Friday, March 27, 2009

The crybaby of AIG

A few days ago, I opened the Op-Ed pages of the New York Times and read a job resignation letter by Jake DeSantis, a former AIG Executive Vice-President.

DeSantis, who had been the head of business development for commodities at AIG, felt “betrayed” by AIG and “unfairly persecuted by elected officials.”

For a moment I almost felt sorry for the DeSantis, who seemed to be feeling the heat from two attorneys-general who were threatening to reveal the names of bonus recipients like him, and of Congress, which is threatening to tax those bonuses at a 90% rate.

As a consequence DeSantis was quitting, revealing his own name, and giving to charity his entire bonus — after tax deductions —of 742,006.40.

Million dollar mogul in
a five and ten cents huff

Of how much? Doesn’t that mean is real bonus was somewhere slightly north of $1 million?

And he resents the ire of the American taxpayers?

Hey, Jake, ever hear about the auto workers who had to give back part of their contracted-for medical and pension benefits?

Hey, Jake, ever hear about the out-of-work blue and white-collar folks who don’t know where their next meal or mortgage payment is coming from, while you admit “saved enough that my family is unlikely to suffer devastating losses during the current bust?”

I’ll bet you did and I’ll bet your family won’t suffer, considering the kind of past earnings that led you to expectations for a million-plus bucks a year.

"Innocent?" Well, not exactly.

You claim, Jake, that you had nothing, nada, zilch-o to do with the AIG meltdown. You say you're innocent.

I believe you. But maybe that’s because you were lucky. Instead of slicing and dicing mortgages, you were slicing and dicing and indexing commodities futures next door. They just didn’t happen to melt down. Not yet, anyway.

The good, the bad the commodified
and the commodity indexified

Now I have no objection to the concept of commodities trading. At least not agricultural commodities trading on a per-contract basis. Buying or selling agricultural futures enables a farmer to lock in a profit — or prevent a loss — on his crops. It enables companies like coffee distributors to stabilize prices at the supermarket. It has a reason, other than sheer greed, to exist.

But by the time commodities get to the Trading Desk, it’s another story. When people start packaging commodities into indexes, and selling put and call options on the futures, and futzing around with margins, and God-knows-what-else since the last time I looked in on the business, that’s not useful. That’s just another form of irresponsible economic parasitism, no different from mortgage mysto-magic.

Remember, all the money you made in commodities for AIG came out of somebody else’s pocket. In 18th Century England they used to hang pickpockets. Here we give them million dollar bonuses.

"Whaaa, whaaa, whaaa!"

Some time ago I mentioned what I heard commodities futures salespeople call the plumbing contractors and dentists and others whom they gulled into trading futures with the promise of huge profits, and then watched lose their shirts.

“Crybabies,” they called them.

So Jake, in an economy where people are losing their homes, their jobs, their savings, their investments, their pensions and their shirts, guess what you are with your million dollar temper tantrum?

Right. Look in the mirror.

1 comment:

Kate said...

I totally agree with you. I blogged about this last week when I was really pissed off and now, days later, I can still feel the rage.