AIG -- Bonuses for Failure

I am not sure that anything that I do or I am involved with relies on insurance provided by AIG. So, in that sense I could not give the proverbial rat's arse whether the company stays afloat or not. Then again, it employs a whole lot of people who do not deserve to be without an income because of the incompetence of a couple of top level executives.

Yet, when it is all said and done, AIG still wants to pay its top executives and employees bonuses. Let's put this into perspective. AIG is a company that lost USD 60 billion (I think) last year and has since taken USD 170 billion worth of government bailout money, and there is an expectation that they will need another USD 60 billion just to be sure of not going under.

Yes, punters, that is almost a quarter of a trillion dollars.

This is the kicker for me. AIG is now claiming that it has to pay, as it is legally bound and all, to pay a couple of hundred million dollars in bonuses. That is outrageous! One cannot seriously claim the right to a bonus when your company is losing cash by the bucketful and taking taxpayer money by the bucketful.

The government's rationale for continuing to pump money into AIG is that if it was to fail then the repercussions would be worldwide and send myriad of other companies to the brink of insolvency. Maybe, maybe not.

In any event, the best idea I have heard over the last couple of days, at least on face value (I need to do a little research to see how it would work in the real world), comes from Chris Gardner (Pursuit of Happyness fame), who suggested that the government might be better served by giving every single American (registered voter I think he said) USD 1 million instead of bailing out these banks and financial institutions. The individual cash payments would make a much better financial stimulus package than what has been offered up-to-date.

Global crises - seems we can't live with them and we can't live without them!

A Liquor Shortage for Jakarta

I do not go out all that often and I am guessing that I will probably not be going out at all for the foreseeable future with "The Kid" being born in a mere six days from now. However, I did notice recently that the price of my regular vodka & cranberry has almost doubled in price in just over a week. I just figured this was a trickle down on the imploding global economy that is being propped up by various bail out packages throughout the world. But, alas, it has more to do with a liquor shortage.

Probably more specifically it has to do with the sudden ratcheting-up of excise or duties on imported alcohol that now sees some 60 containers of liquor sitting idly in some Indonesian ports. The duty on the imported alcohol sitting in Indonesian ports is 300% apparently and importers are refusing to cough up and pay the higher duties. This is but part of the problem. The Government also imposes a quota on imported alcohol. This is designed to protect local producers from the market power of big multinational alcoholic beverage producers.

Nevertheless, standard fare is that this quota is usually tapped out by mid-year and the lack of further imports leads to plenty of smuggled liquor and other less than legal mechanisms of getting more imported liquor into the market.

The end result is that this is likely to make business difficult for places that sell alcohol as people are likely to be much more discerning when it comes to drinking and how much they drink. A three-drink night may well become a one-drink night and an early night at that. The trickle down effect is likely to not only impact the bottom lines of the businesses but also the people that they support, such as staff.

It looks like I will be saving some money.