Sunday, March 15, 2009

The stupidity of AIG

AIG is taking a lot of heat right now because of the $165 million in bonuses it's recently given out, as you may know they were recently given $170 billion of our money via the US Gov. Now $165 mil represents a very small percentage of $170 billion, that's for sure, but to the average Joe $165 mil still sounds like a lot, and sparks out rage. And their in lies the problem, AIG claims they would not be able to get "the best and the brightest" to work for them if they didn't give out bonuses. This is a terrible argument, if the best and brightest are only in it for short term gain...and you as an employer encourage short term thinking by offering ridiculous bonuses...and the result is your company crashes into the ground...Then maybe you don't need the best and the brightest, maybe mid-range talented people who aren't so self interested would work out better for you. And besides, the more the anger grows against AIG and other companies like them, the more their brands are going to suffer. You think I'm signing up for AIG insurance anytime soon? Hell no! I'm sure many people feel the same way. So I wonder what would lose AIG more money, not letting millions fly out into their employees bank accounts and there for not "attracting the best and brightest". Or to keep letting the cash fly, and continue to piss of existing and potential customers.

Friday, March 06, 2009

Voodoo Science

I just read this interesting article about how terrorism risk varies across space and time, which talks about the risk of attacks when it comes to distance (space) and time. The article gives you that voodoo/law of nature kind of feeling, but at the same time the same kind of guess work, and assumptions went into models on Wall Street and we know how that turned out. Turns out the world is a pretty complex place. Anyway, just graphing The two major terrorist attacks in the US from 1989--2009 looks like this. Which is scary. But this of course doesn't take in to consideration many factors, for instance how does one graph attacks that were thwarted? Does that push the time line further? And obviously we've stepped up security much more after 2001 then after 1993, but we also got two wars going on in the middle east, so how does that throw things off? Anyway thought it was kinda interesting.