The Sunshine Empire

This week has seen the towering rage from members of Congress and the political punditocracy about the bonuses given to AIG executives. Now I find the whole thing distasteful like most people, but this sudden outrage about the bonuses seems to be a bit of sound and fury signifying nothing. This is an old story that has been known since January, but now suddenly everybody is enraged. Was everyone just too busy with football season ending to notice? Why the sudden rage now? Now people have a fundamental lack of understanding of the bonus structures on Wall Street. Now I am making no attempt to defend them, but it’s not as simple as the faux outraged public think it is. Due to restrictions on the amount of salary for executive compensation and tax rules essentially most upper level executives essentially are paid like wait staffs in restaurants.

Now this is not the bullshit conservative talking point that these AIG people were all poor middle class middle management types, but typically it can be half of a person’s income at that level. Now when the government owns an 80% stake in your company due to rank mismanagement I think those bonuses should be void, yet the outrage is political. More outrage and ire should be directed at the beneficiaries of TARP funds that still refuse to start lending. Outrage also should be directed at regulatory officials in both the Clinton and Bush administrations that allowed mega banks to form without any regard to the bind that puts the economy in during these troubled times. When there are 17 moderately sized banks the system can survive the failure of 5, yet when there is only 5 mega banks each is too big to fail. Capitalism and the market may be the best system for the freedom and generation of wealth, but unfettered capitalism causes the market to eat itself to death. We need a figure like Teddy Roosevelt to break up these mega companies for the long term health of our economy.

It may be fun to call up a talk radio show or post an I-report rant on CNN, but lets just sit back and look at the big picture. Seeing who can get the angriest is only good for 24 hour news sound bites.