Populist Rage needs an outlet!

It's been two weeks, and the populist rage over 165 million in "retention bonuses" over at AIG; still looms. The 90% tax penalty seems doomed in the Senate. Taxing people punitively just doesn't seem appropriate in the first place; even though most of us will overlook this nagging doubt to right this wrong! But in all truth, the real travesty is that 182 billion of Federal money has gone to this business in the first place. AIG was a legal gambling casino. Credit-default-swaps are million dollar bets that mortgages will fail. To get paid off, it helps to make sure their are plenty bad mortgages in your CDS; since you don't really care about it. You just want it to fail as quickly as possible. This is called hedging and is supposed to take risk out of the Commodities market.

Instead, an insurance company, with few reserves decided the money it made selling these CDS's outweighed the possibility that they would ever default. Then they defaulted in droves in 2007, so AIG had to admit it had a gambling problem and the bankers would not only break AIG's legs if they failed to pay; but also break the legs of the U.S. financial markets.

These markets are full of shady dealings so not paying off the CDS's full value might cause the rest of the world to realize, America specializes in junk security. No more financial market confidence means no more stock exchange means 40% of American GDP instantly evaporates. In other words, since we don't make anything in America, we have to keep selling the junk we do make which is trades of overvalued stocks and risky financial instruments.

I say all this because I believe Americans are more angry at a system that allows the country to be held hostage by bankers and rogue administrations, than they are at the actual AIG employees. The "have nots" feel left out again of the American system of scamming, and need a target to attack, while they suffer. Bush, Cheney, and Rice would be more fulfilling monsters but Pelosi messed that up back in 2006; so now the populist has to make due with lowly AIG bandits. 165 million is less than 1/1000th of 182 billion. That is so small compared to the real scam, that 182 billion was needed from taxpayers in the first place. In the end this 182 billion will turn out to be little more than bribe money to keep the counter-parties of AIG from suing the SEC. Companies peddling worthless debt as high rated securities is fraud and should have been called so years ago during the Bush administration.