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...
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