The Kobayashi Maru Scenario

If you’re a complete and total fan of “Star Trek: The Original Series” (like I am), you know that there is a test that is given to all cadets at Starfleet Academy; a no-win situation from which there is absolutely no possibility of extracting yourself…a test called The Kobayashi Maru.  It’s name is derived from a stranded star-liner that you have to rescue that has drifted into enemy (at that point in the show it was Klingon) territory; your mission is to get in, get those passengers out, and avoid being turned into cosmic dust by the Klingons.  Everyone who has ever taken the test has failed, because it is the ultimate no-win situation.  The only one who did manage to pass it and defeat the computer was then Cadet James T Kirk, who did a little bit of reprogramming so that he could beat and win the simulation.

Right now, we are in our own Kobayashi Maru scenario: how can you possibly bail out the banks and other large financial institutions on one hand, without incurring the complete and total wrath of a disgusted American public on the other?  While the decisions made at these financial institutions were unconscionable, and those who profited from them deserve our scorn at best and a firing squad at worst; the situation involving the sheer volume and intricacy of the derivatives and credit default swaps makes it almost impossible NOT to bail them out further.  Recently, a listing of the companies involved directly with AIG and who received funding from them made it clear that the tentacles of this beast extend to all levels of our economy.

As the saying goes, “Damed if you do, and damned if you don’t”.

As a recovering alcoholic/addict, I can tell you this: the very last thing you wanted to do when I was using was give me money…because I’ll give you three guess as to where it went.  The current situation with AIG is very much in the same category; it seems that the more money we throw at it, the more they spend on corporate trips involving $25,000 facials; and $800,000 BBQ  events as well as the infamous $162 million in bonuses to the very same people who brought down the world’s economy.  On one hand, it absolutely needs to stop…and stop NOW.  On the other hand, the financial instruments that were concocted by those geniuses of monetary wizardry are so complex and are in almost every single sector and Financial Institution of the world’s economy.  To allow AIG to fail completely is to virtually assure nothing short of the complete and total collapse of the planet’s economy…PERIOD.  Notice how I used the word, “completely”.

The American taxpayer owns roughly 80% of AIG, and why we (the Congress and the President) simply cannot stop these so-called “Retention Bonuses” by simple declaration that we are not paying them at all.  Of the 73 total employees who were paid to be “retained”, 11 of them no longer work for AIG in any capacity.  Some retention, huh?  One economist had the best idea I’ve heard so far out of the myriad that have been put forth already: spin off the Derivatives Unit into its own entity, declare bankruptcy and begin an orderly reorganization of that unit, and thus by virtue of the fact that that unit is in bankruptcy, all contracts for those bonuses become null and void.  Simple and elegant; and probably the one scenario that makes the most sense.

The problem with some of the other scenarios involving taxation of these bonuses at amounts ranging anywhere between 60-91% is the fact that you may actually be breaking the law in singling out a group of taxpayers unfairly, and that might not fly with the Supreme Court.  You could potentially pass legislation (which the Congress is trying to do as I type this) and pass it retroactively as another means of recouping the money as well.  What everyone seems to be overlooking here is not only the fact thet the American Tax Payers are on the hook for these funds until they can be returned, but these clowns get to keep their bonuses!  I just don’t want the money returned, I want to make sure that these crooked and immoral bastards that got us into the mess never see a penny of that money; and whatever they did see is captured and returned.  THAT is what bothers me more than the actual spending of the money, which by hook or by crook we shall surely get in one way or another.

So then we are left with the very pressing question of, “What next?”.  For one thing, our current Treasury Secretary Tim Geithner needs to be thrown out the door, along with Larry Summers, he himself an architect of  the dismantling of Glass-Steigel when he worked for President Clinton.  President Obama needs to jettison both of these guys NOW and retain some credibility in the matter while he can.  I don’t think you’ll see a dry eye from either Republican or Democrat on the Hill.  Right now, you have an excellent man available for Treasury Secretary in Paul Volcker who was a former Federal Reserve Chairman and a current Obama economic advisor.  He would absolutely sail through Congress in the nomination process, and I’d feel a hell of a lot more safe with a man of his stature and experience at the helm than the boy-wonder Geithner, an ex-NY Fed Chairman, who’s a little too cozy with the Wall Street bankers involved in this mess.  He is claiming that he didn’t know about the bonuses until a few days before they were to be paid out.  One problem with this logic: as Chairman of the NY Fed, it was almost impossible for him NOT to know , because he helped to administer the first bit of TARP money that went out to the Corporate Paupers a few months ago.  I firmly believed he tried to (and did) cut some sort of deal with AIG to limit the bonuses; and he tried to get away with it without telling his boss until the last minute.  President Obama was then in the unenviable position of having to explain how he pretty much got an end-around by Geithner.  No matter how you slice this, this does not look good for this Administration.

As of last night, a statement from Rham Emmanuel was released that said Geithner’s job was safe.  That’s usually code for , “His ass is on the way out the door”; and coming from Emmanuel, that is almost like Darth Vader changing Admirals on the Death Star on a rotating basis (after they failed miserably at their assignments) in “The Empire Strikes Back”.  Geithner will take the fall for this, make no doubt; and he will be fired, and not allowed a graceful exit.  Volcker will be approved in record time, and we will have a grown-up at the Treasury Department sitting in the cabinet room within 4-6 weeks.

We will still have our own financial Kobayashi Maru Scenario; but at least we’ll have a guy who can do a little reprogramming of the computer sitting in the Center Seat.

“I don’t like to loose…I don’t believe in the no-win scenario” -James T. Kirk,  from “The Wrath Of Khan”

3 responses to “The Kobayashi Maru Scenario

  1. Amen to that! Next time someone should read the $trillion stimulus bill…..and we should have had the five day waiting period for the public to review as was as campaign promise made by Obama. If the Treasury Secretary goes, so should Dodd…he’s a liar and complicit in the scam. Pelosi should go….she’s just friggin clueless……and while she’s Speaker maybe she can do something about immigration reform, instead of calling the rest of us as “un-American” while illigal immigration feeds our prisons, schools, gangs and drug dealers.

  2. I agree with the stimulus bill…they should have had at least another week to review it. I *do* think it will work, but to a certain extent. I think there should be more funding for infrastructure in there, and then we might have more of an impact. You are seeing little signs of the economy improving, though…but anything (no matter how small) is a blessing these days.

    However passage of the stimulus’ timeline was much more generous than the time given to congress (24 hours) to read the PATRIOT Act, which everyone was TOLD by the Executive Branch that it needed to be signed NOW.

    I think Obama got blindsided by Geithner, pure and simple…and for that reason alone, he should be fired and not allowed to resign; ESPECIALLY since it appears that HE is the one responsible for modifying Dodd’s amendment (which was passed UNANIMOUSLY by the Senate) which would have prevented (or severely limited) this incident.

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