President Obama on Leno’s Tonight Show: I’m Stunned By Those AIG Bonuses

President Obama on Leno’s Tonight Show: Stunned By Those AIG Bonuses

Whenever a late-night television show features a sitting president, it usually comes as material for a stand-up comedy routine. But on Thursday night, President Obama overturned another tradition when he appeared on Jay Leno’s Tonight Show to promote his economic recovery plan. President Obama held his own with the comedian, countering Mr. Leno’s jabs about the executive bonuses given out by the American International Group, saying, “The only place where I think this might work is Hollywood.” Obama did not explicitly endorse the House bill passed on Thursday, which would tax bonuses paid to those whose companies have gotten large amounts of federal bailout money, saying “The money’s already gone out.” “I think the best way to handle this is to make sure you’ve closed the door before the horse gets out of the barn,” he said.

When Mr. Leno asked whether someone should go to jail for the AIG debacle, President Obama replied, “Most of what got us into trouble was perfectly legal.” In his appearance with Mr. Leno, Obama carefully balanced his comments between projecting a sense of good humor and projecting a presidential bearing. For example, he momentarily appeared to look startled when Mr. Leno joked that the president had laid the problems of the banking sector at the doorstep of the Treasury Secretary, Timothy F. Geithner. “I love how you say it’s his problem,” Mr. Leno said. For a moment, President Obama gave a stone-faced look to Leno. Then he broke into a laugh, as if he suddenly realized that Leno’s put-down was meant as a joke. “All of this is my responsibility,” Obama said. “I’m trying to break a pattern in Washington where everybody’s always looking for someone to blame.”

President Obama with Jay Leno: I’m Stunned By Those AIG Bonuses

Interested readers will find more in today’s edition of The New York Times here.

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AIG Greed Redux: John Law and the Mississippi Bubble

AIG Greed Redux: John Law and the Mississippi Bubble

A national outcry of public outrage has forced the Obama administration to take action on the large bonuses that AIG has given to a group of its executives. The bonuses that AIG has distributed went to the very group of employees whose risky trades brought the company to the brink of collapse. “It’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,” Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession. “How do they justify this outrage to the taxpayers who are keeping the company afloat,” the president said.

The whole debacle of the greed displayed by AIG, as well as by some large banks that recently received large sums of bailout money from the government, is reminiscent of the simultaneous collapse of both the French trading arm and royal bank in the early 1700s. That collapse has been described as “John Law and the Mississippi Bubble.” John Law was a Scottish economist who believed that money was only a means of exchange that did not constitute wealth in itself and that national wealth depended on trade. During the reign of Louis XIV, John Law set up France’s Banque Générale Privée (“General Private Bank”), which developed the use of paper money. Many have considered Law to be little more than a colorful con man, responsible for the Mississippi Bubble and the chaotic economic collapse in France.

Richard Condie’s 1978 animated short film, John Law and the Mississippi Bubble, offers up a history lesson about that sensational get-rich-quick scheme, which took place in France over 200 years ago. The film won the Best Film Award at the 1980 International Short Film Festival in Tampere, Finland. With economist John Law at the helm, the plan was to open a national French bank and exchange bank notes for gold at wildly inflated share prices to mask the fact that the country’s gold had been depleted in the building of Louis XIV’s palace. In the film, when the inevitable rush to cash in the notes takes place, poor John Law is left broke and broken-hearted.

It was one of the most sensational get-rich-quick schemes heard of in a long time, but it eventually burst over the head of its originator, John Law. This “rags to riches to rags” story, in which the plan was to open a bank and exchange banknotes (paper!) for gold at wildly inflated share prices, ends when John Law, having been cleaned out as a result of a rush to cash in the notes, is left broke and broken-hearted.

John Law and the Mississippi Bubble

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