There are several elements of this recession that bother me. This discomfort and irritation stems from the lack of understanding I have regarding them. They don't make sense to me, and I don't see why they should make sense to anyone.
The first is AIG. They'll be paying out $165 million in bonuses to 370 people who are largely responsible for tanking the company. Now that seems unthinkable, idiotic, and stupid but hold your judgement. They're only paying the bonuses because they are contractually obligated to. Wait, what?
For the common worker, a bonus is something they get when they work hard and deliver for the company above and beyond the call of duty. It's an optional reward, usually tied to a specific, tight deadline or milestone. The average office worker is never guaranteed a bonus, they have to sweat for them. That's the whole point of bonuses, excel and you can reap the benefits. It's a pat on the back for a job well done, a reminder that companies value those who put in their best effort.
What in the name of sanity was AIG's HR department thinking when they made "bonuses" a contractual obligation. How can you even call it a bonus? I don't understand how that works or makes sense. It defeats the entire purpose and concept to award people who seriously fubar'd the company and economy such lofty sums.
The second confusion is short selling. I want to make sure I have this concept down. You borrow someone else's stock, which you don't actually own, and sell it. Then you rebuy it at a later date and give it back to them. You're betting the stock will drop, so that when you rebuy the price will be less than it was when you sold.
First issue: Whose stock are you borrowing? I want to know, because the idea that some creep can use my stock for such things is terribly upsetting. I can't walk into someone's house and sell their antiques, promising to buy them back later. It doesn't work that way.
Second issue: Doesn't this create a self-fulfilling prophecy of sorts? Say Mr. Financial Guru suggests short selling stock A. A whole crapton of people follow his suggestion and low and behold the stock drops. Tadah, short sellers make money, while whoever was actually holding on to the stock loses.
The financial markets are seriously whack. Seriously.