HUNDREDS of millions of little people around the world are suffering the effects of a recession, largely brought about by the greed and incompetence of a few thousand bankers and finance professionals, who turned a once relatively sound international financial system into a casino. They bet the farm and lost.
This tiny financial elite, who earned fabulous salaries, deserves scorn. They should lose their jobs. What they certainly do not deserve is reward. Yet, at US Insurance giant AIG, already bailed out by the US taxpayer to the tune of $170 billion, that is precisely what has happened. Having recorded a $61.7 billion loss — the largest in corporate history — in just the last three months of 2008, AIG executives are rewarding themselves and the top market traders with a total of $165 million in bonuses.
It is hardly surprising that everyone from President Barack Obama through legislators of both parties down to the man in the street are seething with rage at this effrontery. The administration’s immediate response has been to say that the $165 million will be deducted from funds due to be paid to AIG. Why government money is being found to keep alive a company that sits at the heart of the international financial mess? For the simple reason it is deemed to be too big to fail. The lack of that $165 million could tip it into insolvency. Therefore, the AIG executives who organized these outrageous bonuses know perfectly well that the US Treasury will pay whatever it takes to keep their incompetent company alive.
There is, however, surely a better option. The US Justice Department should give serious consideration to prosecuting those AIG people who have been rewarded for failure, with theft of public funds and the managers who arranged the bonuses with conspiracy to commit theft.
It is no better in the UK where the former chief of the Royal Bank Of Scotland (RBS), Sir Fred Goodwin led his institution into one of the biggest-ever banking collapses. RBS has had to be bailed out by the British taxpayers. Now there has been widespread fury at the discovery that Goodwin, who could have simply been fired for his failure, was instead awarded by the RBS board a pension $23 million, equivalent to nearly $17,000 a week — Goodwin is aged only 50.
While politicians in the US and UK rage against such extraordinary payouts, widespread damage is being done to the general reputation of bankers, banking and the financial system as a whole. This is not a sector peopled by evil men.
And for every greedy and incompetent former “master of the universe” there are many thousands of honest people in finance who had absolutely nothing to do with the credit debacle. Unfortunately there is a danger that all finance professionals will be tarred with the same brush and worse ordinary people will lose faith in banking and investment systems that once served them perfectly well. Therefore these scandalous, undeserved rewards should be reversed.
A new dawn in El Salvador
LOS Angeles Times on Tuesday commented on the victory of former leftist guerrillas in El Salvador’s elections, saying in part:
For anyone who witnessed the horror show of El Salvador’s 12-year civil war, the ballot-box victory of former leftist guerrillas there on Sunday was a stunning development. Though it took another 17 years after the war ended, the country now joins Northern Ireland in demonstrating that it is possible for a rebel group to effect political change and assume power through peaceful means. That’s a gratifying development. We are especially pleased that the outgoing National Republican Alliance, or Arena party, chose to respect the results.
President-elect Mauricio Funes of the Farabundo Marti National Liberation Front, or FMLN, has groundbreaking opportunities and tremendous challenges ahead of him when he takes office on June 1. This is still a supremely divided and impoverished nation without strategic resources like Venezuela’s oil reserves or Bolivia’s natural gas and minerals. Funes, who won by only 3 percentage points, must demonstrate to skeptics that the left can govern wisely and for all Salvadorans. A former television reporter who was never a guerrilla himself, Funes is known as a worldly and politically moderate leftist. He was off to a good start in the hours after his election when he appealed for national unity and said that he hopes to strengthen relations with President Obama and work on bilateral issues such as immigration, street gangs and drug smuggling. This sends the right message, especially to the estimated one-quarter of El Salvador’s population that lives in the United States and sends money home. Obama should see the election of Funes as a chance to mend relations with those who view the United States as a historic supporter of Latin America’s repressive regimes and an ally of its economic elite at the expense of the poor. He should move quickly to establish common ground with Funes, who is part of a wave of elected leftist governments across Latin America.
