Everyone flipped a shit last week over bonuses to be paid at AIG Financial Products, the division of the company that killed all your money, and innocence. Congress managed to make this travesty seem reasonable by comparison and proposed a putative 90% tax on bonuses at all companies receiving government assistance. Some nerds argued that the tax might violate that thing, what's it called, the Constitution.
Banker douches predictably got all pissy over this "witch hunt", but in fairness to witches, they never actually came close to destroying the world economy, or, you know, existed.
Treasury secretary Tim Geithner took some serious heat over the AIG bonuses, since its the first event of the financial crisis Congress can actually understand. Separately, Mr. Geithner is still pretty much the only person working at Treasury because Obama's vetting process continues to find that everyone has done something moderately distasteful in their life, which is unacceptable.
Current AIG boss Edward Liddy, who is actually working for a nominal salary of $1, is accosted by the aging hippies of Code Pink who demanded he return it, even though he needs something to snort his dwindling coke stash.
John Gapper worries that the reason AIG gave for handing out the bonuses, that they needed to keep the writers of credit default swaps on payroll in order to unwind those trades, might be accurate. Those contracts alone are complicated enough, and the collateralized debt obligations they insure even more so. This is exactly like some bad comic book where only the super villain can disarm his doomsday device, so we all have to give him our monies. We'll call him "Derivatron".
Gillian Tett explains that the logic behind securitization, the bundling of mortgages, car loans and whatever else into securities and selling them to investors most capable of bearing the risk, worked more or less as planned. The idea was to disperse risk and indeed all of it was, directly to AIG.
The Federal Reserve ramped up its quantitative easing strategy, only don't call it that or Ben Bernanke will kick you in the nuts. It's basically monetary policy on steroids, and Imodium AD. The Fed plans to buy $300bn in US treasuries and another $700 some-odd billion on mortgage-backed securities to, among other things, push rates down to assist in refinancing underwater mortgages. This is the first time the Fed has explicitly monetized US debt but follows similar moves by the Banks of England and Japan. The dollar fell sharply on the news. It is thought the Fed is attempting to buy time until Tim Geithner's toxic asset program and the revamped TALF can be implemented.
Pope to Africa: Drop Dead. The pontiff, fresh from re- then uncanonizing a holocaust denier, continues his charm offensive by telling Africans that condoms not only wont cure AIDS, duh, but will make the problem worse. Okay, Mr. Pope, its bad enough Africans have to deal with contradictory messages coming from their governments, traditional "healers", and poor-hugging NGOs without the Ambassador to Jesus coming along and sowing more confusion amongst all the crop failures. (Also the Pope wasn't counting on the soon-to-be-released Trojan Kevlar!) Even as a non-religious heathen I'm reluctant to just come out and say "hey, fuck you, Pope", so pardon me while I have a hot love-making session for one, just to spite you.
This Week in Graphs:
Corporate earnings are in for 2008, and they're pretty great, uh, if you flip them upside down, like they were on your boss's desk, when he was firing you...
Mohammad Khatami withdrew from the presidential race in Iran after two other reformists planned to run, threatening to dilute the vote against Mahmoud Amadi-Nejad.
Asif Ali Zardari of Pakistan agreed to reinstate the judge at the center of the political crisis and will ask courts to reconsider the banning of opposition leader Nawaz Sharif from politics. Thank fucking god.
Epic scumbag Avigdor Lieberman of Yisrael Beitenu, likely to be king-maker in any Likud-led coalition in Israel, is set to become foreign minister. So Israel's new public face to the world will have openly called for ethnic cleansing of Palestinians and actually lives in a Jewish settlement. Diplomacy!
Separately, the Israeli army wantonly killed civilians in the Gaza war according to allegations made by the incorrigible anti-Semites in, uh, the Israeli army.
The entity managing China's foreign exchange reserves, SAFE, lost roughly a bajillion dollars investing in equities right before they became a substitute for toilet paper.
Finally, the army in Madagascar overthrew president Marc Ravalomanana and installed...
...hey, Ralph Macchio, I guess. Alright.