The Blackmail Worked

The government, led by the US House of Representatives, has learned the tactics of the Mafia: Blackmail. Even as activists and capitalists are setting up tours of the homes of AIG executives for angry mobs, Government Lawyers are offering to keep the names quiet of those that return the money, with a clear implication that those that retain the money will be made public.

The Government has made the executives "a deal they can't refuse." When Chris Dodd (Senator-CT) & Timothy Geitner (Treasury Secretary) finally admitted that they had personally had a hand in the language of the CEO Bailout Bill allowing the bonuses, the House of Representatives had their back. The House, believing themselves to be riding a tide of populism, voted for a 90% tax on Specific Individuals.

While such a targeted tax on money earned prior to the legislation would not likely pass the Constitutionality test in the court system, the cost of legal representation (lawyers) would have cost more than the new government employees had earned.

It is now being reported (CNBC) that most if not all of the US executives that received a bonus have "voluntarily" returned it. Most of the remaining executives keeping the bonuses are foreign residents, i.e. not subject to the targeted tax of the US House of Representatives.

Was all of this hoopla, was this blackmail by the government worth the $50 Million returned or even the $165 Million paid in bonuses? Or was this simply something to divert our attention from the fact that Congress paid out $700 Billion to their CEO Constituencies from the pockets of the common worker? Even if all of it is returned, that's still $699.8 Billion paid out of OUR pockets.

At what cost did these executives return the money? The check came with their resignation. In the midst of turmoil at the now Government owned AIG, now AIU (they changed the name), the top managers have decided to walk out. For some, we might say "good riddance." For others, their knowledge, expertise, and experience with the problem itself may mean, we need them. We simply don't know anything about who was there, who was paid a bonus for what, and hence who left.

Those that left were targeted because of their earnings, not their performance, which may or may not be tied to their performance (should be). If the bonuses worked the way they should have, they would have been paid to those that did the most to keep the corporation in the black. But we don't know, do we?

There is a bit of good news in this: Corporations have learned that Government is not a good business partner. The entire affair has been more akin to an Organized Crime operation than what I expect of government. Several Corporations were forced into the "deal they could not refuse." Once in, they found themselves bullied by politicians that have a record of losing money.

But there is a winner in all of this: Warren Buffett, a major contributor to the Obama campaign. Buffett, through his corporation, Berkshire-Hathaway, is known for his market prowess. Even as Congress first began considering the CEO Bailout Bill, Buffett expressed a wish that he could get in on just 10% of it. Meanwhile, he had $50,000,000,000 sitting on the sidelines, waiting for just the right moment to jump in.

And as the financials market plummetted with the acts and talk of Congress, he found his mark. It wasn't the "toxic assets" and failing banks that Representative Frank and Representative Gordon were forcing the American taxpayer to buy. It was the best of breed, Goldman-Sachs, that had to be co-erced into the bailout that he bought into.

We don't know when exactly he bought in, but on November 3, 2008, GS was selling at $89.09/share and on November 20th at $52.00/share. As of March 23, 2009, it is selling at $111.93/share. That's a gain of 25% to 115% gain in less than 6 months on a stock still considered undervalued by the very system that Obama supporter, Warren Buffett uses.

Warren Buffett is an astute investor and one of the richest men in the world. Many people shook their heads when he so forcefully backed both Hillary and Obama last year in the campaign. Who would have thought then that the tens of thousands he personally donated would earn him literally billions of dollars? Should there be a targeted tax on his earnings? Will there be politicians riding a tide of populism to call for it? NO.

As immoral as it is to back a political candidate for personal profit, it is not illegal. Though it may be satisfying to "tax the rich," to "stick it to the man," to forcefully recover those profits through targeted taxation, it is not Constitutional. It is not legal, nor should it be.

But there is more to this story. Goldman-Sachs, which was bullied into accepting taxpayer money it didn't want, has realized that Tony Soprano would be a better business partner than the US Congress. They didn't want the money. They didn't need the money. And they are working on ways to get rid of the dirty money as quickly as they can.

Goldman-Sachs is looking around at the strings and demands being made on others. Perhaps, they will also pick up the best and brightest from AIG executives, even as they rid themselves of the strings tied to government money.

And a final note on AIG, which is now 80% owned by the US Taxpayer. It is no longer named AIG. It is paying large amounts of (taxpayer) money to change its name to AIU, though many are preferring a more appropriate name IOU, for the failing US Government owned company.

Meanwhile, the US Department of Treasury, parent of the IRS, has grown to a prominence and to power, previously unknown in this Nation.

And I cannot help but find poetic justice in Code Pink having turned on Barney Frank and other of their allies that used them in the anti-Iraq campaign.

Tennessee Taylor©2009, TNT, all rights reserved