But this is not the biggest problem with AIG. The real problem with AIG is that it was selling companies "insurance" so that they didn't have to worry about losing their money (in simplistic terms). But AIG never had enough money to cover it if anything failed! This isn't selling insurance, it's a scam. So why don't they just indict these people for fraud as they did Bernie Madoff? That is the thing I don't understand.
But another thing that irks me about all of this outrage is that the bonuses are a drop in the proverbial bucket compared to the immensity of the total bailout money. They are not the biggest problem we have and too much time is being spent on this issue.
And you know what else? Companies were giving out these outrageous bonuses for years under the Bush administration. No, they weren't companies that received designated "bailouts" from the government. But they certainly received a lot of corporate welfare in terms of tax cuts and other favorable government policies. These companies were still giving out this exorbitant money to executives on the backs of the public and the taxpayers. Where was the outrage then? It seems as long as people were able to drive around in their SUVs and their 401ks were going up, they were able to somehow ignore the growth of the huge deficit between the very rich and the rest of us.
Now that everybody's 401k is in the toilet, suddenly they're "shocked" that AIG conducts business as usual.
Louis to Rick: "I'm shocked - shocked! - to find that gambling has been going on here!"
Gail Collins had a satirical column addressing this all-pervasive anger in the Saturday New York Times. As she put it,
"Angry. So very, very angry. Unable to speak due to mega-anger washing over every pore and fiber of my being. Anger is in. (Hope’s so ... January.)"
She then goes on to talk about all the various things she is "angry" about, finishing with the President.
"Let’s complain about Barack Obama. Why doesn’t he sound angrier? Doesn’t he understand that his job right now is to be the Great Venter?
Sure he keeps saying he’s mad. But you can tell that he secretly thinks it’s crazy to obsess about $165 million in bonuses in a company that’s still got $1.6 trillion in toxic assets to unravel. 'I don’t want to quell that anger. I want to channel our anger in a constructive way,' he said on Wednesday. Everybody knows constructively channeled anger doesn’t really count. It’s like diet pizza."
She then points out that if we had elected McCain we'd be "getting outrage 24/7" and then says:
"Except, of course, the whole reason we elected Barack Obama was because when the economy started melting down, Obama seemed sane and calm while McCain appeared to be a loopy visitor from the Planet of the Overwrought.
I hate it when we make irrational, contradictory demands of our president. But, it seems as if that’s what he’s there for."
Now, if the media could stop hyping up this bonus issue and concentrate on the real problem - how the administration will fix the banks - we'd be in better shape. It's time for us all to get over this - especially since apparently 15 out of 20 high-level AIG executives have given the bonuses back anyway, with more to come.
The bigger concern we should all be worrying about is, will the administration's plans for the economy work? So far, Paul Krugman is not hopeful. In fact, he uses the word "despair." When a Nobel-Prize winning economist says he has a "sense of despair" over the plan, this is not a good thing.
Let's concentrate on the stuff that really matters.