Shell Oil Bails On Renewable Energy

This is very, very bad. Shell Oil's putting all their chips behind biofuels instead.

-AF

Before The Market Goes To Shit

Wall St. weasels' change their performance bonuses into "retention bonuses." Kevin Drum explains:

Of course they got their comp locked down when they saw the storm ahead of them...

What happened at AIGFP is standard practice throughout corporate America. America's corporate titans like to talk endlessly about performance-based pay and how capitalism rewards risk, but in real life compensation packages are almost always constructed to avoid as much risk as possible. If you work in a growing industry, your bonus depends on raw growth rates. If you work in a declining industry, your bonus is linked to relative growth rates. If the market is up, your bonus is paid in stock. If it's not, suddenly deferred comp and increased pension contributions are the order of the day. Heads you win, tails you win.

We may not like it. Hell, we rarely even know it. But the public, we're always the ones stuck assuming the risk. We literally pay for their mistakes.

Mr. Drum points to Hilzoy's take on AIG's contracts:

I hope the Obama administration is looking very hard at this question. The introduction to the contract says that one of its aims is to "recognize the uncertainty that the unrealized market-valuation losses in AIG-FP's super-senior credit derivative and originally-rated AAA cash CDO portfolios have created for AIG-FP's employees and consultants."

That certainly suggests that AIG-FP was aware that there might be significant losses, as does the fact that they got their compensation locked down in a way that made it independent of their profits or losses. (Unless their bonus pool exceeded the amount guaranteed in the contract -- then they got to keep more!) And hard as it is to imagine that AIG's general management had somehow overlooked the signs of trouble in the subprime market in early 2008, it's even harder to imagine that whatever whoever signed off on this would not have asked: why does AIG-FP want this? How bad do they think it's going to get?

I imagine it would be worth scrutinizing the public comments of AIG executives between the first quarter of 2008, when this contract was written, and September, when it collapsed. But that's only one point. I hope that every law enforcement agency with anything resembling jurisdiction goes over everything about AIG-FP with a fine-tooth comb. There are more than enough peculiar aspects to this story to warrant it.

I hope the Obama administration is looking very hard at this question. The introduction to the contract says that one of its aims is to "recognize the uncertainty that the unrealized market-valuation losses in AIG-FP's super-senior credit derivative and originally-rated AAA cash CDO portfolios have created for AIG-FP's employees and consultants."

That certainly suggests that AIG-FP was aware that there might be significant losses, as does the fact that they got their compensation locked down in a way that made it independent of their profits or losses. (Unless their bonus pool exceeded the amount guaranteed in the contract -- then they got to keep more!) And hard as it is to imagine that AIG's general management had somehow overlooked the signs of trouble in the subprime market in early 2008, it's even harder to imagine that whatever whoever signed off on this would not have asked: why does AIG-FP want this? How bad do they think it's going to get?

Over at Digby's joint dday digs deeper. Bottom line: AIG execs brazenly lied to everybody -- the Fed, the Treasury, SEC, regulators, investors -- about everything. How AIG chose to conduct their business positively drips with fraud.

Somebody's gonna go to jail for this.

-AF

Wall Street Entitlement: Family edition

Great stuff on AIG’s disgraceful bonuses by people smarter than I... The TPM crew rips away here, here, here plus AIG's internal bonus docs. Jane Hamsher dismantles the “Blame Dodd” fib. Digby takes down Limbaugh & the GOP’s new “AIG Stimulus” mantra.

On Tuesday, Rush Limbaugh claimed Wall Street firms' “salaries are pretty small. They work on bonuses, via contract based on merit." This is where my father would say, "Does what you're saying to me, make sense to you?"

If the current AIG contracts specify compensation is to consist primarily of bonuses "based on merit", the bonuses wouldn't have been paid at all. Fer chrissakes the AIG & Merrill-types not only have done a spectacularly shit job but they've also completely cocked up the world economy! How can they possibly justify "merit" bonuses? Simple. Regardless of their companies' profitability, Masters of the Universe believe huge bonuses are their god-given right.

Case in point: I just got off the phone w/my 75-year old mother. Mom's income is largely dependent on her modest portfolio. Sadly, it's w/Merrill Lynch for the foreseeable future. (Due to the nature of her investments it's currently too complicated & costly to switch).

Last week Mom spoke with her Merrill "financial advisor." Her "advisor" was whining about the cost of putting her two kids thru private school. Mom chimed in, "You did recently received a big bonus." Advisor snapped back, "I deserved it!"

This financial advisor's sense of entitlement & her disconnect goes a long way towards explaining Tim Geithner's inaction, Larry Summers' "The government cannot just abrogate contracts" position & the Fed's inability to inform Obama about AIG's bonuses until the day before (WTF?!?).

It's bad enough stopping AIG, Merrill & BOA's bonuses didn't occur to any of them. But it's astonishing they failed to foresee the oh-so-predictable outrage to follow.

-AF

*Update: More TPM on potential fraud charges for AIG here & here.
**Edited slightly for clarity.

Bring Me The Heads Of The Jonas Brothers #3

"Retention" Bonus My Ass

NYT:

The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.
(Emphasis added).

I'm betting Ed Liddy's explanation will sound something like: "AIG is contractually obligated to award retention bonuses regardless of whether or not we actually retain an employee."

-AF

Punker Than You

Early this morning I stumbled across a recent NYT piece, "This Band Was Punk Before Punk Was Punk." Needles to say Death had my undivided attention immediately. In the fine tradition of The Chambers Brothers, the three Hackney brothers are brothers. Oh, and they flipped off Clive Davis too!

I was smitten with Death before I heard a note. That never, ever happens. Bolting to iTunes I downloaded their entire 7-song catalog.

Recorded in 1975, but released just last month, Death's ...For the Whole World to See's is fantastic. It's the missing link between Detroit's proto-punk MC5/The Stooges generation & the later Negative Approach et al. All but one tune motors along at breakneck speed. Singer Bobby doubles on bass; his voice a dead ringer for Bad Brains' HR.* (More properly the other way around as Death predates Bad Brains). Bold enough to nick a bit of Zep, guitarist/songwriter/founder David, spits out muscular yet melodic riffs. Death's secret weapons comes courtesy of brother Dannis. His drumming is crisp, propulsive & he has a helluva right foot.

To the eyes & ears of the vast majority of the local scene, these kids might as well have been space aliens. This was a mid-'70s Detroit musical landscape that had Bob Seger (Ugh!) at one end, Funkadelic at the other and disco looming large on the horizon. Playing futuristic politically charged punk rock to an at best indifferent Motown club or house party crowd circa 1973 ends one of only two possible ways: a band gets mighty tough or it dies before its time. After three years of ever-increasing frustration, Death packed it in for good.

The stones music remains. Dig the "A" side of Death's 1976 single "Politicians In My Eyes". If it tickles your pink, snag the rest of ...For the Whole World to See from iTunes, Drag City's website or better yet yer local indie shop.

-AF
*After writing this I discovered The Chicago Reader 's Peter Margasak concurs. The similarity is that obvious.

Bribery? This Isn't Bribery.

It's wasta.

-AF

Bring Me The Heads Of The Jonas Brothers #2

Only they could make Milie Cyrus look like Lydia Lunch.

-AF

I Was Just Thinking...

Writer’s block is a bitch.

Fresh off a verbal castration by Jon Stewart, the smartest thing Jim Cramer can do is go away. Surely his portfolio provides for his retirement.

I’m no rubbernecker. However, the Michael Steele train wreck stops me in my tracks every time.

I don’t wanna say he’s out of his depth but making Steele RNC chair was akin to throwing a baby tied to a cinder block into the Marianas Trench.

It’s probably a Northeast thang. Friendly’s Butter Crunch ice cream rocks my world.

The Republican Party needs an “ideological vasectomy.”

Doesn't that mean they’re all pricks?

Ari Fleischer should shut the fuck up. We’re wise to your lies. When Chris Mathews won’t tolerate it any longer, you gotta give up the jig & move on.

Didn’t Ari quit on Bush six years ago? Since Freedom’s Watch wasn't a smashing success, I guess he needs something to keep busy.

All the Bushies have too much time on their hands. Sucks to be them.

Always knew Chuck Norris was crazier than a shit house mouse. Didn’t realize is he’s a bloody seditionist.

"Weasels" is too kind a word to describe those who crashed our economy.

Citigroup would be smart to quit organizing against EFCA. They really do have more important things to do.

Make a principled stand but first ensure it makes sense, OK?

GOP governors refusing StimPak^TM cash couldn't be more stupid. Their respective electorates get more pissed off by the day.

National exposure makes you look tone deaf + foolish = political doom.

Amity Shlaes is metaphorically challenged & her diatribes on FDR's New Deal are complete BS.

I’m a total sucker for anything brickley, butterscotch, toffee or caramel.

This is sarcasm. However, were we ever to use DNA or retinal scans for voter ID, GOP voter caging bastards are finished.

Is it me or does Lindsey Graham become more and more cartoon-like each time he’s on TV?

Either that or the pharmaceutical grade LSD I took back in '98 is creeping up on me again.

-AF

They Said It. I Repeat It.

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 3

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

There’s a market for cocaine and hookers! So what?

Jon Stewart's response to Jim Cramer.

-AF

IAVA's Rieckhoff Talks Vet Head Injuries, Etc.

Did Bush's SEC Willfully Blow Enforcement?

George Bush's SEC sounds more hinky by the minute. Every day we hear about another massive Ponzi scheme, illegal trading or dodgy manuever. Bernie Madoff lead-offs the list but if you're like me you've had trouble keeping track.

So I skimmed SEC's website. I found Billion Coupons, Locke Capital, Diversified Lending/Applied Equities, Sunwest Management, North Hills, UBS/Blackstone, Elucido Fund, ProTrust, Scoop Capital/Scoop Management, CRE Capital, Joe Forte, Stanford Financial Group. There was a $40 million Ponzi scheme reported just yesterday. Earlier this month 14 top Wall Street "specialist firms" were popped for "unlawful proprietary trading" to the tune of $70 million. That's this year alone!

So far we discover these crooks when they run out of money to shuffle around & make 'em look legit. It's painfully clear under Bush the SEC has completely blew its enforcement responsibility. Fer crissakes, they couldn't be bothered to follow up on Bernie Madoff's decade-long whistleblower. How did we come to this? It can't entirely be chocked up to misplaced priorities & the SEC/Wall Street crony culture, right?

It's not. In an appearance yesterday before a House appropriations subcommittee, new SEC Chairman Mary Schapiro said something I found interesting:

Schapiro asked lawmakers to allow the agency to use $17 million from previous budgets that went unspent. She said the money is needed to maintain adequate staffing levels and upgrade technology.

$17 million in previous SEC budgets unspent? Budgets being plural. That's craaazy. Government agencies, particularly Bush administration government agencies, typically overspend & do a shitty job.

By its underspending during the Bush years an understaffed & technologically backward SEC went totally against type. (Other than doing a shitty job that is). SEC's techological shortcomings & budget surplus do not square with former Chairman Christopher Cox's oft-stated tech upgrade mandate.

A private sector manager desperately needing additional staffers & an IT boost will likely spend every last cent available to correct it. Almost all public sector managers, save the SEC, would do likewise. It's only natural to do anything possible to make your job better, easier.

George W. Bush's SEC literally couldn't have done a worse job if they tried. That the agency left $17 million on the table demonstrates pronounced apathy towards it performance. This apathy allowed Bernie Madoffs to swindled thousands of investors around the world.

-AF

Randy Bewley R.I.P

PYLON - "Feast on My Heart"

Pylon guitarist Randy Bewley died of a heart attack last week.* He was 54. Randy's playing style was of the singular kind only art students with no formal training develop. Angular. Jagged. Slashing. (See: Wire's Colin Newman & Gang of Four's Andy Gill both Bewley contemporaries ).

Way back in the Dark Ages, rock music was destroyed and built back up again for the 2nd time in about three years. A slew of brilliant music was created at an incredible pace. And at that time there was a moment in time when no song better was than "Feast On My Heart." This sucker positively jumped out of the radio at you.

-AF
*I meant to blog about it Friday but I was still in deep in the throes of my Zanaflex holiday.

Things I Have Learned

Blogging, cervical vertigo & zanaflex don't mix. Certainly not with Spanish red wine. Something had to give and that something was blogging.

This has been an edition of "Things I Have Learned."

Thank you.

-AF

Political Equivalent of Shooting Yourself In The Face

Stunning. We just watched Bobby Jindal obliterate his Presidential aspirations. Yes, Obama is a hard act to follow. But, Bobbeh blew it big time.

Gov. Jindal reached for ballsy and ended up clutching stupid. That sing-song delivery immediately telegraphed amateur hour. Sure, he didn't know exactly what Obama's speech would contain. But how can you hope to lead your party when you show a remarkable incapacity for anticipating the issues your opponent would raise and how he'd address them?

Before he even opened his mouth Jindal made that one colossal mistake. Slavishly crafting his party's response entirely from weary talking points & thoroughly discredited GOP-fabricated myths rather than by direct, honest challenges to the President's stated positions, revealed Jindal's political immaturity. It was piss-poor strategy.

Someday GOPers will realize strict adherence to the traditional condescending/tone-deaf/out-of-touch/scaremongering Republican modus operandi is a major tactical handicap. Today was not that day. All Bobby could muster was the same tired old story, the same sad old song and dance.

The "substance" of Jindal's speech was painful & embarrassing. Blunders abounded. Jindal's attempt to turn George Bush's (R) Katrina response into a negative for Obama!?!?! Wow, that's plain crazy. Americans can do anything? Hate to tell ya the Prez has claimed that line, sez it better & tonight told us how his administration will facilitate it. Irresponsible Congressional Democratic leaders? With the GOP's recent record I'd ixnay that subject. StimPak^TM cash supposedly budgeted for a magnetic Vegas to Disneyland train? Not true, Bobby. It's not in there. It doesn't fucking exist!

Healthcare? Bobby told us the GOP doesn't want anyone to lose it. Duh. Then why refuse to allow everybody to get it? Gas price paranoia? C'mon, you gotta do better. School vouchers over improvingour schools? A mad, terribly expensive posture benefitting a select few. Government ethics? Bobby, you're a politician (R) from LA. I'd get off that topic tout de suite. Transparency? Go to the website, silly.

Obama's gonna dismantle our defenses? You're off your rocker, Bobby. Rejection of the Pentagon's admittedly inflated budget dismantles only waste & greed. The Iraq pull-out, Army & Marine troop increases, an assured end to extravagant, impractical Cold War-style weapons systems (See: F-35 here & here or the hole in the sea we've tossed a billion dollars into AKA "littoral combat ships") and pledges honored to our service men & women -- y'know the ones Bush never kept -- will strengthen both our military and our economy too.

As odd as Gov. Jindal's performance was, I found his party's performance odder still. Republicans dropped this ball completely. Was their self-deception so complete i.e. their belief Bobby was up to the task, they didn't bother to assemble the de rigueur GOP "A" team to prep Jindal? 'Cuz if that was their "experts" at work, they need a new "A" team pronto.

And where was the GOP stagecraft we've become accustomed? It was MIA. Man, I thought these guys were the masters. How could you not bus in some friendly Republican faces for Bobby to speak at? Especially since you billed this as a peek at the new-look GOP full of bold & different ideas. Probably would have helped Jindal's delivery as well.

As a result millions watched Obama address a cheering Congress. In contrast, considerably fewer saw Jindal drone at a deserted state house to a bunch of TV cameras. The out-of-touch, amatuerish, small-time production made Bobby Jindal look small. Very small. Tiny. Rather than Presidential material, he looked more like cannon fodder.

Incredibly, the Governor, the Republican Party & everyone else involved flat-out botched tonight's launch of Bobby Jindal -- "Rising Republican Star." It's a failure made all the more embarrassing coming from the party who not all that long ago sold us George W. Bush.

-AF
**Wednesday PM: Edited for clarity. Remember, friends don't let friends post drunk.

Top Army Charity Gets 'F' for "Hoarding"

The Associated Press probed the Army Emergency Relief fund charged with helping our soldiers returning from Iraq & Afghanistan. The results are ugly:

Most charity watchdogs view 1-to-3 years of reserves as prudent, with more than that considered hoarding. Yet the American Institute of Philanthropy says AER holds enough reserves to last about 12 years at its current level of aid.

Daniel Borochoff, president of the American Institute of Philanthropy, said that AER collects money "very efficiently. What the shame is, is they're not doing more with it."

We're chest-deep in the worst financial crisis ever to face our nation. It's having a disproportionately negative affect on our veterans. What is the AER doing? Saving up for 2021. Fuck!

Oh and the AP also found coercion, banned incentives, promotions canceled or delayed if AER loans are not repaid and other heavy-handed tactics in play. Now this is not nearly as bad as the deeply embarrassing VA/Walter Reed fandango. But I'm nonetheless sickened the folks we trust to take care of our service men & women let them down once again.

-AF

**Update: Here's the AP story.

Politico Is All About The Politico

Steve Benen points us to this Politico story: The Obama Cabinet is a CEO black hole.

Holy shit! Call the cops! Obama hasn't surrounded himself with CEOs!

Ludicrous. If Obama had two CEO’s in his cabinet, Politico would write it's at least two too many. They’d say he's repeating the failed strategies of George Bush.

Politico will write about almost anything as long as they can do so in a way that will keep people talking about Politico. We fall for it every time.

-AF

Ron Paul Is A Dope

So are his libertarian/free market pals.

A moment ago I finished watching the latest Real Time with Bill Maher.* Like his cohorts in delusion, Paul maintains we should let the banks go bankrupt. End "corporate" welfare. Prevent passing the bailout/StimPak^TM cost onto "future generations." This one I like the best -- exercise even less government oversight & regulation. In brief, blow up our whole economic model.

In a year somehow the US economy will magically right itself. The rest of the world will be either unaffected or greatly changed for the better.

Yeah, right. I won't waste time arguing this dogma's abject stupidity. However, they completely whiff on several assured major repercussions. Not the least of these is the libertarian/free marketeers operate as if forced bankruptcies of Citibank, Bank of America, etc., will be a free ride. They forget about the lil' thing called the FDIC. We've just never had to use it.

Once the banks go bankrupt, taking the money of depositors with them, the Federal Government has insured, has guaranteed, a huge chunk of our cash. FDIC is bound to pay as much as $100,000 for all deposits except retirement accounts i.e. IRAs which are insured up to $250,000. Anything over those amount is gone. Effectively removed from our economy.

Under Ron Paul's criteria is this not another form of "welfare"? Where would the money come from? Does Ron Paul believe this FDIC bill wouldn't be passed on to "future generations"?

Further proof Libertarianism is stupid and a reliably unrealistic posture. There's little or no chance their ideology will ever be employed wholesale. As such it affords them the ultimate out. It's not their fault when "it" doesn't work. When "it" does work they carp on and on about how it would work much better if only we'd only listen to them.

-AF
*Standby for a whole heap of They Said It I Repeat Its.

The Silly Cost Of Healthcare

I just received the bill for last months ill-fated hospital stay. The two-day tally for a "private" room alone was $8600. Now I'm fortunate to have health insurance. But $8600?

Yeah, I know I had nurses checking on me. They served meals -- shitty even by hospital standards. (First one was chicken. This after I alerted them I was allergic 6 hours prior). Plenty of people worked hard there and deserved to get paid. Blah Yah Blah Yak.

Still, for $8600 I could spend three weeks at the Waldorf-Astoria in a deluxe 2300 sq. ft. room and have a couple grand left over for cocktails & vittles.

-AF

What Jindal Is Trying To Prove

Jindal's bid to be the GOP's next Presidential candidate faces many obstacles. Not the least of which is Bobbeh must overcome the simple fact he's not a Caucasian cracker like the majority of his party. (See: Pat Buchanan's latest racist rant here).

Jindal has officially rejected $90 million in StimPak^TM cash. In doing so he fucked over 25,000 constituents. This goes waaay beyond pure partisan politics.

I've been rattling his strategy around in my head most of the week. There's only one way it makes sense. Closeted Republicans rail against gay rights. Some Jews in WWII covered their tracks by out-Naziing the Nazis. African-Americans who "passed" acted bigoted in the process.

One common deceitful aspect of human nature is a willingness to misrepresent ourselves as something we are not to get ahead (or at least to stay pat). In the animal kingdom, it's a pervasive survival mechanism. For humans it can be an innocuous strategy to get a date with the green-eyed beauty at the end of the bar. Or it can be an insidious, cynical power-ploy.

Here Jindal is trying to prove he can out-cracker the crackers. He wants to show he can out-cracker the competition too.

Naked, unbridled ambition is an ugly thing. Louisiana Governor Bobby Jindal is positively dripping with it.

-AF