Monday, March 16, 2009

Liquidate AIG already

The outrage du jour this weekend and spilling into today is the bonuses AIG is giving their executives who gambled with the entire Western banking system and lost. TPM has been all over the story and the President weighted in this morning.

This story and the AIG bailout has gotten beyond absurd. I previously explained the big issue involved with AIG necessitating the bailout -- in short, the banking system of the entire Western world is infected with their credit default swaps which are the only things keeping many mega banks solvent.

But enough is enough. The American taxpayers own 80% of AIG and with the exception of the financial services sector, AIG remains a very profitable and lucrative company. So it's time to cut the head off AIG management by firing Liddy and the rest of executive management, and liquidate. Sell off all profitable sectors to create a fund to backstop the credit default swaps upon which the international banking system is dependent. This fund will clearly have to be supported by the Treasury but that is already the case. Tell the EU that banks on their side of the Atlantic are going to be thrown overboard unless the EU participates in the backstop -- after all, AIG is bankrupt and their CDS are worthless.

Enough is enough.

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