You may be hearing that in a land where we talk in "trillions" and at the very least, "billions" - the 165 million that was given to AIG execs really doesn't matter.

I disagree.

Here's the reason. It matters  because of what it says about how all of this is really working in Washington.

Picture AIG as a man hanging onto the edge of precipice with the U.S. Treasury leaning down to grab his hands.  Now if the man is not 100% sure that the Treasury will give him a hand -- he's gonna start talking, right?

"I'll do anything - he'll say -- just give me a lift and I'll make sure you'll never be sorry you did."  But instead, the endangered Man (AIG) says  "Yeah, I'll let you help me up, but I'm not going along with that thing about not paying the bonuses."

Strange, right?

So why would that be? Why would the man hanging on the edge of the cliff have LEVERAGE ?  One reason: he KNOWS the man won't let him fall. That's right. He is "TOO BIG TO FAIL!"  So, now he can negotiate.

My guys are still going to go on their trip to Dana Point for golf and massages, they are still going to get their bonus, and on and on.

Not only that - when the Treasury calls and says -- look we need you to reconsider -- this bonus thing is going to look really bad - still the 170 billion dollar man says -- TO THE U.S TREASURY! - sorry, no can do ol' buddy ol' pal.

So now we're thinking that the Man (the treasury) who reaches down really doesnt have the backbone to tell falling man much of anything. That's where we are -- we're in. And AIG knows it.

And so does everybody else.

So what now? Walk away from the ledge. As any good negotiator knows, you  have to be willing to walk away.

This entry was posted on Friday, March 20th, 2009 at 3:33 pm and is filed under America's Talking. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.