Phase 1: use the imaginary economy (the financial sector) to buy insurance against enormous imaginary losses resulting from defaults on other people’s contracts–live large! Take out more than the world’s total GDP!

Phase 2: use your hedge fund to maximize defaults on other people’s contracts.

Phase 3: manipulate the political and regulatory establishment to be sure that the insurers can pay the enormous imaginary amounts with real money, courtesy of tax payers. That 50-1 leverage is only bad in a down turn if you are holding the wrong end of the lever–and they aren’t.

Phase 4: funnel all that real money offshore before your friends in government can think too hard about where it went. Leave them to face the pitch forks and the Committees of Public Safety, if it comes to that.

Phase 5 (what the Beelzebubblies are drooling for): bring that money back in as “foreign” investment and buy up the real economy at distress-sale prices.

The last phase is already starting, in my opinion. Heard about any tech sector mergers lately? anything going on in Big Pharma?

So do you REALLY want to wait and see if pouring money into the AIG/Citi/Goldman/Morgan/Deutsche-Bank/UBS Ponzi pit will eventually provide you and me with a pay day, as Messrs. Geithner and Summers insist? I don’t. That’s not how this game works. Those that wait find out that the phones have been disconnected, no forwarding address. Except, of course, that someone soon comes along to take your house and lock you out of your business as well.

And I don’t think the problem is all that complicated. You have an insolvent company, AIG, that is being used as a conduit/clearing house that funnels money from witting or unwitting collaborators in the Treasury to hedge funds that are manipulating the markets and cashing in on naked CDSes written by other insolvent companies that they control. This is basically like taking insurance on the neighbors’ house prior to burning it down. Oh, and part of AIG runs a parallel insurance scam that lets you funnel your profits to offshore accounts without paying taxes.

That wasn’t all that complicated, was it? An “innovative financial instrument” works pretty much the same way, whether it is AIG’s default swap or Willie Sutton’s .45. Not complicated at all. AIG is just less honest, less hard-working, and more ambitious.

AIG is bankrupt–dead and stinking. Pull the plug, bury the stiff, and roll up the estate before we get sicker than we already are.

the almost $200 billion that has gone into AIG to accomplish what exactly? As far as I can tell they are no more stable than they were before the bailouts – we have just postponed the disaster.

They’ve wound down a lot of AIG’s risky business. That’s not chopped liver.
“As far as you can tell” doesn’t mean anything. You’re not in a position to know what’s going on!

Postponing the disaster is good. Postponing it forever is a little better.

Repubs seem to want the disaster to happen. Why is that?

Instead of lamenting the fact that the bloated body that is AIG (or any of our financial titans) is emitting impolite noises and foul odors during the “resuscitation” process, we need to focus on the fact that the body is, in fact, dead. We need to stop pumping air and fluids through it and bury it decently. Until we do, bad smells and rude noises are the least of our problems.

I guess Repubs would like to see AIG and the economy fail. After all they would blame it all on Dems and claim they can solve all our problems with “simple” solutions (as Michele Bachmann said today).

The problem for the public is that the problem is hard to see, quantify and understand, so they’re getting nervous and lashing out at anything that looks bad. The problem for Obama is the former and that the Republicans are playing politics and pointing fingers in every direction (at Dems of course).

We need some concrete action the public can see and be comforted by!

A.I.G. Uproar Is a Defining Moment for Geithner
By JACKIE CALMES
Questions about why Treasury Secretary Timothy F. Geithner failed to stop the A.I.G. bonuses could threaten President Obama’s economic agenda.

Aaaah, so that’s what it’s about…destroying Obama’s agenda!

Well, that shouldn’t surprise anyone, should it? And, knowing all these bonuses are a very small fraction of the bailout money doesn’t prevent the hyenas from pecking away and building a mountain out of a molehill.

That given, I have to wonder about a few things: were the people receiving these bonuses the same who built the pile of crap or replacements who shouldn’t be faulted AND if Republicans damage Obama’s team will it actually damage their ability to fix things (what the Rs want to blame on him) AND just how well is Geithner really doing in fixing the crisis(?).

It’s hard to know what’s going on because it’s complicated and they aren’t going to explain a lot for fear of sounding insane.

Maybe Geithner is doing TOO GOOD of a job and that’s why Repubs want to take him down. Who knows!

While you have the public rage behind you make the entire IRS returns of those involved (fun defining “those involved” public record and retroactively for 7 years.

My eyes are now wide-open.

Thank you so much for that link. More should go to it. The Movie is the best to follow.