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Confiscation With Representation

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The People's House is a Frivolous Mob.   

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The meaningless news from the House of Representatives is that Speaker Nancy Pelosi's vast Democratic majority, in a screeching hysteria about the AIG bonuses, has passed a bill that engineers confiscatory taxes upon the contractual performance and retention bonuses at AIG and other sad-sack bailed out bankrupts.  The confiscation rate du jour is 90%.   Charlie Rangel, Democrat of New York, who has intimate knowledge of the IRS skill set, spoke as the all-powerful Cardinal of the Ways and Means Committee, "....The American people demand protection."   The vote was 328 to 93.  Text of the Bill    John Boehner, Republican leader of Ohio, who voted against the bill, spoke dryly by using the word "circus."   The bill is frivolous and worthless.   Mr. Rangel's trite remark that "we figured the local and state governments would take care of the other ten percent" demonstrates that the Democrats do not expect this bill to be law.  All the bill has going for it is the clowns and jugglers who can shout in its favor on local TV to their home districts.   Over in the dull circus of the U.S. Senate, there is a dull bill in Kent Conrad's Finance Committee that will tax the AIG executives and their kindred in the other bankrupts at 35%.  This is also a rubbish bill and will come to the rubbish heap.  However it is revealing of the respect for wealth in the wealthy Senate compared to the (Robespierres) in the House.   Also, there is a history homily herein.  Charlie Rangel and Kent Conrad and their congressional mob have illustrated once again the merit to cranky Tom Paine's observation of the true nature of government, though he was talking about King George at the time and not the unborn USA:  "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one."  Note to the Hill: confiscation with representation is as intolerable as taxation without 
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representation.  You gentle and creative characters voted "yea" to the stimulus bill in February 2009 that contained the language that guaranteed those AIG bonuses (language penned by your jocular enabler Chris Dodd, Democrat of Connecticut).    Also, last October 2 and 3, you in the Democratic Majority (and not a few self-involved, insufferable Republican geniuses) voted overwhelmingly in favor of the TARP fiasco that also guarantees bonuses to all the zombie firms that have taken bail-out money.   Now you panic when the voters find you gentle and creative characters on the Hill, along with your TARP cronies, your stimulus bill serfs, and your AIG scapegoats, to be an unnecessary evil.   

Liquidation

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My colleague Thaddeus McCotter, Republican of Michigan, sends along a Republican solution to the AIG fiasco (below) that has the merit of being logical and inevitable.  Break up AIG.   There is plenty of support for this in the strangest place.  At AIG.  According to a rambling and sad-eyed email with multiple edits from an AIG client, published two days ago on the strangely compelling gossip Grand Central reddit.com, the ordinary folk who work at AIG and its clients all expect the company to be put into bankruptcy in 2 to 3 months:

...Sorry ive been jumping around so much but i too am worried that I also might be out of a job soon enough when AIG does go belly up. And everyone at AIG KNOWS that it WILL file for Bankruptcy in the next 2-3 months after they sell off their subsidiaries. Just last week i had a meeting with a client in the AIG NYC office where people were acting like it was just another normal day. Even though i noticed little things that were different; tvs weren't tuned to CNN of CNBC rather turned to ESPN watching the upcoming NCAA tournament. Employees are told to act like normal, walk around with big smiles and never show any stress of the real world and media. Its just so sad to see so many hard working people who are just like you and me (other than the SVP and higher ups) just sitting around in their cubicals and offices knowing that soon enough they will be desperately looking for another job just to support their families. I feel like im rambling here so ill take a break and surf reddit for a while then come back and post more....

Sure, it could be a send-up.  But the brazen folk at Naked Capitalism, who guided me to the email, argue cleverly that it is so bizarrely organized an email -- with a time out for a corned beef supper --  that it certainly appears genuine.  I like the detail that the AIG creatures are wondering around wearing Paxel smiles and trying not to glance at the 
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monitors carrying CNN and MSNBC coverage of the Edward Liddy testimony in the background.   This is credible human fear.   Elsewhere there is credible mention that folk are burning off their vacation and sick leave quickly to prepare for the lights-out moment.   Below, Thaddeus McCotter (and his co-author Peter Latourrette, Democrat of California) is also credible and would hurry along what the AIG folk believe is already happening.    Why bother to pass incoherent, impotent bills that claim to take back what you gave them when you can just detonate the building and sell the furniture and piping?   Not bankruptcy reorganization Chapter 11.  Go straight to bankruptcy liquidation Chapter 7, the Lehman cure for anxiety.   Liquidation is the thing this year.  (Then again, that's what Tom Paine told His Majesty's Colonial Government, 1776.)



FOR IMMEDIATE RELEASE
March 19, 2009
CONTACT: Jameson Cunningham
Office: 202-225-8171
Cell: 202-288-2147
McCotter:  I'm Not Voting to Let Them Keep a Dime of those Bonuses or Another Dime of Bailout Money.  Break Up AIG - Now!
 
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Washington, D.C. - Representative Thaddeus McCotter (R-MI), Chairman of Republican House Policy Committee and the only Republican member from Michigan on Financial Services Committee, today released the following statement on the AIG bonus debacle:
 
"I'm not voting to let them keep a dime of those bonuses or another dime of bailout money.  Break up AIG - now!"
 
"The American people are outraged; outraged at AIG using taxpayer money to reward the very people who caused this debacle, and outraged at those who voted to protect and approve these bonus checks when they voted for the so-called 'stimulus' bill.
 
"Facts are hard things to disprove.  Every single Democrat in the House that voted for that bill voted to approve and protect those AIG bonuses.  Every single Democrat in the Senate that voted for that stimulus bill, along with three Republican senators, voted to approve and protect those AIG bonuses.  The President of the United States signed into law the protection and the approval of those AIG bonuses that they find so repugnant, now that the American people know what was done.
 
"If you are shocked, be shocked at the own members of your party or Administration that put the amendment protecting bonuses in, and be shocked that they will now pass a Bill of Attainder that is unconstitutional to try to cover their tracks.

"The American people want answers.  This outrage could have been avoided if an amendment banning executive bonuses was not stripped from the stimulus bill by the majority party.  This outrage could have been avoided if Senator Dodd's amendment protecting and approving these bonuses was stripped from the stimulus bill.  Not only were there no actions taken to prevent this egregious offense against the American people but this offense was approved by those who voted for the bloated government spending bill.
 
"Americans deserve 100% of their money back and an unconstitutional bill that uses the tax code as a penal code is a gross diversion from the Democrats in Congress and the Administration who made these bonus payments possible."
 
Representative McCotter, along with Rep. LaTourette, sponsored a resolution of inquiry which would force Treasury Secretary Geithner to provide all documents, records and communications regarding American International Group (AIG) within 14 days of the bill's adoption. 
 
Specifically, it demands the following information:  (1) negotiation(s) concerning the controlled break-up of AIG into at least three government-controlled divisions; (2) negotiation(s) concerning the need for an additional $30 billion from the Troubled Asset Relief Program (TARP) funds [PL 110-343, Section 2]; (3) government communications and authorizations for payment of pre-existing bonus contracts with AIG executives.  
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18 Comments

Consider the one thing we do know about God: His ability to create something from nothing. When man creates something, he does so - working from the outside with previously existing materials - leaving the seams to show. When God creates, He creates from the inside and leaves no seams.

‘Nothing’ is the raw material with which God begins. Natural law dictates that in order for any two things to interact in some way, a common element must be active in both. Therefore, ‘nothing’ must be one of the properties of God.

The idea of ‘conspiracy’ relating to U.S. governance was first raised by Hillary Clinton when she spoke out about ‘a vast right-wing conspiracy’ in her 1998 defense of her husband during the Lewinsky scandal. The comment was swiftly stricken from media parlance as no evidence of conspiracy could be substantiated. Nevertheless, for Mrs. Clinton to have raised the point, ‘corruption’ must have been part and parcel of her own M. O. The issue has remained dormant until now.

With Democrats in firm control of the executive branch, both houses as well as the MSM, there are some now beginning to raise questions as to how this could have happened. As the shoe now appears to be on the other foot, one might expect that it would be Republicans who would raise the issue. But Republicans, still regarding the whole notion of ‘conspiracy’ as political poison, have been keeping their powder dry. Instead, one is beginning to see bloggers questioning the integrity of the system that determines our candidates for leadership.

The pointer on the Ouiji board invariably spells out M-E-D-I-A when pertinent questions regarding this are asked. When we then examine the result and identify the winners, there can be little doubt that a conspiracy now exists between the media and Democrats. Whether or not members of the media fully appreciate that the Democrat party is no longer the party of Roosevelt, Kennedy or (even) of Clinton still hangs in the balance.

As President Obama spins his magic to transform the nation into something it has never been, we can only wonder if the media (like so many Americans) were merely duped or if these products of madrasah-like indoctrination at our universities now consider themselves to be hard-core Stalinists working with the Democrats to permanently disfigure the soul of our nation. If the latter be the case, they will surely have failed to consider that seams invariably tear, producing either chaos or some oppressive form of Statism – or both.

Maybe Paulson had it right to begin with in that this is just too much for comprehension and would result in gross misconceptions, fabrications, and story telling.

Arouse the passion of people who don't have a clue how the banking system works and all hell breaks loose with speculation, conspiracy, and skepticism.

I'm beginning to think we would have been better served. It's always the example of a few scoundrels that get copied and pasted to encompass all and everyone.

Who among you are without sin cast the first stone.

In other words... Let's hope and pray that they throw some thing that sticks!

Buy FORD (NO! Not Fix Or Repair Daily!) I mean FORD!

Scorn Trails A.I.G. Executives, Even in Their Driveways
By JAMES BARRON and RUSS BUETTNER NYT
Residents who had been pillars of Connecticut towns are finding themselves the focus of populist rage, and guards have been stationed at some of their houses.

Text of New York Attorney General Andrew Cuomo's statement Thursday that he received the list of AIG bonus recipients.

I have received the list of AIG FP employees who received retention payouts. Mr. Liddy testified in Congress yesterday that he intended to comply with our subpoena and expressed concern for employee safety. Mr. Liddy has in fact now complied with the subpoena. We are aware of the security concerns of AIG employees, and we will be sensitive to those issues by doing a risk assessment before releasing any individual's name. The Attorney General's Office is a law enforcement agency and is experienced in making these assessments.

As we perform our review, we will simultaneously be working with AIG over the next few days to determine which employees received payments and which chose to return the money they received.

The Attorney General's Office will responsibly balance the public's right to know how their tax dollars are spent with individual security, privacy rights, and corporate prerogative.

At this moment, with emotions running high, it is important that we proceed diligently, with care, reflection, and sober judgment. We thank AIG for their compliance.

Calculated Risk comments:


This gem reposted from end of last thread:

Goldman to detail AIG trading relationship Friday
By Greg Morcroft, MarketWatch

(MarketWatch) -- Goldman Sachs said it would hold a conference call with reporters on Friday to, "answer questions from journalists, and clarify certain misperceptions in the press regarding Goldman Sachs' trading relationship with American International Group."

Members of the public can listen to the call via webcast, the company said in a press release.


http://www.marketwatch.com/news/story/goldman-detail-aig-trading-relationship/story.aspx?guid=%7B83E134BA%2DA983%2D451F%2DB6A7%2DFF4D005EEECF%7D&siteid=yhoof

This is even more worrisome than it is disgusting, and on many levels.

Isn't taxing income after it was paid a violation of the Constitutional prohibition on ex post facto laws? Whether or not it is distateful and/or immoral, did the people at AIG who took the bonuses (which were clearly guarented in the contracts and further, known to the people in Treasury, so far as I know) actually break any laws?

I think all this phony populism on the part of the Democrats is likely just more bread and circuses-- unless they can find an in-the-back-pocket judge who doesn't give a fig about Constitutional protections, this'll likely get thrown out of court. Seriously, how can they create a special, particularly punishing (and very likely unconstitutional) confiscatory tax which affects only the AIG recipients of these bonuses? Are they going to apply this rule across the board for all bonuses paid from federal tax dollars?

That being said, if AIG sold an 80% share to the federal gov't, seems to me they shouldn't be surprised when they see the Big Nanny at the door. If Congress came to me with a big smile and a hand out ready to shake and be friends, assuring me in placating tones they only wanted to help, I would run the other direction.

Article I, section 9, clause 3
No Bill of Attainder or ex post facto Law shall be passed
Definition: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial.

I am no legal or Constitutional scholar, but does the Pelosi-Reid Congress have any respect for the Constitution and contract law? The Constitution was written for the common citizen - and I would argue that all the commenters here at the JBS are far better informed and better acting Citizens of this Nation than those rats in the People's House.

Is this bill passed by Congress not exactly that? Is not 90% confiscation of the fruits of a contractually valid agreement punishment? What trial was in evidence, besides the madness of crowds.

I am reading Robert Conquest's Dragons of Expectation and it has opened my eyes to the gathering clouds of a public spirit in America that bodes evil in our future. The time is now to raise our voices and say, "Not in this Country, Not at this Time" - never shall we allow our Government to slip into an Orwellian nightmare where the people exist to serve The State and The Party (our Parties, such as they are). The Cult of Personality around the Leader, the Centralization of Power, the Primacy of the State, the blatant assertion of a counterfactual Reality. Enough!

Madame LaFarge ? I liken her to Madame Defarge ..... knitting a registry of the names of her victims.

From BBC:

'Reports from Iran say Omid Mirsayafi, a blogger who had been jailed for insulting the country's ruling clerics, has died in Tehran's main prison. The International Campaign for Human Rights in Iran says Mr Mirsayafi, 29, died on Wednesday. His lawyer Mohammad Ali Dadkhah said officials at the Evin prison told him Mr Mirsayafi had committed suicide and he demanded and immediate inquiry. Mr Mirsayafi was sentenced last month to 30 months in prison after being convicted of insulting supreme leader Ayatollah Ali Khamenei and other clerics.'

Yeh, let's get all snugly with these good people and let them take us on a Magic Carpet Ride. If Prez O wants to talk, he should first tell them to release their political prisoners and remove the blinders from the press. He should set ultimatums to free Ms Saberi and all the others who have tried to have a voice and have been silenced.

Come out from the shadows and into the sun... where we can see you. Maybe then we talk about how "The Great Satan" will make concessions to earn your LOVE.

AIG is mostly solvent. Some creative bankruptcy bill drafting could save most of it. (The Constitution gives the Federal government this power quite specifically.)

The issue appears to be that AIG was preserved in toto as a conduit for funds to entities, including foreign entities, that the people packaging the Credit Default Swaps had probably wronged by laundering them in AIG's "AAA" rating.

The other issue is that there might have been a real, concerted effort to keep former CEO and Chairman Hank Greenberg from re-acquiring the company when the firm first got into trouble.

It is now open season on capitalism. Every word uttered by our ruling (Marxist) class (including Republicans); every threat (spoken and unspoken) by the hired mob directed against anyone who may ever have had occasion to engage their talents in some aspect of the free and open market - all this originates from the newly installed mood in Washington that has declared capitalism a failed and corrupt conformity. It is our version of Kristallnacht which the radical elements within our society are eager to exploit for the sole purpose of consolidating power, not with an eye toward some notion of a holier justice, but to punish and lay to waste the enemies of our freshly consecrated - and still comically chaotic - Washington politburo.

We all – even the very least of us - are the ‘enemy’ they seek to subdue. Already we have begun to see ourselves as defeated; debauched; incontinent; fat and bloated; rapists of the earth. It is unbearable guilt that has compelled us to bow down to the new order and submit to seppuku.

Finally, all the hype is over; all the mystery, obfuscation; prestige. The battle has been defined at last. It is not one of good against evil; Democrat against Republican; Islam against the West, or any of the other straw men tossed out into the market square. The fighters have entered the ring, their true identities unmasked. It is now clear for all to see that this is a match is between the world's reigning champion (capitalism) and the scrappy challenger (communism). Those who are betting on the challenger to win, better watch their wallets.

I got IT-- I've got it!!

While we are dreaming up new government entities and posts, I suggest we need a Joint House Committee Caner... yep, The Office Of Public Caning or OOPC for short smack /*{ ouch }*\

When a member gets so many oopsies against them or just keeps getting out of line for any number of reasons (or just needs to be updated), The Official Caner is at the job and it is broadcast via C-Span. Tie it in with the Stimulus, create a bureau, remodel a room, and start taking resumes and doing interviews. NOW!

And Hurry!! We gotta do something! I want OOPC! I WANT OOPC!

This editorial from The Economist (by way of Realclearmarkets.com) (thanks, John) makes some lucid points:

"AIG is a red herring. What worries me is the idea of the government determining the pay of everyone working at any firm taking TARP funds. Unfortunately, the political fallout from the AIG mess may result in this becoming the norm. Democrats have proposed legislation stating that any bonus paid by a firm accepting TARP fund is subject to a 90% income tax."

http://www.economist.com/blogs/freeexchange/2009/03/does_a_big_pay_check_make_you.cfm

Bottomline-- if you give Congress your plough, expect their yolk and furrow.

Sorry to sound a sour note here, but I blame AIG, not the government. When the government becomes a major shareholder, darned right they have some say over director compensation. Now, whether the government should have acquired a major stake in the first place, that's a different question. But when the government is a shareholder, it stops being socialism, and starts being a regular function of the Board (executive compensation issues) except that you have some very strange rangers on said Board.

My ex-wife of long ago, the mother of my kids, had a home childcare business, a very successful one (so successful it led to the break-up: I was tripping over ankle-biters going into the kitchen to get my breakfast in the morning.) But, one thing she did I admired: the feds approached her and said they'd give the kids free lunches in return for some oversight on the nutritional standards of the food she served. She suggested that they go micturate up a long segment of tightly-braided hemp. She charged more than her competitors because she bought the groceries herself; she still did very well despite the higher prices. What kind of fool would accept $150B from anyone, government or otherwise, and not expect to have their every move scrutinized? Any small business owner knows this much. That's why we started our own businesses in the first place, to get away from that stuff.

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"... The frantic passage of the Populist Rage Tax was a new low in the U.S. government's response to this crisis. It shows just how likely we are to doom ourselves to a decade or more of misery--by choking our markets, closing our borders, turning our banks into tools of social policy, and wrecking what's left of our economy.

... Thanks to our bailouts/stupidity, we now own major stakes in these firms--at mind-boggling expense. So it's not clear why we want to destroy them. But that's what we seem determined to do.

... Believe it or not, hidden inside these companies are thousands of decent, competent people whose households bring in more than $250,000 a year. Many of these folks had NOTHING to do with the gambling addiction that bankrupted their firms. Many of them still have a choice where to work. And now that they've learned that their family's pay will be capped at $250,000 indefinitely, many of them will quickly decide that now is a good time to pursue their careers elsewhere. (That is, unless their firm takes the easy and obvious step of just paying them a fatter salary, which just renders the whole thing a farce.)

Will everyone leave these firms? No. The folks whose households don't have the education, desire, ambition, skill, or time to make more than $250,000 a year won't. But a lot of the rest will. And however little our massive investments in these companies are worth now, they will soon be worth a lot less."*

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* http://www.businessinsider.com/henry-blodget-90-bonus-tax-now-we-really-are-screwed-2009-3

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True, many innocents are being punished at AIG and elsewhere, but it is not the proper role of government to ensure fairness. It reminds me of that Andrew Jackson quote from the Thaddeus McCotter post ("Put AIG Out of Our Misery"): "You (the banks) tell me that if I permit you to fail, it will ruin 10,000 families. And it may do that, but that will be your sin. If I do not permit you to fail, it will ruin 50,000 families, and that will be my sin." Or, one of my own favorite sayings: "If the government is going to be paternalistic, at the very least they could be good parents."

Fantastic posting, You make reasonable points in a concise and pertinent fashion, I will read more of your stuff, thank you for your time.

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