Friday, February 26, 2010

Why Are the Taxpayers Keeping AIG Alive?

AIG posts $8.9 billion loss...NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) reported a quarterly loss of $8.9 billion on Friday and warned that it may need additional U.S. government support, even as it tries to pay back taxpayers after a $182.3 billion bailout.

Here's the news release: LET AIG FAIL

The degree of corruption here involving Henry Paulson, Ben Bernanke, Tim Geithner, Larry Summers, Lloyd Blankfein and others smells worse than a broken sewage holding tank in New York City in the heat and humidity of August. 

And here's an AIG spokesman spewing forth massive lies:  "We think the combination of strategic asset sales and reviving businesses will generate sufficient funds to repay the taxpayer, mooting the need to pursue the previously contemplated life insurance securitization," AIG spokesman Mark Herr said.

Let me be clear about this:  nearly every significant asset sale tee'd up by AIG has either failed or has fallen far short of the originally estimated sales value.  AIG has NO HOPE of EVER repaying Taxpayer money used to keep AIG and Goldman Sachs, et al alive.

It's clear to me, and probably most people, that the decision to save AIG was based on the decision to indirectly bailout Goldman Sachs, and other Wall Street banks.  Recall that the ex-CEO of GS was the Secretary of Treasury and the then-head of the NY Fed, Tim Geithner, is Robert Rubin's robot - Rubin being the former Co-Chairman of GS several years ago.  Anyone doubt the motive?

It's also clear to me that AIG has NO hope whatsoever to pay back any of the $182 billion owed to the Government.  The Government - aka Taxpayer - owns just under 80% of AIG.  Please be aware that the % of ownership is not arbitrary.  One reason for this is it allows the Government to not include AIG's liabilities as part of the Government's balance sheet, even though the Government is giving billions to AIG ever quarter.

And what to do we get in return? We get to watch AIG pay its employees billions in total compensation; we get to watch AIG funnel billions to Goldman Sachs and other big banks.  Now it looks like AIG will be on the hook for billions in Greek debt-relatged Credit Default Swaps, with Goldman used as the underwriting conduit for this garbage.  The media has done a great job of covering this up, but it's there.

When you open the paper tomorrow and read about the growing civil unrest in California over State education budget cuts, and you start reading about the massive teacher layoffs in your own State from budget cutbacks, keep in mind how much money Obama/Geithner/Bernanke is funnelling to Wall Street, in order to keep the big banks solvent and keep the fat bonus checks flowing.


  1. AIG is a fiat eating derivative monster. If you fail to feed this beast, collapse will be hard and fast.

    TPTB know this and will not let it happen until they are properly positioned themselves.

    Joe M.

  2. Yup. My commentary was strictly rhetorical backed by real numbers and facts.

    Joe, you see the protests in California over education cuts?

    The system is getting ready to implode and I have gut feeling we'll see citizen protests spread:,0,5046378.story

  3. Dave,

    The whole social contract is dissolving rapidly due to an economy in shambles.

    Which reminds me of what Bill H. recently said in Midas, "The system has already collapsed, all we are waiting for now is acknowledgement by panic".

    Joe M.

  4. If your company is not doing well, why did they pay back the loan? Oh right, freeing themselves from the pay restrictions for the bonuses they just paid out only to ask for another bail out.

    If they're not smart enough to forecast all these losses let them go to hell for all I care. Goldman already got their greasy hands on the money so it doesn't matter if they fail now.