It’s Friday, and some Americans are ticked- really ticked. There’s even a concern now that some irate Americans will take to the street and resort to violence:
SAN FRANCISCO (MarketWatch) – U.S. companies are being advised to batten down the hatches for their annual meetings this year amid rising anger among investors and the public over bonuses, bailouts, layoffs and slumping share prices.
"There are a lot of angry people out there," said Patrick McGurn, special counsel at Institutional Shareholder Services, the corporate governance advisory unit of RiskMetrics Group. "I’ve never seen violence at annual meetings in the U.S., but we’ve never seen such dislocation."
Proxy printer R.R. Donnelley is telling companies how to beef up security and handle unruly investors as corporate America reels from an unprecedented spasm of anti-business outrage.
Protests were organized for Thursday outside offices of American International Group, Goldman Sachs
AIG, Wells Farge and Bank of America across the country. AIG employees have been getting death threats since a national furor erupted this week about more than $160 million in bonuses the troubled insurer recently paid.
So what so you Doomers? Are Americans really ready to take to the streets?
For those of us who are going to stick to venting online this week, what should we be paying attention to? This is an open thread, so let us know what’s on your mind.
Yes they are outraged. The Powers, Principalities, Dominions, etc. are clearly worried. This widely syndicated columnist is trying to soothe a lid on it, but his article has much of the flavour of a memo from FEMA or some directorate within the FBI with a mandate to do public diplomacy. It’s what old fashioned Kremlinologists used to call semi-official, and they’d be mining stuff like this hard to get some idea of the true thoughts of the folk who made up the PPT deck for the secret meeting on the evening of March 13, 2008. (Igor thinks I’m “clueless,”, but what does he know
)
“Let’s Put Down the Pitchforks”, Steven Pearlstein, Washington Post, March 20, 2009.
“contain the financial crises.” Does anyone else see the irony of our past and current leadership, who have enslaved the next three generations in untenable debt repayment, solving a financial crises?
If history is a teacher, we can look to the attitude of the people during the Great Depression. John Dillinger was seen as a national hero and the banks were very much considered the villains.
And yes Igor, I’m riled up.
I think the American people need to get a grip on reality and how bonuses are treated at C-level positions. We can be irate with the ridiculous salaries these guys make, but that isn’t the issue at hand. These bonuses to AIG were not ‘performance’ bonuses, but were contractually obligated under terms of employment. In essence, they are no different than base salary, only paid in lump sum. So long as AIG is in business, employee salary (and contracted bonuses) are their #1 liability. By backing AIG, the US government agreed to support AIG in all obligations, including employee pay.
So let’s take it down a more reasonable level. Johnny Q was hired by AIG 2 years ago, with a sign-on bonus of $20k to be fully realized at the end of two year with a final payment of $10k. Now the government steps in to bail out AIG. AIG (and the gov’t by proxy) are still obligated to pay this contractual bonus. The executive bonuses are different only in scale.
You want to talk about moral hazard? Let’s give the gov’t the right to nullify contracts. And this new 90% bonus tax they’re trying to push through now just does the same thing.
Horrors, indeed, Igor.
Keith-
I don’t like the idea of a 90% tax on ANYTHING. The next over-taxed victim could be me.
AIG is obligated to pay their employees, but we are not obligated to pay them. The bailout money could have been issued like a government grant with stipulations on how it is spent.
We shouldn’t be surprised when money is given to institutions and they have carte blanche to spend it as they wish, that we might not approve of how the money is spent. That’s why it’s important to take the time in the first place to say what we are willing to pay for, and what we are not.
I don’t think the bailout money should have been passed out the way it was, but this should be a “my bad” moment for our government officials. Any action to take back the bonuses now just adds more uncertainty to the market. Changing the rules daily is bad for business.
That leaves taxpayers with the bill- a fact we should remember the next time we go to the polls.
John-
Pearlstein’s article concerned me. I think it’s about time that people around the globe educate themselves on financial issues. Then they need to write letters, take to the streets and get online to make their voices heard. As so many of the governments efforts to “contain the financial crisis” are counterproductive, concerned citizens need to get out there and undermine them.
I’ll agree that it’s best to leave the pitchforks at home though- let’s take to the streets waving ballots instead.
i agree….it should be a “my bad” moment. i don’t like the bonuses any more than the next guy. but here’s the problem. i had heard the original reason for dropping the original stipulations, that would have capped pay and bonuses was the contractual concerns that the admin had. they didn’t want to end up in court over non payment issues. if that was the case, then why aren’t they still concerned over the legalities (i’ve heard some admit that the 90% tax is prolly unconstitutional but that they are for it anyway). but what i really don’t get is….why, if they care about contract law, did they give judges some authority to modify mortgages (contracts) in one bill, but then were scared to tamper with contract issues in another. they’re makin it up as they go.
and on another note….as a nation we’re at a point where we have an opportunity to help out each other…..or “take to the streets.” i, for one, hope the entire country doesn’t end up lookin like detroit after winning the NBA or U of A after winning the NCAA title.
twist -
OK, I’ve put my pitchfork away and am now contemplating THE POWER OF NONSENSE™ …
“Dollar Gains on Bets Record Decline on Fed Too Big to Sustain”, by Ye Xie, Bloomberg, March 20, 2009.
… where do they get those amazing names?
We knew at the time of the first bailout that the money was going to bonuses – people who still supported it have no right to be outraged. Sure, the bonuses were contractually obligated, but I think the outrage is really that these people still have jobs. Why is a group of people who lost billions still employed, let alone getting huge bonuses? And the CEOs come out and say the bonus money is needed to keep “talent”? Hell, I’ll lose your company $10 billion for half the cost!
Linenoise -
A few years ago my Mrs M offered to not play football for half of what Joe Montana was charging the 49ers(?).
… meanwhile, a Doom friend just checked in with his take on the present rage:
“The Bitter End!”, MikeFolkerth.com, March 19, 2009.
The greatest fear of sitting politicians must certainly be the possibility that taxpayers all wake up on the same morning and the anger that is currently being vented at corporations becomes focused on the former mentioned.
Mike -
Thanks for dropping by
If politicians want to become the focus for this rage they’d better have patience. This looks like one of those “… for better service please take a number …” situations.
“Goldman CFO feels no guilt over AIG payments”, by Joseph A. Giannone, Reuters, March 20, 2009.
“The next over-taxed victim could be me.”
Twist, I thought my only reasonable option for facing this fiasco was laugh or cry and prepare for the worst. Now I need to add ‘cringe in fear’.
Hutch-
I pretty much cycle between “laugh”,”cry” and “cringe” on a regular basis anymore. You get used to it. : (
Remember those who forced this bailout down our throats. Now they are just trying to cover their tracks with diversion. And did anybody see the people protesting at AIG? They looked familiar. We’re all suckers.