Michelle Malkin notes that this indignation over AIG is rather hypocritical.

Seems bothe the Dems and Republicans have been wanting this both ways.

One day we, the recipients of campaign cash, vote for the bailout.

The next we are aghast at the bonsues paid, to the execs who no doubt provided the campaign cash.

Gee the merry go round ever stops in Washington DC

Our socionomic perspective here on the blog is that ANGER would be increasingly evident. Several of the students months ago expressed surprise noting that they were not angry. Well

check out the reaction of Senators, on both sides of the aisle, over the AIG bonuses.

No doubt the tar and feathers would be ruled  unconstitutional, good thing for those execs! I cannot recall when both sides of the aisle were last this angry. Clearly they realize they have been had with the request for TARP funds for AIG without any subsequent supervision. We have detailed for you that a good deal of money went to overseas banks, and now million dollar bonuses for the execs that masterminded the disaster. And remember, Senators and Congressmen make about $165 K a year, plenty of class resentment there over millinon dollar bonuses! And note that no one is safe. Congress overlooked Geithner's tax indescretions saying he was THE man for the job just weeks ago. Now, gee no outrage that he did not pay his taxes but plenty over his lack of oversight for AIG.

This is all part of a predictable outrage over Wall Street, that of course was hailed as a never ending money machine to baby boomers. Those boomers have seen years of 'savings' melt in a few months. No wonder they are angry.  The $500 K cap on salaries for firms receiving FED bailout money is a similar angry reaction. Does Cognress really believe that people who make billions for shareholders will be happy with $500 K? Will that same Congress limit the pay for movie stars or baseball players?  No way…..

On CNBC Art Cashin, Floor Manager for UBS, points out that FASB 157 requiring mark to market, passed November 15, 2007 a week after the all time high in the Dow at 14,000. The market has been going south every since. Well none of us are saying FASB 157 alone caused that, decades of overspending and unrealistic credit extension caused that. But Larry Kudlow also noted that his friend Chris Cox has been a terrible SEC chair.

Here is a closer examination of Warren Buffet's Berkshire Hathaway.

I would say theses stock investments are still way early, and probably purchased a bit high.

Only a couple of auto makers are doing better this year. 

Our own Senator Cornyn is featured on CNBC as I write saying there is bi partisan outrage that AIG has paid out millions in bonuses.  Business Week details that a good deal of money went to overseas banks. To what end I wonder?

So who thought all this up anyway?  Glad you asked.

Luca Pacioli is credited with codifying accounting in 1494 with Summa De Arithmetica. Like most 'discoveries or inventions' most of the ideas had been around for some time, perhaps going back to Greek civilization. There is much evidence that Muslims used a similar system. It was said that while Alex Bell got credit for the telephone it was Edison that made the thing so that one could actually talk through it. And so it goes.

I suggest you read this one to understand that it was the need for more accounting that grew out of the Reniassance and increased mercantilism (boday known as going shopping ). That traced back to Marco Polo (the Conde Nast Traveler of his day) and the Silk Route to China.

Oh by the way, if computers and the internet are all going to advance civilization, how is it that we have yet another financial disaster on our hands when everyone at Lehman, Bear, FNM, FRE had both a computer and internet access?  Just wondering….not to mention of course the FED…

Now art owners are 'pawning' their collections.

My presentation on derivatives asks early on, what is Facebook worth? Barrons has long kept track of an annual art index of Chinese jade and such. Sootheby's Christie's and Barret Jackson are all auction houses that have posh sales. Now even Annie Leibovitz has pawned her entire photography collection for a mere $15 M.  Annie is one of the most famous names in photography, go to the photo book section of any major book store and you will see her work. There has always been a spirited debate as to whether photos are art, but I suspect Annie cashed in before the value went to say $10 M. IF she cannot make the pawn payments, excuse me loan requirements, would the bank repo the photos, and then what?

Markets are deleveraging as the term goes and re pricing assets. Ever lower price earnings ratios mean that streams of income are worth less and less, and so real estate investment trusts are worth less from the p/e standpoint as well as the uncertainty of rents. Notice the For Lease signs on more and more commercial properties?

But what is the value of a painting or sculpture?  Such things get bid to huge levels in bull markets. A short wheelbase Ferrari once owned by James Coburn recently fetched a record near $10 Million, and that is a car not a downtown lot in Fort Worth….. 

We study derivatives in Intermediate II Accounting, as you can see there are lots and lots of derivatives, art is a derivative of the perception of where we are in a world of ever increasing or now decreasing values. True Picasso is not around to produce another painting, so what is his original effort really worth?  We are going to find out…

How many of us can name the Chineses President?  Okay how about the Chinese Premier?

Okay what's the difference?  When it comes to the US dollar, none, they are both worried.

This is precisely the scenario the gold bugs lay out. The US is overspending its limits which will eventually weaken the US Dollar. If that happens the Chinese will balk at buying more US debt. If they balk, the world balks and then the game is over, we are a giant GM ever rolling the debt dice and never paying off in full. At that point say the gold bugs, gold goes thru the roof as no currency is safe. 

Hmm is this another vote against the stimulus package, I would say so.  

More developing as I write…

Chinese yuan set to replace dollar from Asia News
by Maurizio d'Orlando

Beijing has launched the experiment of using the yuan as a reserve currency in relations with 8 countries. Chinese exporters are asking to charge in yuan instead of dollars, because the U.S. currency is losing value. But China needs to revise its model of development, too much inspired by eighteenth century mercantilism.

Milan (AsiaNews) – While the comments of economic observers have focused on what is happening to U.S. public debt and to financial markets overseas, the news media rarely mention what is happening in Asia, almost as if there were not a strong correlation between the two phenomena. But it is logical that a substantial accumulation of foreign exchange reserves in China, Japan and throughout Asia corresponds to an unprecedented supply of dollars, the global reserve currency.

……………………….

SHANGHAI: China's central bank is considering hiking increasing gold reserves nearly seven-fold to spread risks in its huge foreign exhange (from the Economic Times).

New Zealand walks to the beat of a different drummer on the rescue plan.