Is there a "other side" to this AIG bonus fiasco?

Discussion in 'Wall St. News' started by schreibdave, Mar 16, 2009.

  1. Why is this a very difficult concept.

    These firms are inherently BANKRUPT!!! No bank would lend them, there is no bond market for them, these is no fund raising via private investors or stock sales (not enough to keep them afloat).

    Please use your wonderful logic and please explain exactly how an employee would be able to demand the rest of his annual salary & bonus if the firm goes bankrupt and is illiquid.
     
    #21     Mar 17, 2009
  2. No, it does not work like that.

    Whatever you want "guaranteed" becomes a salary. You're simply promised a bonus, which may not be to your liking when you get it and would cause you to leave the firm. Lately, the contract implied a range for bonus, but there is no guarantee.

    Even the salary has no guarantee, neither does an employment contract in cases of force majeure, which I think this situation falls into.
     
    #22     Mar 17, 2009
  3. No. I am just pointing out mental hypocrisy. Fullfilling hundreds of billions of dollars worth of "legal contracts" isn't spawning nearly the outrage as fulfilling a much smaller number ($165million) of "legal contracts."

    Both sets of contracts were entered into foolhardily by one or both parties.

    There is conceptually no fundamental difference between fulfilling one or another "legally binding obligation."
     
    #23     Mar 17, 2009
  4. That is essentially what happens when an insurance company fails.
     
    #24     Mar 17, 2009
  5. I like the analogy, but its' really like someone forcing you under penalty of jail to pay for someone else's cab ride from NYC to LA. The person forcing you to pay for it then suddenly begins feigning tremendous disgust and outrage at the sheer gall of the cab driver to use one $2 toll road, and directing public and media attention to the toll (slyly distracting from the cab fare).

    And the worst part is that it works, and you are somehow uneasy but generally supportive of the cab fare (because you don't really inderstand what happened), but all riled up about the toll...
     
    #25     Mar 17, 2009