David Kirkpatrick

March 26, 2009

A.I.G. backlash, the other side of the coin

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:45 pm

An op-ed from the New York Times subtitled, “The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.”

deSantis’ resignation letter offers a little perspective on some misplaced outrage (I’m just as guilty as the next blogger, journalist, concerned citizen) going on and how badly the public relations aspect of the ongoing bailouts is being handled by both the government and the firms receiving taxpayer money.

Of course if no taxpayer money was involved in any of this, there’d be no need for “good” PR or concern about who gets hurt and who doesn’t. We have a free market capitalist system until things go south, which makes it not quite a free market capitalist system. Hmm.

From the link:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

December 18, 2008

A theory on the financial crisis — a science fiction parable

Filed under: Arts, Business, et.al. — Tags: , , , , , — David Kirkpatrick @ 2:22 pm

I’ve been blogging on the current financial crisis since January 31, 2008, just a few weeks after I started this blog. In a way I’ve been a sideline observer as this process has heated up and become more public.

The Fed has been pretty busy behind the scenes for a while now (at least around two years) attempting to avoid what has become daily lead stories across broadcast and print media. Clearly these moves have been complete failures. I’m sure the Fed and SEC would argue things would be much worse without their interventions and policy tweaks.

I don’t know about that.

What is clear is we are in uncharted territory. And the government bodies in charge of fiscal policy don’t really have a clue what is going on. Credit default swaps, investment derivatives and other exotic high finance tools? Looks like no one really understands them. Not the parties using these tools, not the regulatory agencies charged with monitoring that use and certainly not the average investor whose money has been tied (maybe by a noose around the neck) to machinations of high finance.

Now don’t get me wrong — at some point high finance truly does become almost magical alchemy. It’s no longer balance sheets and stacks of physical money, it’s more arcane incantations, esoteric handshakes and ephemeral figures written on the sands of an imaginary beach.

Given all this, my theory is maybe it really is magic. Since a lot of the highest order finance these days is totally driven by computers and algorithms no single person understands, maybe a native artificial intelligence grew unbeknownst to anyone involved in the industry and is now rising against its masters. 2009 may become the Age of the Machine.

Hey, it’s as good an excuse as anything I’ve heard from Wall Street or DC for this mess. And makes about as much sense.


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