Wednesday, October 08, 2008

Rant - updated.

I was going to post about some neat new papers on the arxiv, and mention the very good talk on science policy that I heard today from Norm Augustine, former CEO of Lockheed-Martin and leader of the National Academy committee that wrote the now-famous Gathering Storm report. Instead, I read some news about which I must rant.

Remember the $85B (or, as I like to think of it, the 17 years worth of NSF budgets) that the US government used to "save" reinsurer AIG? Turns out, that wasn't enough. They've already blown through it without actually liquidating their assets as everyone was expecting. Now they've managed to get another $37.8B (7.5 years worth of NSF budgets) from the Federal Reserve. I'm sure they're all done now - after all, they've already spent $440K on a luxury retreat for executives (including $150K for meals and $23K for spa charges) after the $85B bailout. (You know you've gone over the line when the Bush administration calls you "despicable".) In the mean time, the US government is considering taking an ownership stake in a number of banks basically to convince the banks that yes, it's ok to lend money to each other since everyone would be backed by the feds. Of course, that plan may meet with resistance from the banks because it may limit executive compensation for the people who run the banks. Right, because unless we pay top dollar for these geniuses, there's a risk that the banks may not be well-run. Heaven forbid. If this keeps up, it'll be time to invest in tar and feather suppliers. At least I can refer you to a handy guide on how the economic meltdown may affect you.

UPDATE: You've got to be kidding me. AIG is planning another gathering, this time at the Ritz-Carlton in Half Moon Bay, CA, for 150 of their agents. Here's a clue, AIG: When you're so desperate for money that the taxpayers have to keep you afloat, maybe you should, I don't know, consider cutting back on ridiculous luxury expenditures? Don't tell me that you need to pamper your agents or they'll quit. I'm done. I don't care what it does to the global financial system: AIG needs to fail, and their executives need to lose their compensation, and the shareholders of AIG should sue those same executives for the last 10 years worth of compensation.

UPDATE 2: If you want to hear the most lucid explanation I've come across for this whole mess, particularly the problem of credit default swaps, listen to this. It's informative. And scary.

2 comments:

Anonymous said...

Simply going by the numbers, we as a nation seem to care by about 1-2 orders of magnitude more about these financial institutions than the NSF/DOE/etc. The impact of these institutions versus that of science on the economy/general well-being is debatable -- see "Gathering Storm" etc.

And people are surprised when some bright undergrad in physics goes into finance instead of academia -- with perks like these, who wouldn't!

aklee237 said...


After reading both your post and the comment by anonymous, I feel the need to do some of my own venting.

I'm a physics major at a major Texas university. Right now I'm a little frustrated with how our college of science operates versus how our business school does things. To hear that these differences carry on over to the real world is giving me some pause for thought

One of my friends is taking an advanced mechanics course. Class average was about a 60 for the first exam and there was no curve. There are some students who are taking it for the third time. I'm taking an undergrad PDE course that for some reason is being taught at a graduate level. Class avg on the first exam was a 55 with a curve. I have a friend who is a finance major. In his statistics class, the class avg on the 1st exam was around a 60. Guess what? There was a curve and if you had above a 60 you got an A on the test. Inflating grades at a business school is like giving a blank check to all these firms that screwed up

I have another friend who is taking quantum mechanics 2 for the third time. Is this how the real world works? Do business majors get easy A's and economic bailouts while physics majors get the shaft?