory rules again in North American law -- whether we are talking about recent adult or childhood memories -- with or without any kind of 'legitimate supporting empirical and/or witness evidence'. North American domestic law used to be narcissistically biased in favor of men. Now it is narcissisically biased in favor of women.
As if women are incapable of lying, manipulating evidence, embellishing and distorting facts, creating false testimony, making themselves out to be 'angels' and 'victims', noncapable of violence themselves of course, non-capable of 'instigating trouble', or 'retaliating to rejection' or 'seducing men in their own right'...all of these potential complications to the 'epistemological truth' in both a psychotherapist's office and even more so in a court of law go out the window in today's North American world of 'feminine -- and feminist -- overprotection'.
So how in the name of God or Zeus or Apollo could Freud give any pretense to 'finding epistemological memory truth' in his clinical office in 1895 when in 2007 we are no further ahead -- epistemologically poisoned equally from both sides by an overbelief in both Freud and/or the opposite pro-feminist, anti-Freud point of view on 'memories' and 'unsubtantiated narcissistcally biased, one-sided testimony'. 'Memories' and 'unsubstantiated, narcissistically biased, one-sided testimony' need to be thrown out of all courts of law until this whole 'epistemological and ethical mess' is put back into proper balanced perspective. Right now our domestic courts are making a mockery of the name 'justice'. Both Freud's Seduction Theory and his Childhood Sexuality and Oedipal Complex theories were one-sidedly biased but today in our domestic courts of law we are all seeing the evidence of his 'Seduction Theory Gone Mad'...
What is it -- something like 70 to 90 of all men in jail now are there on 'domestic crimes'. Where are all the women filling up the women's jails? I don't see the same problem in the women's jails these days. What does that mean? Women don't know how to throw a punch? Push a man? Grab a man by the ear? Throw a piece of furniture at a man? Seduce a man -- or consent to being seduced by a man -- and then 'flip' the next day when she has sobred up or things didn't turn out exactly the way she wanted them to?
The epistemological, ethical, and legal problem that we are facing today -- as originally uncovered at least partly by Freud in the 1890s -- is at least partly this: Is it better to 'have not enough men in jail who have committed sexual and/or domestic assault'? Or is it better to 'throw too many men in jail who are not guilty of the crimes they allegedly committed and/or are being punished for crimes that their accusers were at least equally guilty of -- and who are getting off scott free with no tarnishment of their legal reputations.' Why should a democratic law that is supposed to be equal to all citizens, male and female, black and white, have an overt and/or covert 'threshold of guilt' that is obviously very low when it comes to transgressions committed by a man against a woman, and so high when it comes to transgressions committed by a woman against a man. And that is amongst those transgressions committed by women that even make it to a court of law. Most of them are either not reported, and/or if they are reported, they are not taken seriously by police unless the evidence is overwhelming.
So from a psychotherapeutic and clinical point of view, the problem then becomes this: where do we find a 'workable bridge' between Freud's 'Traumacy-Seduction Theory' and his later 'Childhood Sexuality and Oedipal Complex' theories. Or put another way -- between 'Traumacy Theory' and 'Narcissistic (Compensation) Theory'.
I will leave you with this theoretical and practical problem for now. And that is my take on Freud for today, March 3rd, 2007, modified on March 5th, 2007, then again freshly modified on Monday January 19th, 2009, and again on March 23rd, 2009.
-- dgb, originally written March 3rd, 2007, latest update, Mar. 23rd-24th, 2009.
-- David Gordon Bain.
..................................................................................
Psychology and Law: A Critical Introduction
Author(s): Andreas Kapardis
ISBN10: 052182530X
ISBN13: 9780521825306
Format: Hardcover
Pub. Date: 3/3/2003
Publisher(s): Cambridge University Press
New Price $99.45
List Price $102.00
eVIP Price $94.48
Quantity
New Copy: This item is temporarily unavailable from the publisher, but is expected in soon. Place your order now and we will ship it as soon as it arrives.
Used Price N/A
List Price $102.00
eVIP Price N/A
Marketplace Price $9.98
List Price $102.00
Take 90 Days to Pay on $250 or more
with Quick, Easy, Secure
Subject to credit approval.
This book provides a comprehensive, up-to-date discussion of contemporary debates at the interface between psychology and criminal law. The topics surveyed include critiques of eyewitness testimony; the jury; sentencing as a human process; the psychologist as expert witness; persuasion in the courtroom; detecting deception; and psychology and the police. Kapardis draws on sources from Europe, North America and Australia to offer an expert investigation of the subjectivity and human fallibility inherent in our system of justice. He also provides suggestions for minimizing undesirable influences on crucial judicial decision-making. First Edition Hb (1997): 0-521-55321-0 First Edition Pb (1997): 0-521-55738-0
--------------------------------------------------------------------------------
This book is the authoritative work for students and professionals in psychology and law.
Tuesday, March 31, 2009
On The Factors Surrounding Freud's Abandonment of his 'Seduction (Childhood Sexual Traumacy) Theory
Under construction...dgb -- Mar. 31st, 2009.
Let us now talk about the possibity of a dialectical bridge beween Freud before and after his short little essay, 'Screen Memories' (1899), the major turning point between his 'pre-psychoanalytic traumatic and seduction theories' and his soon-to-be 'Psychoanalysis-proper' as trumpeted by the publication of his famous book, 'The Interpretation of Dreams' (1900). If it was the issue of 'sexuality' that became one of the main dividing points between Freud and Jung, then it is to the issue of sexuality -- and the polarity between 'sexual traumacy' and 'sexual narcissism' -- that we must return.
Much has been made of this controversial theoretical and clinical turning-point in the evolution of Psychoanalysis: many -- particularly feminists knowledgeable with what went down here -- would say that Freud basically abandoned women -- abandoned alleged female victims of childhood sexual assault -- and turned Psychoanalysis into a much more 'chauvanist men's club' that suppressed and distorted all evidence of childhood sexual assaults under the guise of 'childhood and adolescent sexual fantasy' -- most particulary, relative to a girl's love for her father.
I remember running into this issue for the first time when I picked up Masson's controversial book in the mid to late 1980s, 'The Assault on Truth: Freud's Suppression of the Seduction Theory' (1984, 1985, 1992). I even remember contacting Mr. Masson in New Zealand by email -- years after he had broken away (and/or been banished) from numerous psychoanalytic societies that he had belonged to (the International Psychoanalytical Association, the Canadian Psychoanalytic Society, the Toronto Psychoanalytic Society, and I believe, the San Francisico Psychonalytic Society. Cited from another of Masson's books, 'Final Analysis: The Making and Unmaking of a Psychoanalyst', 1990,1991.)
My first email to Masson was responded to by Masson with reasonable warmth as he wished me good luck in my work but still he did not wish to re-hash the Seduction Theory Controversy. My second email to him was not treated as warmly -- understandable I suppose in light of all the grief he had taken during those years, and/or also my lack of 'sufficient professional' credentials on the same subject manner.
Now here is the point I wish to make. As much as I loved reading 'Final Analysis' and 'The Assault on Truth' and Janet Malcolm's 'In The Freud Archives'(1983,84), and I probably side closer to Masson's last published points of view, and Freud's pre-1897 point of view rather than Freud's evolving post-1897 point of view: still, most memories -- plain and simple -- from an 'objective' epistemological point of view, cannot be fully or often even at all significantly trusted.
Let us just look at the anectdotal evidence we have here. It has been at least 15 years since I last theoretically invested any time and energy into this remarkable controversy, so excuse me if my own memory is a little rusty here: I said that I picked up Masson's book, 'The Assault on Truth' in the mid to late 1980s. Wrong! I just fished the book out of my personal library here, dusted off the cobwebs, and found out that the last publication date on the book was 1992. That means that I obviously bought the book sometime in or after 1992 but I 'remembered' it to be in the mid to late 1980s. So much for my memory. I read all three of those books that I just cited above but do I remember which book I read when, and in which order, and how far apart the readings were? I am obviously more than a little suspicious of my own memory at this point. Logically speaking, I would imagine I read 'Assault' first, then 'Final Analysis', then Malcolm's 'In the Freud Archives'. But don't quote me on that -- and I certainly would not want to put my hand on a bible in a court of law because if I did, I would probably have to say simply, 'I don't know'. Do I remember what year it was that I emailed Masson in New Zealand. He was working on 'animal psychology', I believe, by that point in time. (Certainly less stressful than 'human psychology' -- especially when it comes to the subject of 'sex' and 'sexuality'.) Maybe one day I will find the email in my own archives here with a date attached to it. But other than that I can only guess that it was somewhere around 1995-97. Again, don't quote me on that because my memory right now is not holding up to the test. It is certainly flawed.
Do I at least partly make my point? A therapist has no right to totally or even necessarily partly trust' the 'objective epistemological correctness' of any memory that a client cites to him or her for the simple reason that it is a 'memory' and memories can easily fail, distort, embellish, discard...in short, they are very narcissistically biased'. To trust a memory in a court of law -- without substantiating empirical evidence and other credible witness reports is downright ludicrous -- putting a man (i.e., it is usually but not always a man who is being accused when it comes to issues of 'past childhood sexual assaults') in jail on the basis of the unsubstantiated memories and testimony of an alleged victim is hugely dangerous and I would even say ethically and legally reprehensible unless these memories and testimony are otherwise substantiated. (And as far as 'narcissistic bias', let us not forget that you have lawyers who are functioning like 'pre-Socratic Sophist mercenaries' who are paid handsomely to deliver fancy rhetoric and persuasive logic that is designed to narcissistically serve their clients goals and wishes regardless of how close or how far their clients' goals and wishes are connected to any form of 'objective, epistemological truth'.
We have come full circle and the epistemological and legal dangers that Freud ran into in the mid to late 1890s when he started to have second thoughts, and then abandon, his infamous Seduction Theory, are as real and dangerous today as they were back then. 'Subjective clinical-therapy memories' have no business being called 'epistemological truths' -- regardless of how 'epistemologically real' they may seem. The same point needs to be made with a hundred times more force when we start to talk about an alleged 'unconscious' and/or 'reconstructed' memory. None of these memories should have any legal force in a court of law unless they can be 'empirically substantiated beyond any reasonable doubt' by other much more credible and stronger forms of evidence. And this does not mean a woman's 'psychological/emotional/physical symptoms' or a psychologist's so-called professional testimony.
Psychologists and psychiatrists can be hugely narcissistically biased simply by the orientation of their training. Who's giving the testimony -- an orthodox, Oedipal Complex believing, Psychoanalyst? Or a 21st century feminist psychologist who may have been sexually assaulted herself and who may be projecting her own situation onto her client (in Psychoanalysis this is called 'counter-transference') and 'subconsciously looking' for evidence of a sexual assault in her client in practically every symptom that she portrays, and in every memory, conscious or unconscious, legitimately told to her or 'interpretively reconstructed' by the therapist. This presents a huge 'epistemological and ethical danger' not only to psychotherapy in general -- regardless of psychological orientation, orthodox Psychoanalytic or the opposite -- but even more so once this whole psychological and epistemological charade moves into a court of law.
Do I believe that guilty men should be held accountable for their 'sexual assaults'? Of course, I do -- if they can be legitimately proven in a court of law -- and allowing for the fact that there is a very big difference between 'inappropriately making a pass at a woman' and 'rape'. They should not be treated the same -- and even as I speak there are many men terrified of making a pass at a woman, even having sex with a woman for the first time without the petrifiying thought that she could ruin his life just by 'turning on him' the next morning.
The laws for 'sexual assault' and nowadays 'domestic assault' are getting broader and broader, with less and less 'empirical evidence' needed to get a legal conviction.
In effect, this means that we are now getting more and more of the opposite kind of problem than we used to have. Now, instead of far too many men get away with serious sexual crimes that they should have been convicted of with significant sentences, now we are convicting men and throwing men into jail left, right, and centre, on the basis of laws that are narcissistically biased in favor of women and on the basis of 'narcissistically biased evidence' that would never have been considered 'empirical evidence' back before our domestic and sexual assault laws started to change.
In effect, the Seduction Theory rules again in North American law -- whether we are talking about recent adult or childhood memories -- with or without any kind of 'legitimate supporting empirical and/or witness evidence'. North American domestic law used to be narcissistically biased in favor of men. Now it is narcissisically biased in favor of women.
As if women are incapable of lying, manipulating evidence, embellishing and distorting facts, creating false testimony, making themselves out to be 'angels' and 'victims', noncapable of violence themselves of course, non-capable of 'instigating trouble', or 'retaliating to rejection' or 'seducing men in their own right'...all of these potential complications to the 'epistemological truth' in both a psychotherapist's office and even more so in a court of law go out the window in today's North American world of 'feminine -- and feminist -- overprotection'.
So how in the name of God or Zeus or Apollo could Freud give any pretense to 'finding epistemological memory truth' in his clinical office in 1895 when in 2007 we are no further ahead -- epistemologically poisoned equally from both sides by an overbelief in both Freud and/or the opposite pro-feminist, anti-Freud point of view on 'memories' and 'unsubtantiated narcissistcally biased, one-sided testimony'. 'Memories' and 'unsubstantiated, narcissistically biased, one-sided testimony' need to be thrown out of all courts of law until this whole 'epistemological and ethical mess' is put back into proper balanced perspective. Right now our domestic courts are making a mockery of the name 'justice'. Both Freud's Seduction Theory and his Childhood Sexuality and Oedipal Complex theories were one-sidedly biased but today in our domestic courts of law we are all seeing the evidence of his 'Seduction Theory Gone Mad'...
What is it -- something like 70 to 90 of all men in jail now are there on 'domestic crimes'. Where are all the women filling up the women's jails? I don't see the same problem in the women's jails these days. What does that mean? Women don't know how to throw a punch? Push a man? Grab a man by the ear? Throw a piece of furniture at a man? Seduce a man -- or consent to being seduced by a man -- and then 'flip' the next day when she has sobred up or things didn't turn out exactly the way she wanted them to?
The epistemological, ethical, and legal problem that we are facing today -- as originally uncovered at least partly by Freud in the 1890s -- is at least partly this: Is it better to 'have not enough men in jail who have committed sexual and/or domestic assault'? Or is it better to 'throw too many men in jail who are not guilty of the crimes they allegedly committed and/or are being punished for crimes that their accusers were at least equally guilty of -- and who are getting off scott free with no tarnishment of their legal reputations.' Why should a democratic law that is supposed to be equal to all citizens, male and female, black and white, have an overt and/or covert 'threshold of guilt' that is obviously very low when it comes to transgressions committed by a man against a woman, and so high when it comes to transgressions committed by a woman against a man. And that is amongst those transgressions committed by women that even make it to a court of law. Most of them are either not reported, and/or if they are reported, they are not taken seriously by police unless the evidence is overwhelming.
So from a psychotherapeutic and clinical point of view, the problem then becomes this: where do we find a 'workable bridge' between Freud's 'Traumacy-Seduction Theory' and his later 'Childhood Sexuality and Oedipal Complex' theories. Or put another way -- between 'Traumacy Theory' and 'Narcissistic (Compensation) Theory'.
I will leave you with this theoretical and practical problem for now. And that is my take on Freud for today, March 3rd, 2007, modified on March 5th, 2007, then again freshly modified on Monday January 19th, 2009, and again on March 23rd, 2009.
-- dgb, originally written March 3rd, 2007, latest update, Mar. 23rd-24th, 2009.
-- David Gordon Bain.
..................................................................................
Psychology and Law: A Critical Introduction
Author(s): Andreas Kapardis
ISBN10: 052182530X
ISBN13: 9780521825306
Format: Hardcover
Pub. Date: 3/3/2003
Publisher(s): Cambridge University Press
New Price $99.45
List Price $102.00
eVIP Price $94.48
Quantity
New Copy: This item is temporarily unavailable from the publisher, but is expected in soon. Place your order now and we will ship it as soon as it arrives.
Used Price N/A
List Price $102.00
eVIP Price N/A
Marketplace Price $9.98
List Price $102.00
Take 90 Days to Pay on $250 or more
with Quick, Easy, Secure
Subject to credit approval.
This book provides a comprehensive, up-to-date discussion of contemporary debates at the interface between psychology and criminal law. The topics surveyed include critiques of eyewitness testimony; the jury; sentencing as a human process; the psychologist as expert witness; persuasion in the courtroom; detecting deception; and psychology and the police. Kapardis draws on sources from Europe, North America and Australia to offer an expert investigation of the subjectivity and human fallibility inherent in our system of justice. He also provides suggestions for minimizing undesirable influences on crucial judicial decision-making. First Edition Hb (1997): 0-521-55321-0 First Edition Pb (1997): 0-521-55738-0
--------------------------------------------------------------------------------
This book is the authoritative work for students and professionals in psychology and law.
Let us now talk about the possibity of a dialectical bridge beween Freud before and after his short little essay, 'Screen Memories' (1899), the major turning point between his 'pre-psychoanalytic traumatic and seduction theories' and his soon-to-be 'Psychoanalysis-proper' as trumpeted by the publication of his famous book, 'The Interpretation of Dreams' (1900). If it was the issue of 'sexuality' that became one of the main dividing points between Freud and Jung, then it is to the issue of sexuality -- and the polarity between 'sexual traumacy' and 'sexual narcissism' -- that we must return.
Much has been made of this controversial theoretical and clinical turning-point in the evolution of Psychoanalysis: many -- particularly feminists knowledgeable with what went down here -- would say that Freud basically abandoned women -- abandoned alleged female victims of childhood sexual assault -- and turned Psychoanalysis into a much more 'chauvanist men's club' that suppressed and distorted all evidence of childhood sexual assaults under the guise of 'childhood and adolescent sexual fantasy' -- most particulary, relative to a girl's love for her father.
I remember running into this issue for the first time when I picked up Masson's controversial book in the mid to late 1980s, 'The Assault on Truth: Freud's Suppression of the Seduction Theory' (1984, 1985, 1992). I even remember contacting Mr. Masson in New Zealand by email -- years after he had broken away (and/or been banished) from numerous psychoanalytic societies that he had belonged to (the International Psychoanalytical Association, the Canadian Psychoanalytic Society, the Toronto Psychoanalytic Society, and I believe, the San Francisico Psychonalytic Society. Cited from another of Masson's books, 'Final Analysis: The Making and Unmaking of a Psychoanalyst', 1990,1991.)
My first email to Masson was responded to by Masson with reasonable warmth as he wished me good luck in my work but still he did not wish to re-hash the Seduction Theory Controversy. My second email to him was not treated as warmly -- understandable I suppose in light of all the grief he had taken during those years, and/or also my lack of 'sufficient professional' credentials on the same subject manner.
Now here is the point I wish to make. As much as I loved reading 'Final Analysis' and 'The Assault on Truth' and Janet Malcolm's 'In The Freud Archives'(1983,84), and I probably side closer to Masson's last published points of view, and Freud's pre-1897 point of view rather than Freud's evolving post-1897 point of view: still, most memories -- plain and simple -- from an 'objective' epistemological point of view, cannot be fully or often even at all significantly trusted.
Let us just look at the anectdotal evidence we have here. It has been at least 15 years since I last theoretically invested any time and energy into this remarkable controversy, so excuse me if my own memory is a little rusty here: I said that I picked up Masson's book, 'The Assault on Truth' in the mid to late 1980s. Wrong! I just fished the book out of my personal library here, dusted off the cobwebs, and found out that the last publication date on the book was 1992. That means that I obviously bought the book sometime in or after 1992 but I 'remembered' it to be in the mid to late 1980s. So much for my memory. I read all three of those books that I just cited above but do I remember which book I read when, and in which order, and how far apart the readings were? I am obviously more than a little suspicious of my own memory at this point. Logically speaking, I would imagine I read 'Assault' first, then 'Final Analysis', then Malcolm's 'In the Freud Archives'. But don't quote me on that -- and I certainly would not want to put my hand on a bible in a court of law because if I did, I would probably have to say simply, 'I don't know'. Do I remember what year it was that I emailed Masson in New Zealand. He was working on 'animal psychology', I believe, by that point in time. (Certainly less stressful than 'human psychology' -- especially when it comes to the subject of 'sex' and 'sexuality'.) Maybe one day I will find the email in my own archives here with a date attached to it. But other than that I can only guess that it was somewhere around 1995-97. Again, don't quote me on that because my memory right now is not holding up to the test. It is certainly flawed.
Do I at least partly make my point? A therapist has no right to totally or even necessarily partly trust' the 'objective epistemological correctness' of any memory that a client cites to him or her for the simple reason that it is a 'memory' and memories can easily fail, distort, embellish, discard...in short, they are very narcissistically biased'. To trust a memory in a court of law -- without substantiating empirical evidence and other credible witness reports is downright ludicrous -- putting a man (i.e., it is usually but not always a man who is being accused when it comes to issues of 'past childhood sexual assaults') in jail on the basis of the unsubstantiated memories and testimony of an alleged victim is hugely dangerous and I would even say ethically and legally reprehensible unless these memories and testimony are otherwise substantiated. (And as far as 'narcissistic bias', let us not forget that you have lawyers who are functioning like 'pre-Socratic Sophist mercenaries' who are paid handsomely to deliver fancy rhetoric and persuasive logic that is designed to narcissistically serve their clients goals and wishes regardless of how close or how far their clients' goals and wishes are connected to any form of 'objective, epistemological truth'.
We have come full circle and the epistemological and legal dangers that Freud ran into in the mid to late 1890s when he started to have second thoughts, and then abandon, his infamous Seduction Theory, are as real and dangerous today as they were back then. 'Subjective clinical-therapy memories' have no business being called 'epistemological truths' -- regardless of how 'epistemologically real' they may seem. The same point needs to be made with a hundred times more force when we start to talk about an alleged 'unconscious' and/or 'reconstructed' memory. None of these memories should have any legal force in a court of law unless they can be 'empirically substantiated beyond any reasonable doubt' by other much more credible and stronger forms of evidence. And this does not mean a woman's 'psychological/emotional/physical symptoms' or a psychologist's so-called professional testimony.
Psychologists and psychiatrists can be hugely narcissistically biased simply by the orientation of their training. Who's giving the testimony -- an orthodox, Oedipal Complex believing, Psychoanalyst? Or a 21st century feminist psychologist who may have been sexually assaulted herself and who may be projecting her own situation onto her client (in Psychoanalysis this is called 'counter-transference') and 'subconsciously looking' for evidence of a sexual assault in her client in practically every symptom that she portrays, and in every memory, conscious or unconscious, legitimately told to her or 'interpretively reconstructed' by the therapist. This presents a huge 'epistemological and ethical danger' not only to psychotherapy in general -- regardless of psychological orientation, orthodox Psychoanalytic or the opposite -- but even more so once this whole psychological and epistemological charade moves into a court of law.
Do I believe that guilty men should be held accountable for their 'sexual assaults'? Of course, I do -- if they can be legitimately proven in a court of law -- and allowing for the fact that there is a very big difference between 'inappropriately making a pass at a woman' and 'rape'. They should not be treated the same -- and even as I speak there are many men terrified of making a pass at a woman, even having sex with a woman for the first time without the petrifiying thought that she could ruin his life just by 'turning on him' the next morning.
The laws for 'sexual assault' and nowadays 'domestic assault' are getting broader and broader, with less and less 'empirical evidence' needed to get a legal conviction.
In effect, this means that we are now getting more and more of the opposite kind of problem than we used to have. Now, instead of far too many men get away with serious sexual crimes that they should have been convicted of with significant sentences, now we are convicting men and throwing men into jail left, right, and centre, on the basis of laws that are narcissistically biased in favor of women and on the basis of 'narcissistically biased evidence' that would never have been considered 'empirical evidence' back before our domestic and sexual assault laws started to change.
In effect, the Seduction Theory rules again in North American law -- whether we are talking about recent adult or childhood memories -- with or without any kind of 'legitimate supporting empirical and/or witness evidence'. North American domestic law used to be narcissistically biased in favor of men. Now it is narcissisically biased in favor of women.
As if women are incapable of lying, manipulating evidence, embellishing and distorting facts, creating false testimony, making themselves out to be 'angels' and 'victims', noncapable of violence themselves of course, non-capable of 'instigating trouble', or 'retaliating to rejection' or 'seducing men in their own right'...all of these potential complications to the 'epistemological truth' in both a psychotherapist's office and even more so in a court of law go out the window in today's North American world of 'feminine -- and feminist -- overprotection'.
So how in the name of God or Zeus or Apollo could Freud give any pretense to 'finding epistemological memory truth' in his clinical office in 1895 when in 2007 we are no further ahead -- epistemologically poisoned equally from both sides by an overbelief in both Freud and/or the opposite pro-feminist, anti-Freud point of view on 'memories' and 'unsubtantiated narcissistcally biased, one-sided testimony'. 'Memories' and 'unsubstantiated, narcissistically biased, one-sided testimony' need to be thrown out of all courts of law until this whole 'epistemological and ethical mess' is put back into proper balanced perspective. Right now our domestic courts are making a mockery of the name 'justice'. Both Freud's Seduction Theory and his Childhood Sexuality and Oedipal Complex theories were one-sidedly biased but today in our domestic courts of law we are all seeing the evidence of his 'Seduction Theory Gone Mad'...
What is it -- something like 70 to 90 of all men in jail now are there on 'domestic crimes'. Where are all the women filling up the women's jails? I don't see the same problem in the women's jails these days. What does that mean? Women don't know how to throw a punch? Push a man? Grab a man by the ear? Throw a piece of furniture at a man? Seduce a man -- or consent to being seduced by a man -- and then 'flip' the next day when she has sobred up or things didn't turn out exactly the way she wanted them to?
The epistemological, ethical, and legal problem that we are facing today -- as originally uncovered at least partly by Freud in the 1890s -- is at least partly this: Is it better to 'have not enough men in jail who have committed sexual and/or domestic assault'? Or is it better to 'throw too many men in jail who are not guilty of the crimes they allegedly committed and/or are being punished for crimes that their accusers were at least equally guilty of -- and who are getting off scott free with no tarnishment of their legal reputations.' Why should a democratic law that is supposed to be equal to all citizens, male and female, black and white, have an overt and/or covert 'threshold of guilt' that is obviously very low when it comes to transgressions committed by a man against a woman, and so high when it comes to transgressions committed by a woman against a man. And that is amongst those transgressions committed by women that even make it to a court of law. Most of them are either not reported, and/or if they are reported, they are not taken seriously by police unless the evidence is overwhelming.
So from a psychotherapeutic and clinical point of view, the problem then becomes this: where do we find a 'workable bridge' between Freud's 'Traumacy-Seduction Theory' and his later 'Childhood Sexuality and Oedipal Complex' theories. Or put another way -- between 'Traumacy Theory' and 'Narcissistic (Compensation) Theory'.
I will leave you with this theoretical and practical problem for now. And that is my take on Freud for today, March 3rd, 2007, modified on March 5th, 2007, then again freshly modified on Monday January 19th, 2009, and again on March 23rd, 2009.
-- dgb, originally written March 3rd, 2007, latest update, Mar. 23rd-24th, 2009.
-- David Gordon Bain.
..................................................................................
Psychology and Law: A Critical Introduction
Author(s): Andreas Kapardis
ISBN10: 052182530X
ISBN13: 9780521825306
Format: Hardcover
Pub. Date: 3/3/2003
Publisher(s): Cambridge University Press
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This book provides a comprehensive, up-to-date discussion of contemporary debates at the interface between psychology and criminal law. The topics surveyed include critiques of eyewitness testimony; the jury; sentencing as a human process; the psychologist as expert witness; persuasion in the courtroom; detecting deception; and psychology and the police. Kapardis draws on sources from Europe, North America and Australia to offer an expert investigation of the subjectivity and human fallibility inherent in our system of justice. He also provides suggestions for minimizing undesirable influences on crucial judicial decision-making. First Edition Hb (1997): 0-521-55321-0 First Edition Pb (1997): 0-521-55738-0
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This book is the authoritative work for students and professionals in psychology and law.
Monday, March 30, 2009
Obama team drops "war on terror" rhetoric
From the internet...Yahoo News...
Obama team drops "war on terror" rhetoric
1 hour, 16 minutes ago, Mar. 30th, 2009.
THE HAGUE (Reuters) - U.S. Secretary of State Hillary Clinton said on Monday the Obama administration had dropped "war on terror" from its lexicon, rhetoric former President George W. Bush used to justify many of his actions.
"The (Obama) administration has stopped using the phrase and I think that speaks for itself. Obviously," Clinton told reporters traveling with her to The Hague for a conference on Afghanistan, which Bush called part of his "global war on terror."
The term "war on terror" was coined after the September 11, 2001 attacks against the United States, which were planned in Afghanistan by the militant group al Qaeda.
The phrase was strongly criticized by human rights groups who said it was used to justify many actions, such as the opening of the Guantanamo Bay prison for detainees held without trial at the U.S. Naval base in Cuba.
Internationally, the phrase was seen by critics as a "with-us-or-against-us" philosophy, overly dependent on military force and what many Muslims decried as an attack on Islam.
Since taking office on January 20, Obama has moved swiftly to reverse some of Bush's practices, ordering the closure of Guantanamo within a year and an end to harsh interrogation of terrorism suspects.
"I have not heard it used. I have not gotten any directive about using it or not using it. It is just not being used," said Clinton when asked whether the term had been officially dropped by the Obama administration.
Clinton has said one of her main roles as top U.S. diplomat is to improve the U.S. image abroad, particularly after the U.S. invasion of Iraq in 2003.
She has embarked on aggressive public diplomacy during her visits to Europe, the Middle East and Asia, seeking to reach out to ordinary people.
(Editing by Jon Boyle)
(Reporting by Sue Pleming; 1-202 422 1008)
Obama team drops "war on terror" rhetoric
1 hour, 16 minutes ago, Mar. 30th, 2009.
THE HAGUE (Reuters) - U.S. Secretary of State Hillary Clinton said on Monday the Obama administration had dropped "war on terror" from its lexicon, rhetoric former President George W. Bush used to justify many of his actions.
"The (Obama) administration has stopped using the phrase and I think that speaks for itself. Obviously," Clinton told reporters traveling with her to The Hague for a conference on Afghanistan, which Bush called part of his "global war on terror."
The term "war on terror" was coined after the September 11, 2001 attacks against the United States, which were planned in Afghanistan by the militant group al Qaeda.
The phrase was strongly criticized by human rights groups who said it was used to justify many actions, such as the opening of the Guantanamo Bay prison for detainees held without trial at the U.S. Naval base in Cuba.
Internationally, the phrase was seen by critics as a "with-us-or-against-us" philosophy, overly dependent on military force and what many Muslims decried as an attack on Islam.
Since taking office on January 20, Obama has moved swiftly to reverse some of Bush's practices, ordering the closure of Guantanamo within a year and an end to harsh interrogation of terrorism suspects.
"I have not heard it used. I have not gotten any directive about using it or not using it. It is just not being used," said Clinton when asked whether the term had been officially dropped by the Obama administration.
Clinton has said one of her main roles as top U.S. diplomat is to improve the U.S. image abroad, particularly after the U.S. invasion of Iraq in 2003.
She has embarked on aggressive public diplomacy during her visits to Europe, the Middle East and Asia, seeking to reach out to ordinary people.
(Editing by Jon Boyle)
(Reporting by Sue Pleming; 1-202 422 1008)
Saturday, March 21, 2009
Finding Truth
I thought I would bring this essay back up to the top here again because I believe it has relevance relative to the AIG saga, and/or whatever else you might want to use it for....dgb, Mar. 21st, 2009.
.....................................................................................
Finding Truth
We will take Nietzsche as our starting point, and then see where we can evolve to from there -- in our goal of finding truth.
'All facts are interpretations.' -- Nietzsche
We have a world both outside of us and inside of us that is impossible to know fully and completely because our senses are imperfect, our logical faculties are imperfect -- and our 'will to truth' is imperfect. In fact, our will to truth is often the biggest problem of all. We simply don't want to know the truth. As Jack Nicholson said in his famous speech (forgive me but I have forgotten the name of the movie with Tom Cruise, Demi Moore, and Jack Nicholson in it, just looked it up -- 'A Few Good Men') -- 'You can't handle the truth!'
When it comes to truth, personal and/or collective narcissism (greed, selfishness, egotism, ambition, anxiety, fear...) often rears its ugly head to hide, suppress, distort, embellish, and/or push people away from the truth.
So the first thing that is absolutely necessary in finding the truth -- is a 'will to truth'. I do not say this lightly. The truth is not always attractive to the squeemish or the faint-harded...indeed, the truth often requires courage and bravery to seriously look for it in the first place.
My definition of truth: 'A strong structural similarity between things and processes as we believe them to be, and things and processes as they really are -- or were.
Unfortunately, that raises the huge Kantian problem -- the 'subject-object split' and the fact that we can't step outside of our own skin, our own senses, our own logical faculties, and our own narcissistic biases -- to 'know for sure how things and processes really are'.
Thus, we are, and man is, stuck in a paradoxical, epistemological 'Catch 22' -- one that man has been 'epistemologically cursed' with since the beginning of man's existence -- and probably to the end.
There is no such thing as 'perfect truth' unless we are talking about 2 plus 2 equals 4, and/or maybe 'The sun rose up this morning' although that for me is an assumption because I never saw it rise this morning. And of course, the sun didn't really 'rise' -- that is all human relativity at work and play.
So we just have to keep pursuing the 'best approximations of truth' that we can possibly get to, on our own, and/or with the help of our fellow human beings who are similarly interested in 'pursuing truth'.
And of course, truth means nothing without 'context'. If we want to talk about truth -- at least in any practical, pragmatic, functional sense -- we have to talk about something happening in some place and time. And then describing the way it happened. How it happened. Why it happened becomes even more interpretive, more problematic, more complicated, and more controversial. What caused her death? What caused the accident? Who was responsible? Who was to blame? What was to blame?
The danger is -- or at least one of the main dangers -- is that we 'box the truth', call it 'the truth' and forget that we are only giving a 'theory of the truth' that may be right, may be wrong, may be partly right and partly wrong, or it may be the 'truth at first' but then 'life changes' and our 'box of truth' does not change with the evolution of a changing life process.
Five 'Truth Dangers' I call respectively:
1. Idols of Theoretical Boxes and Labels (that don't fit the real world and how it works);
2. Idols of Reification (hanging on to an idea or theory that becomes 'dead' as life changes);
3. Idols of Reductionism (Dividing life into 5, 10, or a hundred pieces -- and not putting it back together again);
4. Idols of Abstraction, Association, and Generalization (One or two instances of a life process do not necessarily imply an 'iron clad rule of nature that will never change'; likewise, just because something looks like a duck and swims like a duck does not necessarily mean that it is a duck -- it could be a swan.)
5. Idols of Narcissistic Bias (Too much unethical, narcissistic bias at work and play -- selfishness, jealousy, envy, greed, anxiety, egotism, pride, money... -- to truly want to know the truth, and/or want it to be known.
Four Rules of Thumb For Pursuing The Truth...
1. Observations first, inferences/interpretations second, value judgments third...Don't jump to premature and/or unwarrented conclusions because then the value judgments -- even before any discussion or debate of 'values and ethics' -- are going to be wrong.
2. Skepticism is a good thing -- people are often jumping to fast and wrong interpretations, assumptions, conclusions...Check you assumptions, check society's assumptions, observe, observe, observe, check different sources, check different biases, check, check, check...
3. Life changes -- make sure your 'conceptual representations of life' change too in order to keep up with all of life's changing processes...evolution, mutation, compensation, etc...
4. Make sure your information comes from credible, reliable sources, and know what their line of bias and potential 'conflict of interest' might be relative to 'steering you away from the truth'.
Avoid these epistemological traps and follow these epistemological rules and you will be putting yourself in a good position towards steering yourself towards the epistemological truth.
A strong 'will to truth' -- and the strength, courage, and perseverence to chase it down like a bull terrier, even a pit-bull -- remains your greatest asset.
-- dgbn, Jan. 21st, 2009.
-- David Gordon Bain
-- Democracy Goes Beyond Narcissism
-- Dialectic Gap-Bridging Negotiations...are still in process...
.....................................................................................
Finding Truth
We will take Nietzsche as our starting point, and then see where we can evolve to from there -- in our goal of finding truth.
'All facts are interpretations.' -- Nietzsche
We have a world both outside of us and inside of us that is impossible to know fully and completely because our senses are imperfect, our logical faculties are imperfect -- and our 'will to truth' is imperfect. In fact, our will to truth is often the biggest problem of all. We simply don't want to know the truth. As Jack Nicholson said in his famous speech (forgive me but I have forgotten the name of the movie with Tom Cruise, Demi Moore, and Jack Nicholson in it, just looked it up -- 'A Few Good Men') -- 'You can't handle the truth!'
When it comes to truth, personal and/or collective narcissism (greed, selfishness, egotism, ambition, anxiety, fear...) often rears its ugly head to hide, suppress, distort, embellish, and/or push people away from the truth.
So the first thing that is absolutely necessary in finding the truth -- is a 'will to truth'. I do not say this lightly. The truth is not always attractive to the squeemish or the faint-harded...indeed, the truth often requires courage and bravery to seriously look for it in the first place.
My definition of truth: 'A strong structural similarity between things and processes as we believe them to be, and things and processes as they really are -- or were.
Unfortunately, that raises the huge Kantian problem -- the 'subject-object split' and the fact that we can't step outside of our own skin, our own senses, our own logical faculties, and our own narcissistic biases -- to 'know for sure how things and processes really are'.
Thus, we are, and man is, stuck in a paradoxical, epistemological 'Catch 22' -- one that man has been 'epistemologically cursed' with since the beginning of man's existence -- and probably to the end.
There is no such thing as 'perfect truth' unless we are talking about 2 plus 2 equals 4, and/or maybe 'The sun rose up this morning' although that for me is an assumption because I never saw it rise this morning. And of course, the sun didn't really 'rise' -- that is all human relativity at work and play.
So we just have to keep pursuing the 'best approximations of truth' that we can possibly get to, on our own, and/or with the help of our fellow human beings who are similarly interested in 'pursuing truth'.
And of course, truth means nothing without 'context'. If we want to talk about truth -- at least in any practical, pragmatic, functional sense -- we have to talk about something happening in some place and time. And then describing the way it happened. How it happened. Why it happened becomes even more interpretive, more problematic, more complicated, and more controversial. What caused her death? What caused the accident? Who was responsible? Who was to blame? What was to blame?
The danger is -- or at least one of the main dangers -- is that we 'box the truth', call it 'the truth' and forget that we are only giving a 'theory of the truth' that may be right, may be wrong, may be partly right and partly wrong, or it may be the 'truth at first' but then 'life changes' and our 'box of truth' does not change with the evolution of a changing life process.
Five 'Truth Dangers' I call respectively:
1. Idols of Theoretical Boxes and Labels (that don't fit the real world and how it works);
2. Idols of Reification (hanging on to an idea or theory that becomes 'dead' as life changes);
3. Idols of Reductionism (Dividing life into 5, 10, or a hundred pieces -- and not putting it back together again);
4. Idols of Abstraction, Association, and Generalization (One or two instances of a life process do not necessarily imply an 'iron clad rule of nature that will never change'; likewise, just because something looks like a duck and swims like a duck does not necessarily mean that it is a duck -- it could be a swan.)
5. Idols of Narcissistic Bias (Too much unethical, narcissistic bias at work and play -- selfishness, jealousy, envy, greed, anxiety, egotism, pride, money... -- to truly want to know the truth, and/or want it to be known.
Four Rules of Thumb For Pursuing The Truth...
1. Observations first, inferences/interpretations second, value judgments third...Don't jump to premature and/or unwarrented conclusions because then the value judgments -- even before any discussion or debate of 'values and ethics' -- are going to be wrong.
2. Skepticism is a good thing -- people are often jumping to fast and wrong interpretations, assumptions, conclusions...Check you assumptions, check society's assumptions, observe, observe, observe, check different sources, check different biases, check, check, check...
3. Life changes -- make sure your 'conceptual representations of life' change too in order to keep up with all of life's changing processes...evolution, mutation, compensation, etc...
4. Make sure your information comes from credible, reliable sources, and know what their line of bias and potential 'conflict of interest' might be relative to 'steering you away from the truth'.
Avoid these epistemological traps and follow these epistemological rules and you will be putting yourself in a good position towards steering yourself towards the epistemological truth.
A strong 'will to truth' -- and the strength, courage, and perseverence to chase it down like a bull terrier, even a pit-bull -- remains your greatest asset.
-- dgbn, Jan. 21st, 2009.
-- David Gordon Bain
-- Democracy Goes Beyond Narcissism
-- Dialectic Gap-Bridging Negotiations...are still in process...
Thursday, March 19, 2009
House votes to recoup bonuses from bailed-out firms
House votes to recoup bonuses from bailed-out firms
2 hours, 31 minutes ago
By Jeremy Pelofsky and Susan Cornwell
WASHINGTON (Reuters) - The U.S. House of Representatives swiftly passed a bill on Thursday to recoup controversial bonuses paid to American International Group Inc as Treasury Secretary Timothy Geithner tried to calm the furor by taking responsibility.
In the face of public outrage at the fact that AIG paid $165 million in bonuses after receiving $180 billion in government aid, the House voted 328-93 to approve a 90 percent tax on bonuses for certain executives at companies that are getting taxpayer-financed help.
The number two Republican in the Senate, Jon Kyl of Arizona, blocked an initial bid to approve a Senate version of the legislation that would put a 70 percent excise tax on bonuses for employees at companies that have received at least $100 million in bailout aid.
Kyl objected to a request to agree by unanimous consent to pass it, saying more study was needed and putting into question when the Senate might again try to pass the legislation.
'BUBBLE AND BUST'
President Barack Obama urged lawmakers to press on with measures that he can sign into law, calling AIG bonuses a symptom of "a bubble and bust economy that valued reckless speculation over responsibility and hard work."
Meanwhile, U.S. Treasury Secretary Timothy Geithner took some blame for the controversy over the AIG payments, telling CNN Treasury was concerned that trying to squelch bonuses agreed previously might come under legal challenge.
Senator Christopher Dodd, chairman of the Senate Banking Committee, had been scrambling to explain how a tough provision to restrict bonuses got watered down in a recently passed stimulus bill.
In response to questions, Geithner said Treasury staff had expressed concern that provisions originally in the bill that would have prevented bonus payments might not survive a legal challenge.
The U.S. Treasury chief, who has come under criticism for not doing more to stop the AIG bonuses, repeated he only learned "the full scale and scope of these specific bonus problems" on March 10 and conceded he was partly at fault.
WHO'S TO BLAME?
"You know, it's my responsibility, I was in a position where I didn't know about these sooner, I take full responsibility for that," Geithner said.
He dismissed calls for his resignation as something that "just comes with the job."
It is still not widely known who at AIG received the bonus payments, which were supposed to be aimed at keeping highly skilled employees on the job at the troubled insurer.
AIG complied with a subpoena to provide details of bonus recipients to New York Attorney General Andrew Cuomo. But he said his office -- aware of threats made against AIG employees -- would conduct a risk assessment before releasing any names.
The House proposal's hefty tax provision would apply to executives with incomes over $250,000 who work for companies that get at least $5 billion in federal aid. That could include others besides AIG, such as mortgage financing company Fannie Mae.
"The whole idea that they should be rewarded millions of dollars is repugnant to everything that decent people believe in," said Representative Charlie Rangel, the Democratic chairman of the tax-writing Ways and Means Committee.
In a measure of the widespread outrage over bonuses, small crowds of protesters marched in cities across the United States to denounce the idea that AIG employees who helped push the insurer to the brink of collapse should be rewarded for it.
In New York, Cuomo said he had details in hand on who received the bonuses at AIG.
He also said Bank of America Corp was expected to hand over the names of the 200 top bonus earners at Merrill Lynch & Co from last year, another potential embarrassment for the bailout process.
Goldman Sachs Group Inc plans to respond publicly to what it described as misperceptions about its trading relationship with AIG after it was paid $12.9 billion by AIG from bailout funds.
Amid the furor, some Senate Republicans urged a slower approach to trying to claw back bonus payments.
"Until we have hearings and we understand all this, we are not going to know what kind of fix to implement," Kyl told reporters.
(Additional reporting by Thomas Ferraro, Glenn Somerville and Grant McCool; Editing by Andre Grenon.)
2 hours, 31 minutes ago
By Jeremy Pelofsky and Susan Cornwell
WASHINGTON (Reuters) - The U.S. House of Representatives swiftly passed a bill on Thursday to recoup controversial bonuses paid to American International Group Inc as Treasury Secretary Timothy Geithner tried to calm the furor by taking responsibility.
In the face of public outrage at the fact that AIG paid $165 million in bonuses after receiving $180 billion in government aid, the House voted 328-93 to approve a 90 percent tax on bonuses for certain executives at companies that are getting taxpayer-financed help.
The number two Republican in the Senate, Jon Kyl of Arizona, blocked an initial bid to approve a Senate version of the legislation that would put a 70 percent excise tax on bonuses for employees at companies that have received at least $100 million in bailout aid.
Kyl objected to a request to agree by unanimous consent to pass it, saying more study was needed and putting into question when the Senate might again try to pass the legislation.
'BUBBLE AND BUST'
President Barack Obama urged lawmakers to press on with measures that he can sign into law, calling AIG bonuses a symptom of "a bubble and bust economy that valued reckless speculation over responsibility and hard work."
Meanwhile, U.S. Treasury Secretary Timothy Geithner took some blame for the controversy over the AIG payments, telling CNN Treasury was concerned that trying to squelch bonuses agreed previously might come under legal challenge.
Senator Christopher Dodd, chairman of the Senate Banking Committee, had been scrambling to explain how a tough provision to restrict bonuses got watered down in a recently passed stimulus bill.
In response to questions, Geithner said Treasury staff had expressed concern that provisions originally in the bill that would have prevented bonus payments might not survive a legal challenge.
The U.S. Treasury chief, who has come under criticism for not doing more to stop the AIG bonuses, repeated he only learned "the full scale and scope of these specific bonus problems" on March 10 and conceded he was partly at fault.
WHO'S TO BLAME?
"You know, it's my responsibility, I was in a position where I didn't know about these sooner, I take full responsibility for that," Geithner said.
He dismissed calls for his resignation as something that "just comes with the job."
It is still not widely known who at AIG received the bonus payments, which were supposed to be aimed at keeping highly skilled employees on the job at the troubled insurer.
AIG complied with a subpoena to provide details of bonus recipients to New York Attorney General Andrew Cuomo. But he said his office -- aware of threats made against AIG employees -- would conduct a risk assessment before releasing any names.
The House proposal's hefty tax provision would apply to executives with incomes over $250,000 who work for companies that get at least $5 billion in federal aid. That could include others besides AIG, such as mortgage financing company Fannie Mae.
"The whole idea that they should be rewarded millions of dollars is repugnant to everything that decent people believe in," said Representative Charlie Rangel, the Democratic chairman of the tax-writing Ways and Means Committee.
In a measure of the widespread outrage over bonuses, small crowds of protesters marched in cities across the United States to denounce the idea that AIG employees who helped push the insurer to the brink of collapse should be rewarded for it.
In New York, Cuomo said he had details in hand on who received the bonuses at AIG.
He also said Bank of America Corp was expected to hand over the names of the 200 top bonus earners at Merrill Lynch & Co from last year, another potential embarrassment for the bailout process.
Goldman Sachs Group Inc plans to respond publicly to what it described as misperceptions about its trading relationship with AIG after it was paid $12.9 billion by AIG from bailout funds.
Amid the furor, some Senate Republicans urged a slower approach to trying to claw back bonus payments.
"Until we have hearings and we understand all this, we are not going to know what kind of fix to implement," Kyl told reporters.
(Additional reporting by Thomas Ferraro, Glenn Somerville and Grant McCool; Editing by Andre Grenon.)
Wednesday, March 18, 2009
A DGB Perspective on The AIG Saga: Today's (March 18th/09) Congress Hearing With Edward Liddy
I thank CNN for carrying the Congress hearing today centering around the Subcommittee Senators drilling Edward Liddy (the current CEO of AIG) regarding the 165 million dollars in 'retention bonuses' just paid out last Saturday (March 14th) to some of the biggest players in AIG (or at least the 'Financial Products' Division -- that part was not totally clear).
1. Two of The Issues
How many AIG employees received bonuses? 30? 40? 50? (I just learned from the article below that the number is 73 including 11 that have left the company.)
It would seem that many of these employees are 'high level financial traders' and not neccessarily a part of the AIG management team that brought both AIG -- and the American economy, indeed much of the world economy -- down to its collective knees.
There is an issue here that I want to tackle regarding these 'retention bonuses' but first I will ask a related question regarding a sub-issue.
What is the difference between a 'retention' bonus and a 'performance' bonus? From what I was hearing today, it seems like they are basically one and the same thing -- perhaps a 'performance' bonus hiding under a different name as a 'retention' bonus. If anyone has any greater clarity on this distinction in terms -- and whether there is really any difference in 'actual meaning' relative to these two terms -- then please fill me in. In the meantime, I will see if I can find anything on the internet in this matter.
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I love the internet for the immediacy in which I can generally find the answers to the questions I am looking for...
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AIG furor puts spotlight on retention bonuses
The payouts, used for years to keep coveted employees from leaving during periods of corporate upheaval, are frequently abused, critics say.
By Walter Hamilton
10:58 PM PDT, March 17, 2009
Reporting from New York -- The furor over American International Group Inc.'s million-dollar payouts to employees who nearly toppled the insurance giant is turning a spotlight on what critics say is frequently an abuse in the way corporate executives are paid.
AIG is shelling out $450 million in so-called retention bonuses. Such payouts have been used for years to keep coveted employees from jumping ship during periods of corporate upheaval, typically caused by a merger or bankruptcy. Compensation experts say the bonuses can serve a legitimate purpose, especially if the workers getting them are likely to lose their jobs within months.
Cuomo: 73 AIG staffers got bonuses of $1 million or more
AIG bonus flap may cost recipients
But as overall executive-pay levels have surged in recent years, executives increasingly have used retention payments to ladle out more money to themselves while walking out the door, critics say.
Executives "have been using these as a vehicle to scoop extra compensation for themselves for years," said David DeBoskey, an executive-pay expert at San Diego State University. "Retention bonuses have been used for nefarious purposes to enrich executives of organizations where their futures are uncertain. When your future becomes uncertain, you look for a quick hit and it comes in the form of a retention bonus."
Retention bonuses have been overshadowed in recent years by other forms of executive pay -- such as salaries, regular annual bonuses and stock options -- that generated far louder howls of protest.
But retention pay was thrust into the executive-compensation debate with the disclosure by AIG that it paid $165 million to employees of its financial products division.
The unit made disastrous bets on securities known as credit-default swaps that ultimately led to billions in losses and necessitated a government bailout costing $170 billion to keep a failure of the company from bringing down the global financial system.
The securities were essentially insurance contracts in which AIG guaranteed investment banks and hedge funds that it would cover losses on mortgage-related bonds, whose values plunged as the housing downturn set in.
Outrage over the bonuses intensified Tuesday as New York Atty. Gen. Andrew Cuomo revealed that 73 AIG workers got bonuses of $1 million or more, including 11 who have since left the company.
The biggest payout was $6.4 million, and the top 10 people took home $42 million, Cuomo wrote in a letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
Critics say it's incongruous for AIG to dish out millions to employees of a unit that lost more than $40 billion last year, especially because the unit is being gradually dissolved.
But AIG says it promised the payments to about 400 employees in early 2008 -- before the depth of the financial crisis became known.
At the time, the financial products unit "was expected to have a valuable, ongoing role at AIG," the company said in a five-page memo prepared last week for the Treasury Department about the payments.
The memo said $55 million was paid in December and $165 million went out Friday. An additional $230 million was scheduled to be paid this year.
In the memo, the company contends that it is legally obligated to honor the contracts that call for the bonuses.
But some legal experts say the government might have some options to block or reverse the bonuses.
One possibility mentioned by members of Congress would be to create a tax that would confiscate potentially all of the payouts. Such a tax would probably face scrutiny on constitutional grounds, but Beverly Hills lawyer Anthony Glassman said it could be designed to withstand such a challenge.
Glassman said the government would have difficulty persuading a court to nullify the bonus agreements. "The only way to solve this is legislatively," he said.
But AIG may have misinterpreted a state law in Connecticut, where its financial products unit is based, when it said it couldn't halt the bonus payments, Richard Blumenthal, the state's attorney general, said Tuesday.
Some lawyers say trying to reclaim the bonuses would cause more harm than good. "All commerce throughout the world is dependent on the sanctity of contracts," said James Donovan, a Los Angeles attorney. A challenge could make it hard for financial firms to recruit employees because they might fear their employment contracts would be broken, he said.
Some compensation experts say the bonus agreements were reasonable last spring when Wall Street thought it could rebound intact from the subprime debacle. At the time, the financial engineers who concocted the exotic securities were highly sought after. And arguably traders who create abstruse securities may be the best people to unwind them.
"Just like you need Bernie Madoff to help you find where all the money went, even though you'd rather throw him in jail and never talk to him again, you need the people who were involved to help undo" the securities, said Adam Zoia, founder of executive search firm Glocap in New York.
Still, critics argue, the AIG payouts underscore the excesses that have marked retention bonuses in recent years.
Even some Wall Street headhunters who negotiate the bonuses believe they became excessive.
"We're coming out of a very greedy time," said Jeanne Branthover, head of the financial-services practice at Boyden Global Executive Search in New York. "Everything got exorbitant, whether you're talking retention bonuses or [annual] bonuses or anything."
walter.hamilton@latimes.com
Times staff writers E. Scott Reckard and Ken Bensinger contributed to this report.
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2. Edward Liddy and His Band of 'High Stake Financial Traders'
I hope that CNN carries more of these types of Congress hearings or meetings -- it gives the American people (and a Canadian outsider like me) the opportunity to at least partly or vicariously participate in how their goverment is being run, how Congress is run, and some names and faces that start to become 'individuated' as opposed to simply negatively stereotyped as a Republican or a Democrat Senator.
And in this respect, it is just as important not to negatively stereotype all the individual members of AIG -- like Edward Liddy who apparently came out of retirement as a past CEO of Allstate Insurance on the government's request working for $1 in 2009 if I heard that right which I think I did (assuming no 'backroom retention or performance bonuses' which he probably deserves under either name if he pulls off some kind of financial miracle here and gets the AIG ship sailing again in deep, hurricane-driven, precarious waters...).
I heard today that AIG stock value went up some 40 cents a share which is nothing to sneeze at if it sticks.
And I heard today -- assuming Liddy's numbers are accurate (I think these numbers should be given and verified/cross-checked/cross validated to the best estimate possible on paper to the Congress Committee and through news outlets to the American people -- that some serious gains have been made in reducing AIG's overall debt load.
It is very easy to negatively stereotype people -- we see it all the time in every realm of every culture, with probably most people if not all people -- I have probably been guilty of this 'faux pas in reasoning' myself in different essays I have written (overgeneralizing, over-associating, painting everybody in a group of people with the same brush) -- and in this regard we must be careful not to paint every employee of AIG with the same brush, nor to use another old cliche, 'lose the baby with the bathwater'. I think that both Congress and the American people -- as outraged as they may be (and I am partly still too although less so since I watched and listened to this hearing today) -- want to keep the best 'AIG' employees, the best AIG performers (and even failing or failed companies still have good employees), and not lose them in a 'Congress witchunt' and/or a 'massive retaliatory (overcompensating) purging' of AIG employees with 'bonuses' attached to their forehead like 'bullseyes'.
Don't get me wrong. I want to get to 'main culprits of this AIG financial meltdown' just as badly as everone else does. The previous CEO who was the leader of AIG through this collapse of AIG has already been fired, released or whatever (probably with a multi-million dollar farewell package although I don't know that). Let's not pin the mistakes -- and/or narcissistic greed of this previous CEO -- with the current one, Edward Liddy, who walked out of his stress-free retirement and into this AIG quicksand. For nothing. (Correction: for $1.)
From what I can see and hear so far -- admittedly as a layperson trying to 'continue to evolve myself, learn some portion of highly complex American economics and politics', figure out what is and has been going on here -- I say, at this time, let's not lose Edward Liddy. It is possible that he may be on his way towards doing a good job. Let's check the numbers he gave Congress today and see if they can be cross-checked for their accuracy.
As long as Liddy wasn't giving Congress a barrel full of 'AIG bullcrap' -- which I don't think he has any motivation for doing so, since he didn't cause the mess that got the AIG and the American people here aside from maybe this last bonus payout on the weekend -- anyway, if he says he needs a particular 'band of high stakes, high expertise, high performing financial traders' who each are intimately knowledgeable and connected with 20-25 highly volatile and huge money contracts, and that these contracts are being 'wound down' improving the overall value of AIG by multi-millions, or even billions, of dollars in a relatively short period of time (even if the company as a whole still owes billions or even a couple of trillion dollars, and that may only be the 'Financial Product' division if what I heard today was right) --then let him keep the employees that he thinks he needs, and be accountable for their performance in 2009.
In this respect, Liddy -- in dialogue (or dialectic exchange) with The Federal Reserve, and with Congress (any more than this, and that could pose a problem also: i.e, 'too many cooks can spoil the broth' and make the proper decision-making by Liddy virtually impossible) -- needs to recognize and distinguish between which employees (and particularly which 'high end financial traders') are 'significantly lessening the AIG debt now as Liddy says is happening vs. those employees, traders, and/or managers who helped to create the AIG 'toxic waste' of billions or trillions of dollars that brought AIG in front of the Congress today. And who were these 'retention bonuses' going out to last Saturday: 'good' or 'bad' performers. (Which obviously blurs the line between a 'retention' bonus and a 'performance' bonus' but Liddy obviously needs to properly know which employees he most needs to keep -- even if it cost millions of dollars as long as these 'traders' trade much more than their own value -- 'in upping the company's value'; not 'further reducing it'.)
If you are a Congress Senator in Washington, a basketball fan, and you care about the future performance of The Washington Wizards, you are not going to want to see Antawn Jamison or Caron Butler, or Gilbert Arenas (even though he's been hurt all year which probably has a lot to do with why your team has been so bad this year) walk out the door -- and get no value in return -- because you fail to honour his contract, whether it is a regular salary contract, an agreed upon performance bonus, and/or a 'retention' bonus to keep him from walking away (if he is a free agent) from a 'currently failing team'.
This assumes that your salary and/or bonus payment numbers are in the same ballpark as what other teams pay their star players, taking into account salary cap, budget, the financial status of the Washington Wizards, and so on. If the Washington Wizards were being 'financially propped up' by the city, the State, and/or the Federal Government -- you would have to expect that the basketball team would still be expected to pay their star players what they need to pay them in order to keep them.
The rest are perhaps more easily replaceable and can walk if they want although you would probably want to protect your good, young, and still developing players as well. To use two other cliches, you don't want to 'cut off your nose to spite your face' or 'shoot yourself in the foot'. You don't want to demand 165 million back if it means jeopardizing your chance at getting 80 billion back -- or worse, have the financial catastrophe that everone was/is fearing the most, including Liddy, actually happen -- i.e., AIG goes into receivership, multi-billions or even a few trillions of dollars are lost, and all the banks that were leaning on AIG to hedge their bets on their sub-prime mortgage contracts that should have never been put out there in the first place (now the persons who initiated these 'sub-prime contracts' resulting in 'credit-default contracts and swapping' -- these are the persons who should really be called up onto the Washington carpet (or maybe even certain politicians in Washinton during the Bush Administration had something to do with the initiation of these sub-prime mortgages and brutal interest rates later in the contract).
The 'BIG Players' here are the 'real bad guys' -- not the traders who 'traded' these contracts later. They were probably only doing what they were told to do in already disasterous situation. Who are you going to blame -- the President or Dictator of a country who tells a general to tell a seargent to tell a pilot to drop a Nuclear bomb -- or anyone under the President's or Dictator's authority who is under the threat of treason, court martial, or gross insubordination if they fail to do what they are ordered to do? The person giving the orders? Or the person taking them? Most of us saw 'A Few Good Men' I think.
I wouldn't have argued this way before the Congress Hearing today. But Liddy at least partly, if not totally, sold me on why he did what he did -- meaning pay out all that bonus money in order to keep some players who if they leave might cause the collapse of what is left of the AIG empire.
AIG -- Arrogance, Incompetence, Greed -- I liked that one.
I also liked Republican Senator Ackerman's comments. We will get to his comments near the end.
In general, I liked Lilly and his answers. A man put into a spot -- accepting a more or less 'thank less' job by the American government that he wasn't even getting paid to do with physical threats to both himself and to his employees -- almost as bad as the one Obama himself walked into. A man being asked to oversee and get rid of a debt load that seems to be in the trillions of dollars -- didn't I hear Liddy say that the 'Financial Products' division itself had a debtload of 2 point something trillion dollars which had been brought down to 1 point something trillion dollars?
In my books, he sounded and must have felt something like what I imagine General Dwight Eisenhower felt like before the Battle of Normandy -- knowing that he was going to probably lose a lot of soldiers in the battle but knowing that winning or losing this battle could quite possibly determine the final outcome of World War 11, which it did.
In Lilly's case, he knew that he was gambling with 165 million dollars of the American taxpayers' money, and that there would probably be a huge outcry of rage at more corporate bonuses going out to high stake AIG players but knowing also that if he refused to honor these bonus contracts (which were created before AIG went seriously in the tank, and before Lilly came on board at AIG), he risked these same high stake players (traders) walking out the door on him in the most volatile and precarious of his Operational Divisions -- The Financial Products Division -- the one that owed 2 point something trillion dollars, had been brought down to 1 point something trillion dollars, and which could still topple the AIG empire, and with it many American banks dependent on AIG staying alive, meaning crashing the American economy far worse than Americans have seen so for to this date, perhaps it has not already reached this point further exasperating or creating the greatest financial collapse and disaster in American history.
So Lilly gave the bonuses out on Saturday March 14th, probably trying to minimize the presence and negative impact of the American media, which didn't work -- everyone found out on Monday -- and the rest has been a huge outcry of American rage leading up to Lilly's 'defense' in front of the American Congress Financial Committee and the American people. A man perhaps in a 'no-win' position. Caught between a 'rock and a hard place'. American rage or American Financial Disaster.
He picked to 'eat' American rage.
I see at least two lessons here about:
A. 'Distinction'; and B. 'Context'.
Let's look at these two inter-related principles separately:
A. Distinction:
Dont blame high stake financial traders for the mistakes of the people above them -- the managers and owners who 'set the rules' and 'created the parameters' under which the traders agreeably or disagreeably had to/have to work.
They deserve to get paid what they are worth. If they have already 'unwound' multi-millions or even billions of dollars of AIG and American debt, then they deserve to be paid 'a fraction of this amount', even if this runs into the millions of dollars under whatever name you want to call the bonus -- 'performance bonus' and/or 'retention bonus'.
The importance here is to connect these bonuses to 'current individual performance' (2008); not to blame individuals who had no responsibility or accountability for the creation of the 'toxic contracts' in the first place, and based independently not on AIG overall collapse -- unless they were partly responsible for it -- but rather on how well each individual involved here did in 2008 to 'undo in his own realm of control -- meaning the 20 to 25 highly volatile contracts that each of these traders controls' -- irrespective of the overall collapse of AIG that may or may not have had anything to do with each trader's individual performance.
To go back to a basketball example: How do we know that there is not a 'Lebron James' or a 'Kobie Bryant' or a 'Dwayne Wade' amongst these high-stake traders? You can't rightfully blame a basketball player for the mistakes of his coach or GM or owner -- unless you are trying to 'scapegoat' any and/or every player on the team who may have had an excellent season -- or not -- in the context of a 'bad team' situation.
I saw some 'good individual performances' amongst the Senators yesterday -- even in the larger context of an American Government -- even under the Obama administration -- that has 'screwed up'. Fool me once, shame on you. Fool me twice, shame on me. Fool me three times -- I am a part of the problem, and I need to give my 'head a shake'. Shame on the Obama Administration. They've had at least two chances now to legislate greater 'transparency' and 'accountability' amongst companies who are receiving 'American bailout money'. They have failed twice now. They need to get it right this time. And that doesn't mean overcompensating in the wrong direction.
B. Context
In almost every situation, every encounter, every process, every relationship, indeed, even every word, context matters -- hugely.
We are so quick to rush to judgment -- before we have all the facts together in their proper place. We see an 'individual part' -- we don't see the context of 'the whole'. We assume that the 'individual part' is equivalent to the 'context of the whole'. It is not. Good -- even excellent -- individual performances can happen in the context of a 'very bad team situation with bad leadership'. We must not paint everyone on a 'bad team' with the same paintbrush. If the American government on the backs of the American people are paying bailout money to AIG, then the 'good to excellent players' on this 'bad team' need to be paid properly -- even if it is with part of the money that is being given to them to keep the company afloat. Otherwise, they are likely going to lose their 'best individual performers' -- and the ship is likely to go nowhere except further down into the deepest depths of the ocean. Am I beating a dead horse here?
That is why we have courts of law with hopefully good judges and/or juries -- to determine the extent of individual responsiblity, accountability, and blame -- in the context of 'the facts of the greater whole'.
'Sound bites' and 'visual bites' can be extremely dangerous. Causing us to jump to fast -- and bad conclusions. Bad judgments.
If Lilly is good to great at what he does -- which I think he quite possibly is -- then let us all give him enough room to 'function properly' and 'fix the AIG ship'.
Change the 'name', the 'structure', and/or the 'nature' of these 'retention contract bonuses.' But let's not let the existence and functioning of possibly excellent individual performers walk away from a 'before Lilly-dysfunctional ship'. Let's better know who the good and bad performers were/are in 'the AIG ship gone bad'. And if the AIG ship is 'correcting itself and starting to float again in 2009' -- let's not 'hammer more holes in the ship' and watch it go plunging back, or deeper, into the darkest depths of the ocean.
Let Lilly perform. He's being 'not paid' to make the kinds of decisions that none of us (or very few of us, and I certainly do not include myself here) would have the wish nor the ability to make. Worse people are still walking around 'free and rich' here than some of the AIG people here who are possibly being scapegoated. And I know one person for sure who is still sitting in jail for a crime much less than these (I'm thinking of Conrad Black): 1. sub-prime mortgage contracts with huge escalating interest rates; and 2. insurance for 'hedge bets' or 'credit default contracts' that that the insurance company doesn't have the money to insure if they are 'called on these bets'. That's like buying stocks from a stock broker who keeps your money -- and doesn't buy your stocks. Can you think of anyone who before the American courts for doing this?
Republican Senator Ackerman did a great job of spelling out this basic type of fraud in simple layperson's language. CNN helped too with their demonstration of how 'hedge contracts' or 'credit-default contract insurance' works.
I have a name for it -- and I see this kind of 'phenomeon' all the time in the business world I walk around in.
Call it -- 'No Value For Value Capitalism'.
I learned about 'No Value Capitalism' and 'Credit Defaulf Swapping' when I was back in high school. Informally. With no name attached to it. Away from school.
Some of my friends at the time started engaging in some regular 'penny poker games'. (Some of the guys took their stakes higher but my tightest group of friends wanted to keep the stakes low to keep the games friendly. Probably a good idea but we still had some problems. Of 4 or 5 of us, one of the group members started to lose more often than not -- and worse -- he stopped paying what he owed.
Instead, our losing poker player started to put his debts on 'credit'. Well, it didn't take long for 'Perry Credit' to start to build up as a 'pseudo-asset' for each and every one of the other poker players. So we started engaging in 'The Credet-Default Swapping Program'. (Again, we didn't have a name for it back then other than 'Perry Credit'.)
So all of us started 'swapping our Perry Credit'. Of course, it didn't take us very long to realize that this 'Perry Credit' was basically 'worthless'. As in 'No Value'. Thus, in effect we were learning the essence of 'No Value' Capitalism. Or 'No Value For Value' Capitalism.
As Republican Senator Ackerman would state -- indeed, did state -- at the Congress Hearing on March 18/09 -- we (my poker friends) and they (AIG) were basically exchanging 'snake oil' -- without even the snake oil inside the bottle. We (they) were exchanging 'worthless' or 'toxic' credit..
Who would want to buy it? Unless the person on the other end of the 'credit swap' didn't know what he or she was getting, who would want credit that was 'worthless' or 'toxic'?
Now I don't know how this part worked at AIG -- I know how it worked at our poker games. We had to finally get rid of 'Perry' and start our games from scratch again. One lost friend.
So again, I don't know how this next part at AIG worked. I can surmise at least partly what happened from what Senator Ackerman was saying. And we all know that it was not entirely the individual house owners who started to 'default' on their 'mortgage contracts' who were not entirely the source of the problem here.
There was an American economy that was getting worse -- even before these toxic-default-mortgage-contracts started to come back in the bankers' faces. Blame this mainly on the war in Iraq -- which the Bush Admininistration was putting on 'credit'. 'Charge the cost of the Iraq War to the American People when I'm gone' was basically the philosophy that the Bush Administration was practising. And that probably includes all the Senators who were at the Liddy hearing on Wed. March 18th/09. In effect, one could almost say that the pre-Obama American Government was selling 'snake oil' to the American people. 'A war that costs nothing!' Or so that was the illusion. That was the 'snake oil'. The snake oil was 'cobra venom' and it was building up in the bottle...and starting to 'overflow out the top of the bottle'. The cobra venom was starting to 'poison' the American people.
Plus there was another problem going on here. Some person somewhere -- either a politician in Washington in government, or a banker or mortgage seller on Wall Street got this 'brilliant' idea. Catch my sarcasism here, please. The idea may go down as the worst idea in American history.
Let's say it was a politician in Washington. The idea went something like this: 'Hey, let's get more people -- more middle class, or even lower middle class, people into their own homes!' Maybe this started out as an 'altruistic idea' -- somebody in Washington trying to help more people 'achieve the American Dream'.
However -- excuse my cynicism here but somehow I entirely doubt this. We are talking 'Capitalism' here -- 'Narcissistic Capitalism'. I don't want to overgeneralize here. I know there are some politicians in Washington -- probably more Democrats than Republicans by the nature of their 'polar' respective 'ideologies' but I think the Republicans are starting to get the message from the results of the last election -- who may have the good of 'Main St. America' at heart but I think the 'birth of sub-prime mortgage contracts' was based on human greed, not human altruism.
Everyone in Washington, everyone in The Republican Party (maybe not Sarah Palin...leave her alone, David, the election is over...), everybody on Wall Street knows probably Adam Smith's most famous line:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. -- Adam Smith
The birth of the idea probably went something like this: 'Hey, I know a way we can make more money. We artifically create a 'low interest rate' for motivate more middle class, or even lower middle class, American citizens to buy houses. Then we start jacking up the interest rate on these contracts once the new home owners are a year or two into their contract -- and this is how we will more than make up for 'the cheap start up fee in the form of these sub-prime interest rates'.
In effect, this 'banker's logic' is no different than enticing a person to get a credit card by advertising a 'low start up interest fee' -- and then 'jacking up the interest rate' once the new credit card owner has had his credit card for a given period of time -- let's say a year. The 'seductive bonus' for consumers is at the beginning of the contract; the 'poisonous snake oil' for consumers which -- if it works -- is much more beneficial for bankers later in the contract. The snake oil if it is the 'right toxicity' level must be strong enough to partly paralyze, partly hypnotize, the consumer but still not so strong as to completely paralyze the consumer and make him or her incapable or unwilling to pay the 'UnGodly, Satanic Interest Rates' that have been 'jacked upwards' to 'squeeze more money out of him and/or her'.
Well, the first and 'weakest' homeowners of these 'Satanic Mortgage Deals' started to 'lose consciousness because of an overtoxic cobra poison'. Other homeowners in these same types of deals -- thousands of others -- soon started succumbing to the overtoxic poision as well. Houses started going into 'foreclosure' everywhere.
Thousands and thousand of homeowners involved in these Satanic Deals had to give up their new houses -- and hit the street. Combine this with the war in Iraq -- that was being financed on credit -- and the American economy started to spiral downward like a ship or airplane in The Bermuda Triangle. The 'triangle was 1. Washington; 2. Wall Street; and 3. Main Street.
And AIG was right in the middle of The Bermuda (America) Triangle -- indeed, it was probably one of the main creators of The Bermuda (America) Triangle. Or to use another example, it started out as one of the main 'spiders' but then became a 'spider caught in its own spider web' -- its own self-created Bermuda-American Triangle. 'What goes around comes around' -- some very astute person said and/or wrote that...I can't find the origin of this maxim (because it is dominated on the internet by a Justin Timberlake song of this name)...However, the concept of 'cosmic justice' is poetically established in the oldest piece of written philosophy in Western (and Greek) history...
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The second oldest philosopher -- Anaxamander, 610-546 BC -- in the history of Western philosophy was also the first philosopher to basically assert the maxim 'What goes around, comes around.' but not in these words. Axamander was a very wise and 'street smart' philosopher who knew an awful lot about 'the interaction between life, human behavior, opposites -- and the evolution and destruction of power'. I refer to Axaxamander as the first 'dialectic philosopher' because he talked and wrote about the 'interaction and the struggle for power between opposite factions in life'...
'Anaxamander's Fragment' -- probably the oldest piece of written philosophy in Western history -- has something obscure, but still very interpretively meaningful, indeed fascinating, to say about the idea of 'Cosmic Justice'.
I found this relatively new piece below on the internet by an unidentified writer/philosophy student working on (or maybe now finished) a PHD thesis relative to the philosophy of Derrida in relation to the earlier work of Heidegger -- and the aforementioned Anaxamander. The piece was written on April 1, 2008, is called 'Contaminations' and can be found by googling...The Anaxamander Fragment, Contaminations...
(As a probably superfolous side-note, when I first started writing about 'Anaxamander's Fragment' on Nov. 8th, 2007, there was very little information on the internet about it -- just a few tidbits. Now, you can google...Anaxamander's Fragment, find my various essays on it...and also hundreds, literally hundreds of other philosophical commentaries on it...Either I was blind back in 2007 -- in fairness some pieces were written before mine, most probably afterwards, except for those commentaries that were written by the main philosophers...Nietzsche, Russell, Heidegger, Derrida..., and some pieces are simply undated. (I hate that. If you are working on the internet, date your pieces, people, date your pieces. Or work on a website, blogsite, and/or twitter that dates your pieces for you.). Regardless -- what this says mainly, I think, is that there continues to be a literal evolutionary explosion of information/knowledge on the internet of uncalcuable proportions because students and grass roots citizens everywhere, can and do, put their thoughts on the internet now instead of in private journals and papers.
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The Anaximander Fragment
The Anaximander Fragment is perhaps the oldest fragment of philosophical thought that has passed down, through the ages, to us. It’s a short sentence, preserved by Theophrastus and Aristotle. It speaks about the beginning and end of things, of payment, justice, the order of time. Frankly, as with the other fragments of the preSocratics, it’s pretty obscure.
Heidegger translates it thus:
“But that from which things arise also gives rise to their passing away, according to what is necessary; for things render justice and pay penalty to one another for their injustice, according to the ordinance of time.”
Early Greek Thinking, p.20
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Here is the original Anaxamander Fragment as it is usually translated...and as I have previously translated in several of my essays.
Whence things have their origin,
Thence also their destruction happens,
As is the order of things;
For they execute the sentence upon one another
- The condemnation for the crime -
In conformity with the ordinance of Time.
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What goes around, comes around. The same 'toxic poison' that has been sweeping the nation, spreading through America and poisoning individual workers, families, house owners, senior citizens...has come back to poision its original source -- Wall Street Banks, Traders, -- and AIG.
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what goes around, comes around
The status eventually returns to its original value after completing some sort of cycle.
A person's actions, whether good or bad, will often have consequences for that person.
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To use another well-used maxim, one might say that AIG 'reaped what they sewed'...
Or to risk antagonism myself, and quote another rightly and/or wrongly villanized 'American anti-thesis antagonist' in recent American history, one might say that,
'AIG's chickens have come home to roost!'
But perhaps what enrages the American people most is that the people who originally started the spread of this toxic poison leading to 'worthless and/or toxic credit default mortgage contracts' have not only not been 'caught' and/or 'punished' but indeed, may still be getting rich from their toxic ideas and actions...
Or are they?
This is what the American public absolutely needs to know. I would not want to say I work at AIG right now. (There are 'lynch mobs' metaphorically and/or literally waiting outside their doors.)
This is why -- before and/or at the same time as -- any lists are released to the American public of 'bonus collectors at AIG', cooler heads need to prevail. Imperative distinctions need to be made between:
1. (Arrogance, Greed, and Evil): Executive owners and/or decision makers who created the original 'toxic mortgage contract poison' -- and who may or may not still be collecting bonuses at AIG. If they are, then tax these executives out of their bonuses;
2. (Incompetence): High end managment exeutives and/or 'financial traders' who have simply done a terrible job in 2008 -- and are not worthy of these 'retention bonuses' -- especially when they are being propped up and financed by the American people;
3. (Competence, Excellence...): New executive managers who may be of 'superior stock' to the 'old, hopefully evicted team', and/or high-end financial traders who may actually have saved AIG millions of dollars in previous debt by 'getting rid of bad, toxic contracts (don't ask me who would buy them or whether it's even ethical to sell them -- are these 'traders' trading 'toxic poison' to other companies and/or other parts of the world or to The American people?). But let us just assume for a minute here, that there may be some AIG bonus collectors out there that may have actually 'earned' their bonues;
4. There is some legitimacy to the logic that 'the sacredness of all legal contracts should be honoured and adhered to' or else all contracts may lose their sacredness, no longer be honoured, and become essentially 'Perry Credit' (in my high school terminology) or a part of this toxic wasteland of bad, default contracts that are bringing down the nation...
Hegel's Hotel: DGB Philosophy, for the most part (not entirely because I can get very angry too -- and can and do write angry essays), is put together in all its individual essays to cool angry, overcompensating heads -- fast and inappropriate judgments based on not enough familiarity with the 'full context of the situation related to the whole'.
Thesis. Anti-thesis. Synthesis.
Hegel's 'dialectic logic' modified, updated, renewed, reinvigorated, and 'humanistically-existentialized' for the 21st century.
That may sound academic and shallow in the context of plunging fortunes and devastated families.
But let us not forget how 9/11 and the chase for Bin Laden in Afghanastan --'evolved' -- into the invasion of Iraq -- which also has a lot to deal with the devastated American economy.
That too -- was overcompensation based on, and/or leading to, 'bad associating', 'bad generalizing', and 'bad causal interpretations'.
By Congress -- Republican and Democrat Senators -- alike.
And by the past President of The United States of America -- and his team of executive advisors.
The Invasion on Iraq was based on a collosal, unilateral, unsanctioned United Nations, American mistake.
Which is why America has no ruling Repubican Party right now.
And which is why America has the immensely charismatic, 'Apollonian God of all speech givers' -- President Obama.
But charisma and amazing speeches will only get a man or woman so far.
The rest requires 'effective action'.
Now President Obama is on 'the hotseat'.
Now it's President Obama's turn to turn words into action and -- 'get it right'.
Even if the 'pragmatically important and effective is not the perfect'.
Most importantly -- for the sake of the credibility and the integrity of the present American government and the present Congress -- it is imperative to make sure that 'government actions' are congruent with 'government words'.
Words like 'accountability' and 'transparency' are a 'dime a dozen' amongst American and Canadian politicians.
It doesn't take much effort to 'talk the talk' -- although that obviously should be the starting point for effective government action.
Still, especially after the Bush Administration, The American Government -- both Congress and Obama's Executive Team -- need to gain, regain, and/or keep the working trust of the American people.
Somebody pulls a fast one on you...and...
'Once shame on you. Twice shame on me. Three times -- and I'm a significant part of the problem.'
Either legislate these 'retention bonus contracts' out of existence,
Tax them to death,
Or call them what they perhaps should be called in order to avoid semantic confusion and the potential for the greed and abuse of a high end employee and/or executive 'getting two differently named bonus cheques that should probably be labelled as one and the same thing: 'Individual Performance-Retention Bonus Contracts'.
Then there can be no confusion with Congress, the White House, and the American people.
These bonus contracts -- especially to employees in 'bailed out companies' -- should be transparent and subject to 'Reason and Justification Relative to Ethical, Value for Value Capitalism'. They should be related to keeping high performing top end employees that a successful multi-billion dollar business needs to keep in order to either keep performing well and/or to 'upright a shipwreck, and make the ship sail again'.
Make these contracts 'value for value'. Not 'value for nothing' or 'value for incompetent performance'. And not 'value for looting, shipwrecking, and abandoning a previously seaworthy ship'. No 'conflict of interest' bonus contracts where the same people making the contracts receive the contracts -- 'greater and greater unbridled goodies'.
In contrast, if there are still 'high end financial traders' who aboard the AIG ship who reduce AIG's debtload by 'millions and millions of dollars'...
These 'super-performers' who may be helping to pull a multi-billion dollar indebted company out of the brink of bankruptcy may still deserve 'super financial compensation'. A particular percentage of the money -- and 'value' -- they have
added to AIG's improved performance in their particular area of work. (Assuming they weren't a part of the management team that created the problem in the first place.)
I like the one Senator's suggestion -- 'double or nothing for the bonus collectors'.
Even Liddy had to smile at that one.
And if Liddy succeeds...at getting AIG out of this 'hell-hole'.
Then he deserves the 'biggest individual performance-retention bonus' of them all.
I shake my head. The guy came out of retirement for $1 -- for this.
Let us move on.
-- dgb, March 18th-20th, 2009.
-- David Gordon Bain
-- Democracy Goes Beyond Narcissism
-- Dialectic Gap-Bridging Negotiations...
Are still in process...
1. Two of The Issues
How many AIG employees received bonuses? 30? 40? 50? (I just learned from the article below that the number is 73 including 11 that have left the company.)
It would seem that many of these employees are 'high level financial traders' and not neccessarily a part of the AIG management team that brought both AIG -- and the American economy, indeed much of the world economy -- down to its collective knees.
There is an issue here that I want to tackle regarding these 'retention bonuses' but first I will ask a related question regarding a sub-issue.
What is the difference between a 'retention' bonus and a 'performance' bonus? From what I was hearing today, it seems like they are basically one and the same thing -- perhaps a 'performance' bonus hiding under a different name as a 'retention' bonus. If anyone has any greater clarity on this distinction in terms -- and whether there is really any difference in 'actual meaning' relative to these two terms -- then please fill me in. In the meantime, I will see if I can find anything on the internet in this matter.
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I love the internet for the immediacy in which I can generally find the answers to the questions I am looking for...
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AIG furor puts spotlight on retention bonuses
The payouts, used for years to keep coveted employees from leaving during periods of corporate upheaval, are frequently abused, critics say.
By Walter Hamilton
10:58 PM PDT, March 17, 2009
Reporting from New York -- The furor over American International Group Inc.'s million-dollar payouts to employees who nearly toppled the insurance giant is turning a spotlight on what critics say is frequently an abuse in the way corporate executives are paid.
AIG is shelling out $450 million in so-called retention bonuses. Such payouts have been used for years to keep coveted employees from jumping ship during periods of corporate upheaval, typically caused by a merger or bankruptcy. Compensation experts say the bonuses can serve a legitimate purpose, especially if the workers getting them are likely to lose their jobs within months.
Cuomo: 73 AIG staffers got bonuses of $1 million or more
AIG bonus flap may cost recipients
But as overall executive-pay levels have surged in recent years, executives increasingly have used retention payments to ladle out more money to themselves while walking out the door, critics say.
Executives "have been using these as a vehicle to scoop extra compensation for themselves for years," said David DeBoskey, an executive-pay expert at San Diego State University. "Retention bonuses have been used for nefarious purposes to enrich executives of organizations where their futures are uncertain. When your future becomes uncertain, you look for a quick hit and it comes in the form of a retention bonus."
Retention bonuses have been overshadowed in recent years by other forms of executive pay -- such as salaries, regular annual bonuses and stock options -- that generated far louder howls of protest.
But retention pay was thrust into the executive-compensation debate with the disclosure by AIG that it paid $165 million to employees of its financial products division.
The unit made disastrous bets on securities known as credit-default swaps that ultimately led to billions in losses and necessitated a government bailout costing $170 billion to keep a failure of the company from bringing down the global financial system.
The securities were essentially insurance contracts in which AIG guaranteed investment banks and hedge funds that it would cover losses on mortgage-related bonds, whose values plunged as the housing downturn set in.
Outrage over the bonuses intensified Tuesday as New York Atty. Gen. Andrew Cuomo revealed that 73 AIG workers got bonuses of $1 million or more, including 11 who have since left the company.
The biggest payout was $6.4 million, and the top 10 people took home $42 million, Cuomo wrote in a letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
Critics say it's incongruous for AIG to dish out millions to employees of a unit that lost more than $40 billion last year, especially because the unit is being gradually dissolved.
But AIG says it promised the payments to about 400 employees in early 2008 -- before the depth of the financial crisis became known.
At the time, the financial products unit "was expected to have a valuable, ongoing role at AIG," the company said in a five-page memo prepared last week for the Treasury Department about the payments.
The memo said $55 million was paid in December and $165 million went out Friday. An additional $230 million was scheduled to be paid this year.
In the memo, the company contends that it is legally obligated to honor the contracts that call for the bonuses.
But some legal experts say the government might have some options to block or reverse the bonuses.
One possibility mentioned by members of Congress would be to create a tax that would confiscate potentially all of the payouts. Such a tax would probably face scrutiny on constitutional grounds, but Beverly Hills lawyer Anthony Glassman said it could be designed to withstand such a challenge.
Glassman said the government would have difficulty persuading a court to nullify the bonus agreements. "The only way to solve this is legislatively," he said.
But AIG may have misinterpreted a state law in Connecticut, where its financial products unit is based, when it said it couldn't halt the bonus payments, Richard Blumenthal, the state's attorney general, said Tuesday.
Some lawyers say trying to reclaim the bonuses would cause more harm than good. "All commerce throughout the world is dependent on the sanctity of contracts," said James Donovan, a Los Angeles attorney. A challenge could make it hard for financial firms to recruit employees because they might fear their employment contracts would be broken, he said.
Some compensation experts say the bonus agreements were reasonable last spring when Wall Street thought it could rebound intact from the subprime debacle. At the time, the financial engineers who concocted the exotic securities were highly sought after. And arguably traders who create abstruse securities may be the best people to unwind them.
"Just like you need Bernie Madoff to help you find where all the money went, even though you'd rather throw him in jail and never talk to him again, you need the people who were involved to help undo" the securities, said Adam Zoia, founder of executive search firm Glocap in New York.
Still, critics argue, the AIG payouts underscore the excesses that have marked retention bonuses in recent years.
Even some Wall Street headhunters who negotiate the bonuses believe they became excessive.
"We're coming out of a very greedy time," said Jeanne Branthover, head of the financial-services practice at Boyden Global Executive Search in New York. "Everything got exorbitant, whether you're talking retention bonuses or [annual] bonuses or anything."
walter.hamilton@latimes.com
Times staff writers E. Scott Reckard and Ken Bensinger contributed to this report.
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2. Edward Liddy and His Band of 'High Stake Financial Traders'
I hope that CNN carries more of these types of Congress hearings or meetings -- it gives the American people (and a Canadian outsider like me) the opportunity to at least partly or vicariously participate in how their goverment is being run, how Congress is run, and some names and faces that start to become 'individuated' as opposed to simply negatively stereotyped as a Republican or a Democrat Senator.
And in this respect, it is just as important not to negatively stereotype all the individual members of AIG -- like Edward Liddy who apparently came out of retirement as a past CEO of Allstate Insurance on the government's request working for $1 in 2009 if I heard that right which I think I did (assuming no 'backroom retention or performance bonuses' which he probably deserves under either name if he pulls off some kind of financial miracle here and gets the AIG ship sailing again in deep, hurricane-driven, precarious waters...).
I heard today that AIG stock value went up some 40 cents a share which is nothing to sneeze at if it sticks.
And I heard today -- assuming Liddy's numbers are accurate (I think these numbers should be given and verified/cross-checked/cross validated to the best estimate possible on paper to the Congress Committee and through news outlets to the American people -- that some serious gains have been made in reducing AIG's overall debt load.
It is very easy to negatively stereotype people -- we see it all the time in every realm of every culture, with probably most people if not all people -- I have probably been guilty of this 'faux pas in reasoning' myself in different essays I have written (overgeneralizing, over-associating, painting everybody in a group of people with the same brush) -- and in this regard we must be careful not to paint every employee of AIG with the same brush, nor to use another old cliche, 'lose the baby with the bathwater'. I think that both Congress and the American people -- as outraged as they may be (and I am partly still too although less so since I watched and listened to this hearing today) -- want to keep the best 'AIG' employees, the best AIG performers (and even failing or failed companies still have good employees), and not lose them in a 'Congress witchunt' and/or a 'massive retaliatory (overcompensating) purging' of AIG employees with 'bonuses' attached to their forehead like 'bullseyes'.
Don't get me wrong. I want to get to 'main culprits of this AIG financial meltdown' just as badly as everone else does. The previous CEO who was the leader of AIG through this collapse of AIG has already been fired, released or whatever (probably with a multi-million dollar farewell package although I don't know that). Let's not pin the mistakes -- and/or narcissistic greed of this previous CEO -- with the current one, Edward Liddy, who walked out of his stress-free retirement and into this AIG quicksand. For nothing. (Correction: for $1.)
From what I can see and hear so far -- admittedly as a layperson trying to 'continue to evolve myself, learn some portion of highly complex American economics and politics', figure out what is and has been going on here -- I say, at this time, let's not lose Edward Liddy. It is possible that he may be on his way towards doing a good job. Let's check the numbers he gave Congress today and see if they can be cross-checked for their accuracy.
As long as Liddy wasn't giving Congress a barrel full of 'AIG bullcrap' -- which I don't think he has any motivation for doing so, since he didn't cause the mess that got the AIG and the American people here aside from maybe this last bonus payout on the weekend -- anyway, if he says he needs a particular 'band of high stakes, high expertise, high performing financial traders' who each are intimately knowledgeable and connected with 20-25 highly volatile and huge money contracts, and that these contracts are being 'wound down' improving the overall value of AIG by multi-millions, or even billions, of dollars in a relatively short period of time (even if the company as a whole still owes billions or even a couple of trillion dollars, and that may only be the 'Financial Product' division if what I heard today was right) --then let him keep the employees that he thinks he needs, and be accountable for their performance in 2009.
In this respect, Liddy -- in dialogue (or dialectic exchange) with The Federal Reserve, and with Congress (any more than this, and that could pose a problem also: i.e, 'too many cooks can spoil the broth' and make the proper decision-making by Liddy virtually impossible) -- needs to recognize and distinguish between which employees (and particularly which 'high end financial traders') are 'significantly lessening the AIG debt now as Liddy says is happening vs. those employees, traders, and/or managers who helped to create the AIG 'toxic waste' of billions or trillions of dollars that brought AIG in front of the Congress today. And who were these 'retention bonuses' going out to last Saturday: 'good' or 'bad' performers. (Which obviously blurs the line between a 'retention' bonus and a 'performance' bonus' but Liddy obviously needs to properly know which employees he most needs to keep -- even if it cost millions of dollars as long as these 'traders' trade much more than their own value -- 'in upping the company's value'; not 'further reducing it'.)
If you are a Congress Senator in Washington, a basketball fan, and you care about the future performance of The Washington Wizards, you are not going to want to see Antawn Jamison or Caron Butler, or Gilbert Arenas (even though he's been hurt all year which probably has a lot to do with why your team has been so bad this year) walk out the door -- and get no value in return -- because you fail to honour his contract, whether it is a regular salary contract, an agreed upon performance bonus, and/or a 'retention' bonus to keep him from walking away (if he is a free agent) from a 'currently failing team'.
This assumes that your salary and/or bonus payment numbers are in the same ballpark as what other teams pay their star players, taking into account salary cap, budget, the financial status of the Washington Wizards, and so on. If the Washington Wizards were being 'financially propped up' by the city, the State, and/or the Federal Government -- you would have to expect that the basketball team would still be expected to pay their star players what they need to pay them in order to keep them.
The rest are perhaps more easily replaceable and can walk if they want although you would probably want to protect your good, young, and still developing players as well. To use two other cliches, you don't want to 'cut off your nose to spite your face' or 'shoot yourself in the foot'. You don't want to demand 165 million back if it means jeopardizing your chance at getting 80 billion back -- or worse, have the financial catastrophe that everone was/is fearing the most, including Liddy, actually happen -- i.e., AIG goes into receivership, multi-billions or even a few trillions of dollars are lost, and all the banks that were leaning on AIG to hedge their bets on their sub-prime mortgage contracts that should have never been put out there in the first place (now the persons who initiated these 'sub-prime contracts' resulting in 'credit-default contracts and swapping' -- these are the persons who should really be called up onto the Washington carpet (or maybe even certain politicians in Washinton during the Bush Administration had something to do with the initiation of these sub-prime mortgages and brutal interest rates later in the contract).
The 'BIG Players' here are the 'real bad guys' -- not the traders who 'traded' these contracts later. They were probably only doing what they were told to do in already disasterous situation. Who are you going to blame -- the President or Dictator of a country who tells a general to tell a seargent to tell a pilot to drop a Nuclear bomb -- or anyone under the President's or Dictator's authority who is under the threat of treason, court martial, or gross insubordination if they fail to do what they are ordered to do? The person giving the orders? Or the person taking them? Most of us saw 'A Few Good Men' I think.
I wouldn't have argued this way before the Congress Hearing today. But Liddy at least partly, if not totally, sold me on why he did what he did -- meaning pay out all that bonus money in order to keep some players who if they leave might cause the collapse of what is left of the AIG empire.
AIG -- Arrogance, Incompetence, Greed -- I liked that one.
I also liked Republican Senator Ackerman's comments. We will get to his comments near the end.
In general, I liked Lilly and his answers. A man put into a spot -- accepting a more or less 'thank less' job by the American government that he wasn't even getting paid to do with physical threats to both himself and to his employees -- almost as bad as the one Obama himself walked into. A man being asked to oversee and get rid of a debt load that seems to be in the trillions of dollars -- didn't I hear Liddy say that the 'Financial Products' division itself had a debtload of 2 point something trillion dollars which had been brought down to 1 point something trillion dollars?
In my books, he sounded and must have felt something like what I imagine General Dwight Eisenhower felt like before the Battle of Normandy -- knowing that he was going to probably lose a lot of soldiers in the battle but knowing that winning or losing this battle could quite possibly determine the final outcome of World War 11, which it did.
In Lilly's case, he knew that he was gambling with 165 million dollars of the American taxpayers' money, and that there would probably be a huge outcry of rage at more corporate bonuses going out to high stake AIG players but knowing also that if he refused to honor these bonus contracts (which were created before AIG went seriously in the tank, and before Lilly came on board at AIG), he risked these same high stake players (traders) walking out the door on him in the most volatile and precarious of his Operational Divisions -- The Financial Products Division -- the one that owed 2 point something trillion dollars, had been brought down to 1 point something trillion dollars, and which could still topple the AIG empire, and with it many American banks dependent on AIG staying alive, meaning crashing the American economy far worse than Americans have seen so for to this date, perhaps it has not already reached this point further exasperating or creating the greatest financial collapse and disaster in American history.
So Lilly gave the bonuses out on Saturday March 14th, probably trying to minimize the presence and negative impact of the American media, which didn't work -- everyone found out on Monday -- and the rest has been a huge outcry of American rage leading up to Lilly's 'defense' in front of the American Congress Financial Committee and the American people. A man perhaps in a 'no-win' position. Caught between a 'rock and a hard place'. American rage or American Financial Disaster.
He picked to 'eat' American rage.
I see at least two lessons here about:
A. 'Distinction'; and B. 'Context'.
Let's look at these two inter-related principles separately:
A. Distinction:
Dont blame high stake financial traders for the mistakes of the people above them -- the managers and owners who 'set the rules' and 'created the parameters' under which the traders agreeably or disagreeably had to/have to work.
They deserve to get paid what they are worth. If they have already 'unwound' multi-millions or even billions of dollars of AIG and American debt, then they deserve to be paid 'a fraction of this amount', even if this runs into the millions of dollars under whatever name you want to call the bonus -- 'performance bonus' and/or 'retention bonus'.
The importance here is to connect these bonuses to 'current individual performance' (2008); not to blame individuals who had no responsibility or accountability for the creation of the 'toxic contracts' in the first place, and based independently not on AIG overall collapse -- unless they were partly responsible for it -- but rather on how well each individual involved here did in 2008 to 'undo in his own realm of control -- meaning the 20 to 25 highly volatile contracts that each of these traders controls' -- irrespective of the overall collapse of AIG that may or may not have had anything to do with each trader's individual performance.
To go back to a basketball example: How do we know that there is not a 'Lebron James' or a 'Kobie Bryant' or a 'Dwayne Wade' amongst these high-stake traders? You can't rightfully blame a basketball player for the mistakes of his coach or GM or owner -- unless you are trying to 'scapegoat' any and/or every player on the team who may have had an excellent season -- or not -- in the context of a 'bad team' situation.
I saw some 'good individual performances' amongst the Senators yesterday -- even in the larger context of an American Government -- even under the Obama administration -- that has 'screwed up'. Fool me once, shame on you. Fool me twice, shame on me. Fool me three times -- I am a part of the problem, and I need to give my 'head a shake'. Shame on the Obama Administration. They've had at least two chances now to legislate greater 'transparency' and 'accountability' amongst companies who are receiving 'American bailout money'. They have failed twice now. They need to get it right this time. And that doesn't mean overcompensating in the wrong direction.
B. Context
In almost every situation, every encounter, every process, every relationship, indeed, even every word, context matters -- hugely.
We are so quick to rush to judgment -- before we have all the facts together in their proper place. We see an 'individual part' -- we don't see the context of 'the whole'. We assume that the 'individual part' is equivalent to the 'context of the whole'. It is not. Good -- even excellent -- individual performances can happen in the context of a 'very bad team situation with bad leadership'. We must not paint everyone on a 'bad team' with the same paintbrush. If the American government on the backs of the American people are paying bailout money to AIG, then the 'good to excellent players' on this 'bad team' need to be paid properly -- even if it is with part of the money that is being given to them to keep the company afloat. Otherwise, they are likely going to lose their 'best individual performers' -- and the ship is likely to go nowhere except further down into the deepest depths of the ocean. Am I beating a dead horse here?
That is why we have courts of law with hopefully good judges and/or juries -- to determine the extent of individual responsiblity, accountability, and blame -- in the context of 'the facts of the greater whole'.
'Sound bites' and 'visual bites' can be extremely dangerous. Causing us to jump to fast -- and bad conclusions. Bad judgments.
If Lilly is good to great at what he does -- which I think he quite possibly is -- then let us all give him enough room to 'function properly' and 'fix the AIG ship'.
Change the 'name', the 'structure', and/or the 'nature' of these 'retention contract bonuses.' But let's not let the existence and functioning of possibly excellent individual performers walk away from a 'before Lilly-dysfunctional ship'. Let's better know who the good and bad performers were/are in 'the AIG ship gone bad'. And if the AIG ship is 'correcting itself and starting to float again in 2009' -- let's not 'hammer more holes in the ship' and watch it go plunging back, or deeper, into the darkest depths of the ocean.
Let Lilly perform. He's being 'not paid' to make the kinds of decisions that none of us (or very few of us, and I certainly do not include myself here) would have the wish nor the ability to make. Worse people are still walking around 'free and rich' here than some of the AIG people here who are possibly being scapegoated. And I know one person for sure who is still sitting in jail for a crime much less than these (I'm thinking of Conrad Black): 1. sub-prime mortgage contracts with huge escalating interest rates; and 2. insurance for 'hedge bets' or 'credit default contracts' that that the insurance company doesn't have the money to insure if they are 'called on these bets'. That's like buying stocks from a stock broker who keeps your money -- and doesn't buy your stocks. Can you think of anyone who before the American courts for doing this?
Republican Senator Ackerman did a great job of spelling out this basic type of fraud in simple layperson's language. CNN helped too with their demonstration of how 'hedge contracts' or 'credit-default contract insurance' works.
I have a name for it -- and I see this kind of 'phenomeon' all the time in the business world I walk around in.
Call it -- 'No Value For Value Capitalism'.
I learned about 'No Value Capitalism' and 'Credit Defaulf Swapping' when I was back in high school. Informally. With no name attached to it. Away from school.
Some of my friends at the time started engaging in some regular 'penny poker games'. (Some of the guys took their stakes higher but my tightest group of friends wanted to keep the stakes low to keep the games friendly. Probably a good idea but we still had some problems. Of 4 or 5 of us, one of the group members started to lose more often than not -- and worse -- he stopped paying what he owed.
Instead, our losing poker player started to put his debts on 'credit'. Well, it didn't take long for 'Perry Credit' to start to build up as a 'pseudo-asset' for each and every one of the other poker players. So we started engaging in 'The Credet-Default Swapping Program'. (Again, we didn't have a name for it back then other than 'Perry Credit'.)
So all of us started 'swapping our Perry Credit'. Of course, it didn't take us very long to realize that this 'Perry Credit' was basically 'worthless'. As in 'No Value'. Thus, in effect we were learning the essence of 'No Value' Capitalism. Or 'No Value For Value' Capitalism.
As Republican Senator Ackerman would state -- indeed, did state -- at the Congress Hearing on March 18/09 -- we (my poker friends) and they (AIG) were basically exchanging 'snake oil' -- without even the snake oil inside the bottle. We (they) were exchanging 'worthless' or 'toxic' credit..
Who would want to buy it? Unless the person on the other end of the 'credit swap' didn't know what he or she was getting, who would want credit that was 'worthless' or 'toxic'?
Now I don't know how this part worked at AIG -- I know how it worked at our poker games. We had to finally get rid of 'Perry' and start our games from scratch again. One lost friend.
So again, I don't know how this next part at AIG worked. I can surmise at least partly what happened from what Senator Ackerman was saying. And we all know that it was not entirely the individual house owners who started to 'default' on their 'mortgage contracts' who were not entirely the source of the problem here.
There was an American economy that was getting worse -- even before these toxic-default-mortgage-contracts started to come back in the bankers' faces. Blame this mainly on the war in Iraq -- which the Bush Admininistration was putting on 'credit'. 'Charge the cost of the Iraq War to the American People when I'm gone' was basically the philosophy that the Bush Administration was practising. And that probably includes all the Senators who were at the Liddy hearing on Wed. March 18th/09. In effect, one could almost say that the pre-Obama American Government was selling 'snake oil' to the American people. 'A war that costs nothing!' Or so that was the illusion. That was the 'snake oil'. The snake oil was 'cobra venom' and it was building up in the bottle...and starting to 'overflow out the top of the bottle'. The cobra venom was starting to 'poison' the American people.
Plus there was another problem going on here. Some person somewhere -- either a politician in Washington in government, or a banker or mortgage seller on Wall Street got this 'brilliant' idea. Catch my sarcasism here, please. The idea may go down as the worst idea in American history.
Let's say it was a politician in Washington. The idea went something like this: 'Hey, let's get more people -- more middle class, or even lower middle class, people into their own homes!' Maybe this started out as an 'altruistic idea' -- somebody in Washington trying to help more people 'achieve the American Dream'.
However -- excuse my cynicism here but somehow I entirely doubt this. We are talking 'Capitalism' here -- 'Narcissistic Capitalism'. I don't want to overgeneralize here. I know there are some politicians in Washington -- probably more Democrats than Republicans by the nature of their 'polar' respective 'ideologies' but I think the Republicans are starting to get the message from the results of the last election -- who may have the good of 'Main St. America' at heart but I think the 'birth of sub-prime mortgage contracts' was based on human greed, not human altruism.
Everyone in Washington, everyone in The Republican Party (maybe not Sarah Palin...leave her alone, David, the election is over...), everybody on Wall Street knows probably Adam Smith's most famous line:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. -- Adam Smith
The birth of the idea probably went something like this: 'Hey, I know a way we can make more money. We artifically create a 'low interest rate' for motivate more middle class, or even lower middle class, American citizens to buy houses. Then we start jacking up the interest rate on these contracts once the new home owners are a year or two into their contract -- and this is how we will more than make up for 'the cheap start up fee in the form of these sub-prime interest rates'.
In effect, this 'banker's logic' is no different than enticing a person to get a credit card by advertising a 'low start up interest fee' -- and then 'jacking up the interest rate' once the new credit card owner has had his credit card for a given period of time -- let's say a year. The 'seductive bonus' for consumers is at the beginning of the contract; the 'poisonous snake oil' for consumers which -- if it works -- is much more beneficial for bankers later in the contract. The snake oil if it is the 'right toxicity' level must be strong enough to partly paralyze, partly hypnotize, the consumer but still not so strong as to completely paralyze the consumer and make him or her incapable or unwilling to pay the 'UnGodly, Satanic Interest Rates' that have been 'jacked upwards' to 'squeeze more money out of him and/or her'.
Well, the first and 'weakest' homeowners of these 'Satanic Mortgage Deals' started to 'lose consciousness because of an overtoxic cobra poison'. Other homeowners in these same types of deals -- thousands of others -- soon started succumbing to the overtoxic poision as well. Houses started going into 'foreclosure' everywhere.
Thousands and thousand of homeowners involved in these Satanic Deals had to give up their new houses -- and hit the street. Combine this with the war in Iraq -- that was being financed on credit -- and the American economy started to spiral downward like a ship or airplane in The Bermuda Triangle. The 'triangle was 1. Washington; 2. Wall Street; and 3. Main Street.
And AIG was right in the middle of The Bermuda (America) Triangle -- indeed, it was probably one of the main creators of The Bermuda (America) Triangle. Or to use another example, it started out as one of the main 'spiders' but then became a 'spider caught in its own spider web' -- its own self-created Bermuda-American Triangle. 'What goes around comes around' -- some very astute person said and/or wrote that...I can't find the origin of this maxim (because it is dominated on the internet by a Justin Timberlake song of this name)...However, the concept of 'cosmic justice' is poetically established in the oldest piece of written philosophy in Western (and Greek) history...
......................................................................
The second oldest philosopher -- Anaxamander, 610-546 BC -- in the history of Western philosophy was also the first philosopher to basically assert the maxim 'What goes around, comes around.' but not in these words. Axamander was a very wise and 'street smart' philosopher who knew an awful lot about 'the interaction between life, human behavior, opposites -- and the evolution and destruction of power'. I refer to Axaxamander as the first 'dialectic philosopher' because he talked and wrote about the 'interaction and the struggle for power between opposite factions in life'...
'Anaxamander's Fragment' -- probably the oldest piece of written philosophy in Western history -- has something obscure, but still very interpretively meaningful, indeed fascinating, to say about the idea of 'Cosmic Justice'.
I found this relatively new piece below on the internet by an unidentified writer/philosophy student working on (or maybe now finished) a PHD thesis relative to the philosophy of Derrida in relation to the earlier work of Heidegger -- and the aforementioned Anaxamander. The piece was written on April 1, 2008, is called 'Contaminations' and can be found by googling...The Anaxamander Fragment, Contaminations...
(As a probably superfolous side-note, when I first started writing about 'Anaxamander's Fragment' on Nov. 8th, 2007, there was very little information on the internet about it -- just a few tidbits. Now, you can google...Anaxamander's Fragment, find my various essays on it...and also hundreds, literally hundreds of other philosophical commentaries on it...Either I was blind back in 2007 -- in fairness some pieces were written before mine, most probably afterwards, except for those commentaries that were written by the main philosophers...Nietzsche, Russell, Heidegger, Derrida..., and some pieces are simply undated. (I hate that. If you are working on the internet, date your pieces, people, date your pieces. Or work on a website, blogsite, and/or twitter that dates your pieces for you.). Regardless -- what this says mainly, I think, is that there continues to be a literal evolutionary explosion of information/knowledge on the internet of uncalcuable proportions because students and grass roots citizens everywhere, can and do, put their thoughts on the internet now instead of in private journals and papers.
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The Anaximander Fragment
The Anaximander Fragment is perhaps the oldest fragment of philosophical thought that has passed down, through the ages, to us. It’s a short sentence, preserved by Theophrastus and Aristotle. It speaks about the beginning and end of things, of payment, justice, the order of time. Frankly, as with the other fragments of the preSocratics, it’s pretty obscure.
Heidegger translates it thus:
“But that from which things arise also gives rise to their passing away, according to what is necessary; for things render justice and pay penalty to one another for their injustice, according to the ordinance of time.”
Early Greek Thinking, p.20
.............................................................................
Here is the original Anaxamander Fragment as it is usually translated...and as I have previously translated in several of my essays.
Whence things have their origin,
Thence also their destruction happens,
As is the order of things;
For they execute the sentence upon one another
- The condemnation for the crime -
In conformity with the ordinance of Time.
............................................................................
What goes around, comes around. The same 'toxic poison' that has been sweeping the nation, spreading through America and poisoning individual workers, families, house owners, senior citizens...has come back to poision its original source -- Wall Street Banks, Traders, -- and AIG.
................................................................................
what goes around, comes around
The status eventually returns to its original value after completing some sort of cycle.
A person's actions, whether good or bad, will often have consequences for that person.
..........................................................................
To use another well-used maxim, one might say that AIG 'reaped what they sewed'...
Or to risk antagonism myself, and quote another rightly and/or wrongly villanized 'American anti-thesis antagonist' in recent American history, one might say that,
'AIG's chickens have come home to roost!'
But perhaps what enrages the American people most is that the people who originally started the spread of this toxic poison leading to 'worthless and/or toxic credit default mortgage contracts' have not only not been 'caught' and/or 'punished' but indeed, may still be getting rich from their toxic ideas and actions...
Or are they?
This is what the American public absolutely needs to know. I would not want to say I work at AIG right now. (There are 'lynch mobs' metaphorically and/or literally waiting outside their doors.)
This is why -- before and/or at the same time as -- any lists are released to the American public of 'bonus collectors at AIG', cooler heads need to prevail. Imperative distinctions need to be made between:
1. (Arrogance, Greed, and Evil): Executive owners and/or decision makers who created the original 'toxic mortgage contract poison' -- and who may or may not still be collecting bonuses at AIG. If they are, then tax these executives out of their bonuses;
2. (Incompetence): High end managment exeutives and/or 'financial traders' who have simply done a terrible job in 2008 -- and are not worthy of these 'retention bonuses' -- especially when they are being propped up and financed by the American people;
3. (Competence, Excellence...): New executive managers who may be of 'superior stock' to the 'old, hopefully evicted team', and/or high-end financial traders who may actually have saved AIG millions of dollars in previous debt by 'getting rid of bad, toxic contracts (don't ask me who would buy them or whether it's even ethical to sell them -- are these 'traders' trading 'toxic poison' to other companies and/or other parts of the world or to The American people?). But let us just assume for a minute here, that there may be some AIG bonus collectors out there that may have actually 'earned' their bonues;
4. There is some legitimacy to the logic that 'the sacredness of all legal contracts should be honoured and adhered to' or else all contracts may lose their sacredness, no longer be honoured, and become essentially 'Perry Credit' (in my high school terminology) or a part of this toxic wasteland of bad, default contracts that are bringing down the nation...
Hegel's Hotel: DGB Philosophy, for the most part (not entirely because I can get very angry too -- and can and do write angry essays), is put together in all its individual essays to cool angry, overcompensating heads -- fast and inappropriate judgments based on not enough familiarity with the 'full context of the situation related to the whole'.
Thesis. Anti-thesis. Synthesis.
Hegel's 'dialectic logic' modified, updated, renewed, reinvigorated, and 'humanistically-existentialized' for the 21st century.
That may sound academic and shallow in the context of plunging fortunes and devastated families.
But let us not forget how 9/11 and the chase for Bin Laden in Afghanastan --'evolved' -- into the invasion of Iraq -- which also has a lot to deal with the devastated American economy.
That too -- was overcompensation based on, and/or leading to, 'bad associating', 'bad generalizing', and 'bad causal interpretations'.
By Congress -- Republican and Democrat Senators -- alike.
And by the past President of The United States of America -- and his team of executive advisors.
The Invasion on Iraq was based on a collosal, unilateral, unsanctioned United Nations, American mistake.
Which is why America has no ruling Repubican Party right now.
And which is why America has the immensely charismatic, 'Apollonian God of all speech givers' -- President Obama.
But charisma and amazing speeches will only get a man or woman so far.
The rest requires 'effective action'.
Now President Obama is on 'the hotseat'.
Now it's President Obama's turn to turn words into action and -- 'get it right'.
Even if the 'pragmatically important and effective is not the perfect'.
Most importantly -- for the sake of the credibility and the integrity of the present American government and the present Congress -- it is imperative to make sure that 'government actions' are congruent with 'government words'.
Words like 'accountability' and 'transparency' are a 'dime a dozen' amongst American and Canadian politicians.
It doesn't take much effort to 'talk the talk' -- although that obviously should be the starting point for effective government action.
Still, especially after the Bush Administration, The American Government -- both Congress and Obama's Executive Team -- need to gain, regain, and/or keep the working trust of the American people.
Somebody pulls a fast one on you...and...
'Once shame on you. Twice shame on me. Three times -- and I'm a significant part of the problem.'
Either legislate these 'retention bonus contracts' out of existence,
Tax them to death,
Or call them what they perhaps should be called in order to avoid semantic confusion and the potential for the greed and abuse of a high end employee and/or executive 'getting two differently named bonus cheques that should probably be labelled as one and the same thing: 'Individual Performance-Retention Bonus Contracts'.
Then there can be no confusion with Congress, the White House, and the American people.
These bonus contracts -- especially to employees in 'bailed out companies' -- should be transparent and subject to 'Reason and Justification Relative to Ethical, Value for Value Capitalism'. They should be related to keeping high performing top end employees that a successful multi-billion dollar business needs to keep in order to either keep performing well and/or to 'upright a shipwreck, and make the ship sail again'.
Make these contracts 'value for value'. Not 'value for nothing' or 'value for incompetent performance'. And not 'value for looting, shipwrecking, and abandoning a previously seaworthy ship'. No 'conflict of interest' bonus contracts where the same people making the contracts receive the contracts -- 'greater and greater unbridled goodies'.
In contrast, if there are still 'high end financial traders' who aboard the AIG ship who reduce AIG's debtload by 'millions and millions of dollars'...
These 'super-performers' who may be helping to pull a multi-billion dollar indebted company out of the brink of bankruptcy may still deserve 'super financial compensation'. A particular percentage of the money -- and 'value' -- they have
added to AIG's improved performance in their particular area of work. (Assuming they weren't a part of the management team that created the problem in the first place.)
I like the one Senator's suggestion -- 'double or nothing for the bonus collectors'.
Even Liddy had to smile at that one.
And if Liddy succeeds...at getting AIG out of this 'hell-hole'.
Then he deserves the 'biggest individual performance-retention bonus' of them all.
I shake my head. The guy came out of retirement for $1 -- for this.
Let us move on.
-- dgb, March 18th-20th, 2009.
-- David Gordon Bain
-- Democracy Goes Beyond Narcissism
-- Dialectic Gap-Bridging Negotiations...
Are still in process...
AIG CEO asks employees to repay some bonus money
From the internet...yahoo news...
AIG CEO asks employees to repay some bonus money
2 hours, 23 minutes ago
By Emily Kaiser and Corbett Daly
WASHINGTON (Reuters) - The head of AIG said on Wednesday he was trying desperately to prevent the company from collapsing when he allowed the payment of $165 million in bonuses that have stoked widespread public outrage.
Edward Liddy, who took over as chairman and chief executive of American International Group Inc in September when the government stepped in with the first of a series of rescues, said he had asked employees receiving more than $100,000 in bonuses to repay at least half.
"Americans are asking quite simply, why pay these people anything at all," Liddy told a House of Representatives subcommittee. "Here's why: I am trying desperately to prevent an uncontrolled collapse of that business."
Liddy said some employees had already given back their entire bonuses. Others who had received retention bonuses had since left the company.
AIG has drawn intense fire from the public, politicians and President Barack Obama for accepting up to $180 billion in government aid and then handing out multimillion-dollar bonuses.
Liddy said the payouts were necessary to retain top employees with the specialized knowledge to dispose of $2.7 trillion in complex securities that ended up dragging the company to the brink of collapse last year.
Fury over the bonuses threatens to undermine Obama's efforts to solve the credit crisis and pull the economy out of a deep recession. He has said he might have to ask Congress for money beyond a $700 billion bailout fund approved in October.
"People are right to be angry. I'm angry," Obama said on Wednesday.
Many voters view the financial rescues as free handouts to wealthy executives who made bad decisions, and the fat bonuses have fueled that anger.
"It is morally reprehensible and fiscally irresponsible to expect bonus money for bringing a corporate giant to its knees," said Democratic Representative Carolyn Maloney.
Another Democrat, Representative Paul Hodes, quipped that AIG stood for "arrogance, incompetence and greed."
But there was some concern that the firestorm in Washington would turn off private investors the government needs to help buy up bad assets from banks' balance sheets and stabilize the financial system.
LIDDY SAYS EMPLOYEES THREATENED
Channeling the populist sentiment, several Democrats and Republicans in Congress sought to force AIG to disclose details about the bonuses, and proposed taxing them so heavily that the recipients could wind up with nothing.
Representative Barney Frank, the Democrat who chairs the House Financial Services Committee, pressed Liddy to release the names of those who received bonuses, and said he intended to subpoena the information.
Liddy refused, citing concerns for the safety of his employees, and read aloud what he said were examples of violent threats that had been received.
A copy of AIG's retention bonus contracts was posted on Frank's committee's website. (www.house.gov/apps/list/press/financialsvcs_dem/press031809.shtml)
Separately, three Republicans asked the Senate Banking Committee to subpoena for documents related to the bonuses.
The House hearing room was filled to capacity, with more than 80 people inside and dozens more waiting outside. The line to get in was already 40 deep more than an hour before the hearing began.
When Liddy entered the hearing room, he stopped briefly to talk with a handful of protesters, many of whom were dressed in bright pink clothing and carrying signs.
Representative Paul Kanjorski, who chairs the subcommittee, grew increasingly frustrated with the disruption and told the protesters not to "try my patience". He shouted "Signs down!" and later had the signs confiscated.
One of them read, "Fire Geithner," referring to Treasury Secretary Timothy Geithner, who has been a key architect of the bailouts.
Obama said he had complete confidence in Geithner, and said he was "making all the right moves" in fixing the economy.
The situation has put Obama in a tight spot as he tries to strike a balance between sharing the outrage and keeping his focus on the bigger issue of repairing the economy.
"An instinct exists among members of our political class to convene show trials to make up for their own shortcomings," said Joseph Brusuelas, a director at Moody's Economy.com in West Chester, Pennsylvania. "This is on the verge of damaging the real progress made by the Federal Reserve in addressing the financial crisis."
For the AIG retention bonus contracts, see www.house.gov/apps/list/press/financialsvcs_dem/press031809.shtml (Additional reporting by Kristin Roberts, Karey Wutkowski and Jeremy Pelofsky; Writing by Emily Kaiser; Editing by Andrea Ricci)
AIG CEO asks employees to repay some bonus money
2 hours, 23 minutes ago
By Emily Kaiser and Corbett Daly
WASHINGTON (Reuters) - The head of AIG said on Wednesday he was trying desperately to prevent the company from collapsing when he allowed the payment of $165 million in bonuses that have stoked widespread public outrage.
Edward Liddy, who took over as chairman and chief executive of American International Group Inc in September when the government stepped in with the first of a series of rescues, said he had asked employees receiving more than $100,000 in bonuses to repay at least half.
"Americans are asking quite simply, why pay these people anything at all," Liddy told a House of Representatives subcommittee. "Here's why: I am trying desperately to prevent an uncontrolled collapse of that business."
Liddy said some employees had already given back their entire bonuses. Others who had received retention bonuses had since left the company.
AIG has drawn intense fire from the public, politicians and President Barack Obama for accepting up to $180 billion in government aid and then handing out multimillion-dollar bonuses.
Liddy said the payouts were necessary to retain top employees with the specialized knowledge to dispose of $2.7 trillion in complex securities that ended up dragging the company to the brink of collapse last year.
Fury over the bonuses threatens to undermine Obama's efforts to solve the credit crisis and pull the economy out of a deep recession. He has said he might have to ask Congress for money beyond a $700 billion bailout fund approved in October.
"People are right to be angry. I'm angry," Obama said on Wednesday.
Many voters view the financial rescues as free handouts to wealthy executives who made bad decisions, and the fat bonuses have fueled that anger.
"It is morally reprehensible and fiscally irresponsible to expect bonus money for bringing a corporate giant to its knees," said Democratic Representative Carolyn Maloney.
Another Democrat, Representative Paul Hodes, quipped that AIG stood for "arrogance, incompetence and greed."
But there was some concern that the firestorm in Washington would turn off private investors the government needs to help buy up bad assets from banks' balance sheets and stabilize the financial system.
LIDDY SAYS EMPLOYEES THREATENED
Channeling the populist sentiment, several Democrats and Republicans in Congress sought to force AIG to disclose details about the bonuses, and proposed taxing them so heavily that the recipients could wind up with nothing.
Representative Barney Frank, the Democrat who chairs the House Financial Services Committee, pressed Liddy to release the names of those who received bonuses, and said he intended to subpoena the information.
Liddy refused, citing concerns for the safety of his employees, and read aloud what he said were examples of violent threats that had been received.
A copy of AIG's retention bonus contracts was posted on Frank's committee's website. (www.house.gov/apps/list/press/financialsvcs_dem/press031809.shtml)
Separately, three Republicans asked the Senate Banking Committee to subpoena for documents related to the bonuses.
The House hearing room was filled to capacity, with more than 80 people inside and dozens more waiting outside. The line to get in was already 40 deep more than an hour before the hearing began.
When Liddy entered the hearing room, he stopped briefly to talk with a handful of protesters, many of whom were dressed in bright pink clothing and carrying signs.
Representative Paul Kanjorski, who chairs the subcommittee, grew increasingly frustrated with the disruption and told the protesters not to "try my patience". He shouted "Signs down!" and later had the signs confiscated.
One of them read, "Fire Geithner," referring to Treasury Secretary Timothy Geithner, who has been a key architect of the bailouts.
Obama said he had complete confidence in Geithner, and said he was "making all the right moves" in fixing the economy.
The situation has put Obama in a tight spot as he tries to strike a balance between sharing the outrage and keeping his focus on the bigger issue of repairing the economy.
"An instinct exists among members of our political class to convene show trials to make up for their own shortcomings," said Joseph Brusuelas, a director at Moody's Economy.com in West Chester, Pennsylvania. "This is on the verge of damaging the real progress made by the Federal Reserve in addressing the financial crisis."
For the AIG retention bonus contracts, see www.house.gov/apps/list/press/financialsvcs_dem/press031809.shtml (Additional reporting by Kristin Roberts, Karey Wutkowski and Jeremy Pelofsky; Writing by Emily Kaiser; Editing by Andrea Ricci)
AIG CEO defends bonuses as public fury mounts
AIG CEO defends bonuses as public fury mounts
1 hour, 3 minutes ago
By Kristin Roberts and Emily Kaiser
WASHINGTON (Reuters) - The head of AIG said on Wednesday the "cold realities of competition" compelled the insurer to pay $165 million in bonuses, and acknowledged that bailout-weary Americans' patience was running thin.
American International Group Inc has come under intense fire from the public, politicians and President Barack Obama for accepting up to $180 billion in government aid and then handing out multimillion-dollar bonuses, but Edward Liddy said the best hope for recouping taxpayer money was to keep running AIG as a business.
"No one knows better than I that AIG has been the recipient of generous amounts of government financial aid," he said in remarks prepared for delivery to a congressional committee.
"We have been the beneficiary of the American people's forbearance and patience. And we are acutely aware not only that we must be good stewards of the public funds we have received, but that the patience of America's taxpayers is wearing thin," he said.
Fury over the bonuses threatens to undermine Obama's efforts to solve the credit crisis and pull the economy out of a deep recession. Many voters view the financial rescues as free handouts to wealthy executives who made bad decisions, and the fat bonuses -- although relatively small compared to the government's $700 billion bailout fund -- have fueled that anger.
The situation has put Obama in a tight spot as he tries to strike the right balance between sharing the public's outrage and keeping his focus on the bigger issue of repairing the economy. Some economists have warned that the bonuses could become a distraction that delays recovery efforts.
AIG has argued that the payouts were necessary to retain top employees with the specialized knowledge to dispose of $2.7 trillion in complex securities that ended up dragging the company to the brink of collapse last year.
Liddy, who took over as chairman and chief executive six months ago when the government first stepped in to try to stabilize AIG, said the company had made mistakes "on a scale few could have ever imagined possible."
That stark admission did little to dull the anger directed toward him on Wednesday. Senate Republican leader Mitch McConnell called the bonus situation "an offense to the taxpayers, and we're going to get to the bottom of it, even if the Department of the Treasury hasn't."
U.S. Treasury Secretary Timothy Geithner said late on Tuesday that AIG would have to promise to compensate taxpayers for the bonuses as a condition for receiving a planned $30 billion expansion of its bailout.
But Geithner said anger toward Liddy was "unjustified" because he had joined AIG at the government's behest and the problems there predated him.
(Additional reporting by Corbett Daly and Jeremy Pelofsky; Writing by Emily Kaiser)
1 hour, 3 minutes ago
By Kristin Roberts and Emily Kaiser
WASHINGTON (Reuters) - The head of AIG said on Wednesday the "cold realities of competition" compelled the insurer to pay $165 million in bonuses, and acknowledged that bailout-weary Americans' patience was running thin.
American International Group Inc has come under intense fire from the public, politicians and President Barack Obama for accepting up to $180 billion in government aid and then handing out multimillion-dollar bonuses, but Edward Liddy said the best hope for recouping taxpayer money was to keep running AIG as a business.
"No one knows better than I that AIG has been the recipient of generous amounts of government financial aid," he said in remarks prepared for delivery to a congressional committee.
"We have been the beneficiary of the American people's forbearance and patience. And we are acutely aware not only that we must be good stewards of the public funds we have received, but that the patience of America's taxpayers is wearing thin," he said.
Fury over the bonuses threatens to undermine Obama's efforts to solve the credit crisis and pull the economy out of a deep recession. Many voters view the financial rescues as free handouts to wealthy executives who made bad decisions, and the fat bonuses -- although relatively small compared to the government's $700 billion bailout fund -- have fueled that anger.
The situation has put Obama in a tight spot as he tries to strike the right balance between sharing the public's outrage and keeping his focus on the bigger issue of repairing the economy. Some economists have warned that the bonuses could become a distraction that delays recovery efforts.
AIG has argued that the payouts were necessary to retain top employees with the specialized knowledge to dispose of $2.7 trillion in complex securities that ended up dragging the company to the brink of collapse last year.
Liddy, who took over as chairman and chief executive six months ago when the government first stepped in to try to stabilize AIG, said the company had made mistakes "on a scale few could have ever imagined possible."
That stark admission did little to dull the anger directed toward him on Wednesday. Senate Republican leader Mitch McConnell called the bonus situation "an offense to the taxpayers, and we're going to get to the bottom of it, even if the Department of the Treasury hasn't."
U.S. Treasury Secretary Timothy Geithner said late on Tuesday that AIG would have to promise to compensate taxpayers for the bonuses as a condition for receiving a planned $30 billion expansion of its bailout.
But Geithner said anger toward Liddy was "unjustified" because he had joined AIG at the government's behest and the problems there predated him.
(Additional reporting by Corbett Daly and Jeremy Pelofsky; Writing by Emily Kaiser)
Tuesday, March 17, 2009
Outraged Congress eyes tax on AIG bonuses
From the internet...
Outraged Congress eyes tax on AIG bonuses
By Kevin Drawbaugh
WASHINGTON (Reuters) - Outraged U.S. lawmakers moved on Tuesday toward slapping a heavy tax on millions of dollars in executive bonuses at bailed-out insurer American International Group Inc.
House of Representatives Speaker Nancy Pelosi hoped for legislation within days to recover the bonuses from AIG, a giant that once stood astride the financial system but is now surviving on a federal rescue worth up to $180 billion.
AIG did not return calls and e-mails seeking comment.
The AIG affair is sure to aggravate public anger over the bailouts for big business and sap support for the new Obama administration's efforts to stabilize the financial system and pull the economy out of recession.
With one senator remarking that top AIG managers might even consider suicide, senators proposed a special tax on $165 million in bonuses pledged to dozens of executives at what was once the world's largest insurer.
The House is making its own efforts to recoup the money. Pelosi told reporters several committees have been working on AIG legislation that the House could act on quickly.
Other options could be enlisting the U.S. attorney general to recover excessive pay at companies getting government aid and clamping down on bonuses at such companies.
Senate Democratic Leader Harry Reid said the AIG bonuses should be returned. Otherwise, he said, Congress will have an opportunity over the next few days to consider legislation that he thought would pass overwhelmingly.
AIG will send its chief executive officer, Edward Liddy, to Capitol Hill on Wednesday to testify before the powerful House Financial Services Committee.
Representative Barney Frank, chairman of that panel, said AIG should be sued "to get those bonuses back."
AIG was due to pay bonuses last Sunday to employees of its financial products unit, which made bad bets on toxic mortgages and credit default swaps that sent the company to its knees.
'THE COUNTRY IS ANGRY'
Several lawmakers introduced tax bills likely to worry other businesses taking part in the government's many financial rescue programs.
Democratic Representative Gary Peters' bill, for instance, would put a 60 percent tax on bonuses over $10,000 at any company in which the government has a 79 percent or greater equity stake. It now holds about 80 percent of AIG.
The special tax would be in addition to the top 35 percent income tax rate plus state and local taxes, making it possible to recover 100 percent of the bonuses, Peters said.
"Currently, AIG is the only company that meets this threshold," he said in a statement. "The legislation I'm proposing will get taxpayers their money back.
Max Baucus, the Democratic chairman of the Senate Finance Committee, and Chuck Grassley, the panel's top Republican, proposed a 70 percent tax on bonuses for executives at companies getting money from the $700 billion financial bailout package.
The proposal would require the companies to pay a 35 percent excise tax, with the other 35 percent to be paid by the bonus recipient. The tax would apply to any company receiving federal bailout money, including mortgage giants Fannie Mae and Freddie Mac, Senate aides said.
The legislation is aimed mostly at AIG and the tax would be retroactive to January 1, 2009.
"The country is angry and I am angry," Baucus said. "Companies that shouldn't be paying bonuses are ... and it's got to stop. The tax code is one way to do it."
Grassley said in a radio interview on Monday he would feel better if AIG's top managers were to "take that deep bow and say 'I'm sorry' and then either do one of two things: resign or go commit suicide."
On Tuesday, he stepped back.
"What I'm expressing here obviously is not that I want people to commit suicide," Grassley said. "But I do feel very strongly that we have not had statements of apology."
AIG'S MILLIONAIRES
President Barack Obama, who took office eight weeks ago, expressed "outrage" on Monday about the bonuses, which come as the White House faces widening skepticism about financial institution bailouts -- none more so than AIG.
"Obviously, the president is committed to working as quickly as possible with Congress to find ways to recoup this money," White House spokesman Robert Gibbs said on Tuesday.
New York Attorney General Andrew Cuomo said AIG created 73 millionaires with bonuses of $1 million or more. He has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.
Senate Republican Leader Mitch McConnell pinned much of the blame on the Obama administration, which inherited the AIG bailout, the financial crisis and the recession from the Republican administration of George W. Bush.
McConnell said Obama's team should not have given AIG an additional $30 billion two weeks ago without getting assurances that it would not be spent on bonuses.
"This administration could have and should have ... prevented this from happening," he said.
(Additional reporting by Kim Dixon, Donna Smith, Richard Cowan, John Poirier, David Lawder, Thomas Ferraro, Susan Cornwell, Jeremy Pelofsky, Caren Bohan, Corbett Daly and Glenn Somerville in Washington, and Grant McCool and Jonathan Stempel in New York; Editing by John O'Callaghan)
Outraged Congress eyes tax on AIG bonuses
By Kevin Drawbaugh
WASHINGTON (Reuters) - Outraged U.S. lawmakers moved on Tuesday toward slapping a heavy tax on millions of dollars in executive bonuses at bailed-out insurer American International Group Inc.
House of Representatives Speaker Nancy Pelosi hoped for legislation within days to recover the bonuses from AIG, a giant that once stood astride the financial system but is now surviving on a federal rescue worth up to $180 billion.
AIG did not return calls and e-mails seeking comment.
The AIG affair is sure to aggravate public anger over the bailouts for big business and sap support for the new Obama administration's efforts to stabilize the financial system and pull the economy out of recession.
With one senator remarking that top AIG managers might even consider suicide, senators proposed a special tax on $165 million in bonuses pledged to dozens of executives at what was once the world's largest insurer.
The House is making its own efforts to recoup the money. Pelosi told reporters several committees have been working on AIG legislation that the House could act on quickly.
Other options could be enlisting the U.S. attorney general to recover excessive pay at companies getting government aid and clamping down on bonuses at such companies.
Senate Democratic Leader Harry Reid said the AIG bonuses should be returned. Otherwise, he said, Congress will have an opportunity over the next few days to consider legislation that he thought would pass overwhelmingly.
AIG will send its chief executive officer, Edward Liddy, to Capitol Hill on Wednesday to testify before the powerful House Financial Services Committee.
Representative Barney Frank, chairman of that panel, said AIG should be sued "to get those bonuses back."
AIG was due to pay bonuses last Sunday to employees of its financial products unit, which made bad bets on toxic mortgages and credit default swaps that sent the company to its knees.
'THE COUNTRY IS ANGRY'
Several lawmakers introduced tax bills likely to worry other businesses taking part in the government's many financial rescue programs.
Democratic Representative Gary Peters' bill, for instance, would put a 60 percent tax on bonuses over $10,000 at any company in which the government has a 79 percent or greater equity stake. It now holds about 80 percent of AIG.
The special tax would be in addition to the top 35 percent income tax rate plus state and local taxes, making it possible to recover 100 percent of the bonuses, Peters said.
"Currently, AIG is the only company that meets this threshold," he said in a statement. "The legislation I'm proposing will get taxpayers their money back.
Max Baucus, the Democratic chairman of the Senate Finance Committee, and Chuck Grassley, the panel's top Republican, proposed a 70 percent tax on bonuses for executives at companies getting money from the $700 billion financial bailout package.
The proposal would require the companies to pay a 35 percent excise tax, with the other 35 percent to be paid by the bonus recipient. The tax would apply to any company receiving federal bailout money, including mortgage giants Fannie Mae and Freddie Mac, Senate aides said.
The legislation is aimed mostly at AIG and the tax would be retroactive to January 1, 2009.
"The country is angry and I am angry," Baucus said. "Companies that shouldn't be paying bonuses are ... and it's got to stop. The tax code is one way to do it."
Grassley said in a radio interview on Monday he would feel better if AIG's top managers were to "take that deep bow and say 'I'm sorry' and then either do one of two things: resign or go commit suicide."
On Tuesday, he stepped back.
"What I'm expressing here obviously is not that I want people to commit suicide," Grassley said. "But I do feel very strongly that we have not had statements of apology."
AIG'S MILLIONAIRES
President Barack Obama, who took office eight weeks ago, expressed "outrage" on Monday about the bonuses, which come as the White House faces widening skepticism about financial institution bailouts -- none more so than AIG.
"Obviously, the president is committed to working as quickly as possible with Congress to find ways to recoup this money," White House spokesman Robert Gibbs said on Tuesday.
New York Attorney General Andrew Cuomo said AIG created 73 millionaires with bonuses of $1 million or more. He has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.
Senate Republican Leader Mitch McConnell pinned much of the blame on the Obama administration, which inherited the AIG bailout, the financial crisis and the recession from the Republican administration of George W. Bush.
McConnell said Obama's team should not have given AIG an additional $30 billion two weeks ago without getting assurances that it would not be spent on bonuses.
"This administration could have and should have ... prevented this from happening," he said.
(Additional reporting by Kim Dixon, Donna Smith, Richard Cowan, John Poirier, David Lawder, Thomas Ferraro, Susan Cornwell, Jeremy Pelofsky, Caren Bohan, Corbett Daly and Glenn Somerville in Washington, and Grant McCool and Jonathan Stempel in New York; Editing by John O'Callaghan)
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