Why AIG Bonus is an important issue?

I know the furor on AIG bonuses is behind us but I didn’t come across any article that really hit the mark on why it is so important to focus on it — at least to my satisfaction.

Admittedly, Mr. Blow, in his column at the New York Times   came close. On the other hand, another NYT columnist, the famous Mr. Brooks,  in his recent column minimizes the issue — he doesn’t get it.

This is not about the $165M and the pittance it is in comparison to $2T required to “fix” the banks. It is about values that 95% (I believe) of us live by: a value system that has in-built checks within the system and more importantly within us as individuals that prevents us from conducting daylight robberies at the same companies that provide us sustenance. In AIG’s case it is obviously worse — they are not just stealing from the company money they don’t deserve, they are stealing from the American Treasury and the American people. We want to be ensured that we ALL understand the world the same way. This is a very important point — otherwise the foundation for a civilized society is pulled from underneath it. It is akin to driving by making your own rules — there will be accidents and deaths galore. Secondly, and equally importantly, unless we “fix” the thinking that afflicts Wall Street, I don’t know how people like Mr. Brooks and others imagine that we can “fix” the current situation? Despite the $2T bailout.

So in ending, it is not as much about revenge or repatriation, it is about making us believe that we all have the same understanding of rights and wrongs. It is about restoring confidence in our leaders and system more so than restoring confidence in our markets. I would like my leaders to restore my confidence in the following saying: “With great power comes great responsibility,” and stop convincing me that with great power comes great opportunity to fleece the system and unsuspecting people.

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What do the people of the world think? – Part II

The Good — In Part I, published on Feb 23rd, we covered the nations with net positive results, i.e. countries viewed favorably by the world populace — at least the populace of the countries that the poll was conducted in.

The Bad — In Part II, I cover the nations with net negative less than 10 points, i.e. countries viewed unfavorably by the world populace but too badly.

The Ugly — In Part III, to be published at a later date,  I will cover the nations with net negative greater than 10 points, i.e. countries viewed  really unfavorably by the world populace.

So without further ado, Part II (China and United States):

Section 1: A re-cap on the poll. 

BBC World Service Poll in conjunction with Program on International Policy Attitudes (PIPA) at the University of Maryland conducted  13,575 in-home or telephone interviews across a total of 21 countries between 21 November 2008 and 1 February 2009.

The poll asked if the individual’s view of a countries’ influence was “mainly positive”, “mainly negative” or “neutral?” The question was asked about 16 countries. 9 out of 16 countries had a net positive influence and 7 had a net negative influence per the poll (see graph below).

world-poll-2009

 Section 2: Comments on some of the countries with net negative scores.

Rank 10: China

 China is the country with the least net negative points — 1 point —  but has had a swing in the negative direction of 13 points compared to last year. Similar poll in early 2008 showed net positive of 12 points for China.

I believe Olympics has done more harm for China than good: firstly, it brought renewed focus to the annexation of Tibet and the continued supression of human, religious and other rights and secondly, the widespread coverage of pollution in Beijing laid bare the callous approach taken by the Chinese Government towards the environment, natural resources  and forced human migration. The tainted toys and milk scandal also must have contributed to the negative trend.

In general, the communist regime, its mind wash program that still continues via controlled media and demonizes other nations it doesn’t like and its overall cloak and dagger mode of operation leads many to not trust the Chinese establishment.

Rank 11: United States of America

The USA reduced its net negative points from 12 to 3 in one year (2009: 40 positive vs. 43 negative) .  Almost all of that positive bump can be attributed to the huge sigh of relief that emanated from across the globe as President Bush’s term ended. The mindless violence caused by US invasion of Iraq, its unwavering support of Israel despite its draconian measures against Palestinians in peace time and war time alike, and its interference in internal matters of many countries — mostly leading to negative affects — had left little trust for the Bush administration and its policies.

On the other hand, the humanitarian work done by the Bush administration in Africa, the humanitarian causes supported by the people of America at large, the spirit of innovation and the ideals of freedom, equality and prosperity (at least for those living in the US) always gets the USA some support in prosperous and poor countries alike.

I will be watching the 2010 report anxiously. For, despite Obama administration’s positive moves on a various fronts– from investment in alternative energy sources, closing down Guantanamo prison, separation of Science and Politics to withdrawal from Iraq and reaching out to Russia, Iran and Syria — it is the ominous global economic situation caused by, in many peoples minds, by US imposition of broken down form of capitalism on to the globe that will likely drive US popularity down. And I am sure there will be a real battering of American image if the recession continues for a long period of time or gets worse.

Is this why Obama went to Canada?

The likes of Mr. Rich, the New York Times columnist, are scratching their heads trying to figure out what they would do to stop the meltdown of the financial system. And of course since they can’t figure out a solution they believe President Obama must be in an equal bind. To quote from Mr. Rich’s recent article, The Ecstasy and the Agony, “Therein lies the Catch-22 that could bring the recovery down. As Obama said, we can’t move forward without a functioning financial system. But voters of both parties will demand that their congressmen reject another costly rescue of it. Americans still don’t understand why many Wall Street malefactors remain in place or why the administration’s dithering banking policy lacks the boldness and clarity of Obama’s rhetoric.”

Given Mr. Obama’s moves to fundamentally restructure the American social and economic landscape, I believe a more likely solution to the banking problems of America is what Theresa Tedasco hints at in her article the “The Great Solvent North.” She points out that the World Economic Forum ranked the Canadian Banking System at # 1 in terms of stability. The Canadian Banking system, in short, is five large banks that are very carefully regulated by the Government and prevented them from taking huge risks and securitizing their loans.  And because it was only five banks it was easy for the regulators to regulate.

I think President Obama, more than to shake Mr. Harper’s hand, went to Canada to learn from the Federal Regulators how to manage banks and save them from themselves. President Obama and Mr. Volcker, former chairman of the Federal Reserve, both have talked up the virtues of the Canadian system.

If President Obama is seriously considering the Canadian model, the interesting part will be of course the journey — the transition from thousands of banks in the US to only five to ten consolidated banks. I watch the next year with baited breath.