Wednesday, March 18, 2009

AIG Outrage

I am outraged. I'm almost mad with outrage. But not with AIG bonuses.

I am outraged with the way the whole thing was handled by US Government. Bonuses total about 175 million dollars. Total money lent by government to AIG totals more than 180 billions (with a B). We are crying about one thousands of money lost. It's totally insane.

AIG should've been bankrupted in a special way. I understand that house of cards called world financial system would fall apart if AIG just allowed to go bankrupt. OK, let's make a special deal: US govenrment takes over the company, sells viable insurance business and guarantees all that crazy CDS stuff. In that case, no bonuses would be given. No, government and congress created strange scheme in which government continues to pour money in that pit.

I am also outraged by current Congress hysteria about the bonuses. I'm afraid current Congress investigation would literally cost much more than bonuses themselves.

Full disclosure: at the time of publication author did not have any positions in AIG. Positions can change any time.

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