What Does AIG Stand For?
Last week, Rep. Paul Hodes (D-New Hampshire) famously quipped the answer to the question “What does AIG stand for?” as: “Arrogance, Incompetence & Greed”. That got me thinking about how mad I’ve been about this whole financial sector bailout thing, simmering just under the brim of my thinking cauldron. First, I’m gonna do some complaining. Then, I’ll get to some answers to that question myself.
For me, my complaint is not about the bonuses. Really, folks, AIG’s bonuses amount to about 0.1% of the money we gave them; not a big deal on the money meter, but certainly a big deal in the principle of the matter. I understand that. Rewarding these idiots for taking huge chances without firing these inept business leaders is really at the core of it for me, regardless of whether it’s a contractual obligation or not. I’m one pitchfork-and-torch away from crying “Off with their heads!” Instead, I’ll say, “Put someone else in charge”, even from within their own ranks; at least, the newly appointed will understand there’s some cause-and-effect to their actions because they saw their predecessors gutted & fired. After all, if you don’t want to play by the very rules that you force upon us when we come to you asking for a loan, then fine. Go right yourself by whatever bootstraps you have left, for apparently, you don’t need our money as bad as Congress thinks you do. What’s good for the goose is good for the gander. If you’re going to privatize the profits, don’t come to me asking to socialize the losses.
Furthermore, I don’t see how more liquidity is going to solve our current problems. Pumping billions and billions of dollars into these companies so they can, in turn, hand that money over to European and PacRim investors only depletes the net cash you & I have in our bank & brokerage accounts by devaluing the US dollar. And it still leaves us with the bill! It does absolutely nothing for the main cause of financial gridlock, which is trust (as I wrote about here). I can understand giving money to Ford, GM, or Chrysler for they’ll produce something, eventually. What does AIG and its ilk do for me? Not much, as far as I can tell. I've got all the debt I can handle now, thanks.
You know, nationalizing the banks for a short time may not be such a bad idea. I’m not advocating that at this time, but at least with that process, all the toxic debt is laid wide-open for appropriate eyes in the government and in the failing firm to see. No more hiding of that data. No more BS from the likes of John Thain (Merrill Lynch) or James Cayne (Bear Stearns). After the “good” is separated from the “chaff”, at least everyone left outside will have the trust issue behind them because of the (assumed) impartiality of the federal government. Right now, no one firm wants to “belly up to the bar” and speak freely of their gluttonous behavior over the past decade. That'd be political and commercial suicide.
And there’s (at least) one other problem…
When will people wake up to the real problem? It's not liquidity! It's the massive debt loads that Joe Citizen has taken on. Pumping billions of dollars into the economy via banks and financial houses (which had ballooned to 2.5X their GDP percentages a decade ago) is not going to fix this issue. Generally speaking, we the public are just as stupid as the bankers & finance sector (well, okay, not that stupid). We have gorged ourselves with debt to fulfill our part of this consumer-based economy, taking 2nd and 3rd mortgages simply to drop in on Vegas and see what’s happening or buy that had-to-have bling-bling. Manufacturing has died off in this country, being shipped offshore & replaced by Services which provide lower-paying jobs and no long-term contributions to GDP. That’s part of the heart of the problem. When Consumerism retrenches, Services are the first thing hit. So what if all the banks were to magically relieve themselves of this toxic debt tomorrow? Does anyone really think that's going to solve the real issues, those being trust and too much consumer debt? If you do, you're not thinking straight, IMO. If anyone's opinion differs, here's your chance to educate me.
Certainly, some of the bailout funds may eventually find their way into helping consumers on-the-ropes refinance their 100+% LTV homes (which is a good thing, to keep them in those homes), but that's not going to soak up any more liquidity the government is dumping out there right now; they'll simply be borrowing from Peter to pay Paul (but at better rates). Does anyone really expect anyone but the most stupid or hardest-pressed borrowers in the world to take on more debt at an economic time like the present?! Hardly.
Personally, I think it would be massively better if those funds were pumped into the economy via infrastructure and R&D dollars, as I’d written about earlier here.
Ok, I’m done complaining, well for now anyway. In answer to the question “What does AIG stand for?”, I did find another entry on the Web (but surprisingly, not very many). Someone suggested “And I Get?”, which is pretty funny. But I’ve got a few of my own.
So, without further delay, here’s my Top Twenty List of What AIG Really Stands For:
#20 – Adept In Guile
#19 – Accounting Insolvent Goobers
#18 – Ain’t It Grand?
#17 – Abandoned Ideals Gratuitously
#16 – Alternative Investment Gorging
#15 – Antitrust In Gear
#14 – Association for Ironic Genuineness
#13 – All Is Gold
#12 – Artifices & Inventoried Graft
#11 – Appropriations In Germination
#10 – Anything Ill Gained
#9 – Anti-regulation Invites Greed
#8 – Abrogating Irretrievable Greenbacks
#7 – American Investors Gilded
#6 – Adopt, Ingratiate, Grab
#5 – Abusing Idiots Gleefully
#4 – Artful Investing Gimmicks
#3 – Avarice Intoxicated Goons
#2 – American Illusionists Guild
And my #1 Choice for What AIG Really Stands For is…
#1 – Any Investment Goes
Feel free to add to the list. Hope your day is a good one!