Economy Questions Thread

[julie_m]

What do the money experts around here think of this?

Bernanke: recession could end in '09

WASHINGTON – America's recession "probably" will end this year if the government succeeds in bolstering the banking system, Federal Reserve Chairman Ben Bernanke said Sunday in a rare television interview.

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Think it's possible, or reckless optimism?

 

[JB]

Not a chance!!!!!

 

[Badger_Golfer]

Id say thats a very big, "if".

 

[jcuray]

probably not possible think it will get worse yet before it gets better having said that I hope I am dead wrong on this.

 

[Badger_Golfer]

It difficult to expect things will get better when you have companies like AIG who take the money the government gives them and use 95% of it to pay out bonuses and intend to come back to the government asking for more money.
The government cant really turn them away now, because they themselves said that companies like AIG are too big to be allowed to fail, so its just going to be an endless cycle thats going to do nothing but rack up more national debt, which we all will be paying for a very long time.

 

[JB]

That is not what happened with AIG at all. They did not spend 95% of the bailout to pay bonuses.

 

[Badger_Golfer]

That is not what happened with AIG at all. They did not spend 95% of the bailout to pay bonuses.

Thats not what they said on the Sunday news programs. They said the government gave AIG something like $175 million and $170 million of that went to pay out bonuses.

 

[ActionJackson8]

Thats not what they said on the Sunday news programs. They said the government gave AIG something like $175 million and $170 million of that went to pay out bonuses.

AIG has received A LOT more than 170 million, upwards of 80 billion actually.

 

[JB]

AIG received A WHOLE LOT more money than that. Then paid that much in bonuses. It was not even close to that kind of percentage. And it was not really to the executives as much as it was sales people that earned the money.

 

[JB]

Actually AJ it was about double that too. They got about 170 billion if I remember correctly.

 

[Badger_Golfer]

I guess the way I look at, even if it was in their contract to get bonuses, if the company is losing so much money that it needs to go to the government for a bailout, no one should be getting a bonus.

 

[ActionJackson8]

Actually AJ it was about double that too. They got about 170 billion if I remember correctly.

You're right I think the first installment was 80 billion then they got another a few months later.

 

[Badger_Golfer]

I could be wrong about that figure, I dont recall if it was million or billion. It could have been $175 billion.

 

[JB]

Many of the bonuses were given to employees that are comission only or are low wage employees. That was part of the reason the bailout was given. People have this view because they assume the bonuses were strictly for executives. That is not always the case.

 

[julie_m]

I guess the way I look at, even if it was in their contract to get bonuses, if the company is losing so much money that it needs to go to the government for a bailout, no one should be getting a bonus.

I agree with that, Bake, very true. Congrats on 1,000!

EDIT:
Here you go on the numbers, guys:

Bonus Money at Troubled A.I.G. Draws Heavy Criticism

By EDMUND L. ANDREWS and PETER BAKER
Published: March 15, 2009

WASHINGTON — Obama administration officials and Republicans alike were nearly universal in condemning the $165 million in bonuses that the American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, is to pay executives in the business unit that brought the company to the brink of collapse last year.

Edward M. Liddy, the government-appointed chairman of A.I.G., argued that some bonuses were needed to keep the most skilled executives.

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[JB]

I wont turn this political or argue this point anymore. But lets not forget that less than 10% went to bonuses and that was what the bailout was for. To make sure these companies could pay their employees and stay afloat. Other money was used to pay policies that had to be tendered. Should they not be allowed to pay those either? What should bailout money be used for then? Bonuses and commissions are part of payroll.

 

[julie_m]

I wont turn this political or argue this point anymore.

You are right...the original question was RE: Bernanke. I'm interested in Claire's take. :wink:

 

[Badger_Golfer]

I wont turn this political or argue this point anymore. But lets not forget that less than 10% went to bonuses and that was what the bailout was for. To make sure these companies could pay their employees and stay afloat. Other money was used to pay policies that had to be tendered. Should they not be allowed to pay those either? What should bailout money be used for then? Bonuses and commissions are part of payroll.

If the autoworkers are expect to give things up, why not the people in the banking industry too? That money was supposed to be used to free up credit, which is something hasnt happened.
Yet another example of Wall Street doing whats best for Wall Street instead of doing whats best for this country.

 

[JB]

Trust me. They gave up ALOT. But insurance and financial terms are not always made public like they are in union jobs.

 

[bogeyme]

Think it's possible, or reckless optimism?

This will happen in 2009 right after my Reds win the World Series, the Blue Jackets win the Stanley Cup, my Browns make the playoffs, and a man walks on the moon.

I don't see it happening this year or next. Maybe at the end of 2010 we will start to see a turn around and a major turn around in 2011.

 

[Sir Shanksalot]

If the autoworkers are expect to give things up, why not the people in the banking industry too? That money was supposed to be used to free up credit, which is something hasnt happened.
Yet another example of Wall Street doing whats best for Wall Street instead of doing whats best for this country.

My FIL worked in the insurance industry for many years and has some good friends who are executives at AIG. They got clobbered. One of his best friend lost $9 million, most of his retirement. Apparently, they were give company stock as part of the bonus but they had restrictions on being able to sell off that stock(depending on their age). He just watched as his money went bye-bye, unable to do anything.

 

[JB]

Shanks,
I have worked with them in a different capacity for over 10 years and it is true. Every executive I know there got killed. The news always fails to report that.

 

[scott_d]

If the autoworkers are expect to give things up, why not the people in the banking industry too? That money was supposed to be used to free up credit, which is something hasnt happened.
Yet another example of Wall Street doing whats best for Wall Street instead of doing whats best for this country.

AIG while they have a bank is not really in the banking industry as most people know it. I don't know about in your area but in Texas the banks are lending money just like they always have (it does require good or decent credit and a down payment to purchase a home). They had decent years last year and are in good shape. I think only 15 banks in Texas (out of 700+) accepted any money from the CaPP (capital purchase program) and some of those were pressured into accepting the money. Many others were pressured and refused. Some of the ones that took it have or are trying to give it back.

There is a huge difference between Wall Street "bank" and your local community bank.

 

[JB]

They are an insurance company first and foremost.

 

[Sir Shanksalot]

What do the money experts around here think of this?



Think it's possible, or reckless optimism?

I think it is very optimistic. The banks really need private capitol to flow back into the banking system and that is not going to happen without investor confidence. The gov't has not even been able to figure out how much the toxic paper is worth. The gov't can't do it on it's own.