More Pasta Please

 

AIPC continues to digest its gains as it has nearly tripled in the last few months. It is worthy to note that AIPC has lagged the market in the recent rally though that does not concern me as it is still holding the last gap that occurred after the last earning report.

I added to my AIPC position today as I continue to reduce my cash position and build up the portfolio’s two main positions, AIPC and BAC-B.

 

On them AIG Contracts. I am formulating a different view of them contracts. Not because of the alleged legality of these contracts but because of what these contracts were about.

According to the current AIG CEO, these bonuses were promised to people who were told that their jobs were going away because AIG will unwind their business unit and unwind the 100’s of millions of dollars of CDS related to their business unit. At the time, the employees had no reason to stay on board and work themselves out of a job. So AIG promised them a retention bonus to stay through and unwind their portfolio’s properly and in an orderly fashion. At the end of the unwinding they would be let go, some already have been, and handed over the retention bonus for staying on and unwinding the portfolio.

Now, I personally do not agree with the bonus amounts, and having no internal knowledge of what these people had to do, or the complexity of the work, I am in no position to judge. It is certainly a possibility that had they left, unwinding the portfolios would’ve caused a lot more losses (orders of magnitudes higher) than the actual bonuses paid.

Having heard what Liddy is saying, I think people are missing the Forest for the Trees and that the law of unintended consequences will kick in and the impact of the Public Lynching would be much worse than the $165 million people are bitching about.