At the core of this mess is AIG. So far, it is one of the largest recipients of money from the government. Presently, they are fighting a conflict of trying to do business while appeasing the cronies in the government. The way I see it, this is an impossible task.
I just came across an article that emphasizes this point. Here are a couple of paragraphs from that story which show the point.
In recent months, scores of AIG veterans have departed for jobs at competitors around the world. Companies such as Ace Limited and Zurich Financial Services have snatched up AIG executives with increasing regularity. Other companies, such as New York-based Allianz Aviation Managers, continue to receive resumes from employees at AIG.
“In a climate where daily we hear about people in the financial sector being laid off, you mean to tell me we can’t find folks to replace some of these people?” said Rep. Elijah Cummings (D-Md.), a vocal critic of the retention pay program. “The other question is, where are they going to go?”
The story outline how many AIG people left and went to competitors. Even the CEO of Zurich acknowledged the hiring of AIG employees. Yet, Congressman Cummings shows his ignorance when it comes to private business. He asks "where are they going to go?". The answer is to Zurich obviously.
Here is a situation where a G-Man has no clue what is happening. This is not an abstract idea that leaders at AIG are trying to promote. They are not saying that key people could leave or might leave. They are already leaving. If they are to pull out of this free fall, they are going to need top people to do it. That is the only way that the taxpayers will get their money back.
Once again, the government employed assault tactics with no plan. We heard about this for the past 7 years regarding Iraq. Bush (and his people) had a great plan for getting rid of Sadam. However, they had no idea what to do once he was gone. The Treasury had a plan to save AIG without a plan how to manage it once they got it.
People like Congressman Cummings have no clue what drives success in the private sector. Corporations are made up of people. The human commodity is the most valuable resource a company has. Lose key people and an entire organization can be dragged down. Many are wondering where Apple will be without Steve Jobs. He is the major asset that drove that entity.
The government made an "investment" in AIG. Yet, because of politics from people who have no clue about succeeding in the private sector, we are seeing a diminishing of the chances of ever seeing a return. The government is known for mediocrity. Any talent in the financial arena is going to shy away from AIG if this trend continues. I only hope the G-Men get their noses out of it and let the people in charge take the actions to return to profitability.
And this is a preclude to how badly they will mess up healthcare.
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