Sunday, March 15, 2009

it will never end

So why are we bailing out AIG with so much money? Because without paying off the 'bad bets' that AIG made to the other stakeholders (huge foreign banks, huge domestic banks, huge multinational insurance companies) those other stakeholders will also fail. Also - many entities have LOTS of AIG on their books, but as of now haven't had to realize it as a loss. So long as it exists, it remains an 'asset'... when it disappears they'll have to declare the loss. It is a cascade failure.

So what if we stop paying - other companies go tits up.

If we dont stop paying, then their executives get to continue to 'honor agreements that were contractually signed in the last days before the bailout' where massive bonuses and retention payments were set up for HUGE numbers of employees. "Together, the three programs could result in roughly $1.2 billion in retention and bonus payments to AIG employees." Remember - much of this is going to 'keep' people in the 'financial instruments' part of the company which is now 79.9% owned by the US Govt... keep the very people who made these bad decisions... and pay them huge sums of money because "Honoring contractual commitments is at the heart of what we do in the insurance business."

So here's an opportunity for Obama to use some of Bush's powers (that he seems to love so much). Declare all AIG executives 'unlawful enemy combatants' who waged an unlawful war of 'economic terrorism' on the US economy... and send them to gitmo without a trial.

I want to see a picture of AIG executives being waterboarded with Jon Stewart doing a Lyndie England pose in front - but maybe that's just me.

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