Of Pricey Bandaids, Toxic Assets, And Hence The Need to Nationalize
American International Group, once the world's largest insurer, was deemed too big to fail, but it is anyway, and we the taxpayers are apparently rescuing it for the fourth time to the total whopping tune of $150 billion. AIG is set to get another $30 billion in federal funds, even though it is preparing to post quarterly losses of about $60 billion - roughly $460,000 per minute, or the biggest loss in corporate history.
Uh, okay. So now we're giving them lots more money. Many of us, of course, would really like to get paid obscene amounts for doing incredibly stupid things. Even so, because AIG insures the losses of a global banking system likewise failing, Peter Morici of the University of Maryland's Smith School of Business calls the newest bailout "just another bandaid."
Given that AIG will have gotten a total of $150 billion from a government – ie: us – that already holds an 80
percent stake in the company, the bailout also means that AIG is now essentially us. It's our money, that is, though because the government remains frightened of the boogeyman nationalization, it's AIG's control. And, if they get it together, their profits. In other words, lemon socialism in action.
Ira Glass of NPR's "This American Life" did a nice piece recently on how the bailout works and why it sucks. It's basically banking for idiots, explaining the current crisis in normal, direct language to otherwise intelligent, well-informed people whose eyes glaze when they hear about spread sheets and toxic assets – in other words, most of us.
It's also a supremely cogent argument for the nationalization of banks. To understand why the taxpayers will ultimately pay for the greed and stupidity of bankers, and why we shouldn't, go here
Or to sign the CD petition to nationalize banks, go here