Boo Hoo AIG Executives Got Some of Your Cash

Once again, a quick scan of the TV or the news sites on the internet just pisses me off. Today everyone is hoping mad because AIG, a large insurance company that received $160 Billion Dollars in tax payer bailout money, is giving out bonuses to their senior managers. In all, its 73 executives and it totals about $160 Million dollars.

Should the people responsible for running a company into the ground get a bonus? Should these executives profit from tax payer subsides? Of course not. It's wrong and stupid. But is that even the issue here? This is less than one tenth of one percent of the total bailout given just to AIG. It is barely a blip on the radar screen in the whole bailout mess. Should we just let it go? Probably not. Should we focus on it while our inept government tosses trillions of dollars down the money hole? ABSOLUTELY NOT.

Like the Wizard in the Wizard of Oz, the Obama administration has done a great job to keep you from looking at the man behind the curtain. Don't look at the fumbling administration, staffed by rookies and egomaniacs, what's Rush Limbaugh up to? What? They gave out bonuses? Outrageous!!!!

I'm getting a little sick and tired of all the games and shenanigans. We have a banking, stock market, and credit "crisis" that demands immediate action. So, let's focus on health care, education and renewable energy. Let's quote everyday, down to the specific number, how many jobs we've lost but then let's put in rules to restrict stimulus jobs to union members. Oh...REALLY?

The problem here is that government, leftists in particular, always attack the symptom and not the actual disease. They don't look to real solutions or long term fixes. Let me tell you what I would have done.

This whole thing started with people who couldn't pay their mortgages. They shouldn't have had mortgages in the first place, but the government encouraged (i.e. underwrote and passed laws) banks to issue them. The banks then passed the mortgages on to other financial institutions, which caused a massive domino effect on the entire economy.

So, the government stepped in and gave cash to the banks and insurance companies. Bad move. Keeping them afloat is irrelevant. What matters is the root of the problem, the yeyhoot who can't pay his mortgage. This is the "toxic" asset that the TARP program was meant to fix.

Every month about 300,000 homes go into foreclosure. The average price for a home in the US is $264,000. What we should have done is step in and purchase the homes from the banks that were going into foreclosure. That's $79 Billion a month. In a year, if the same numbers continued we would have spent $800 Billion or so. That, is the same amount of the first TARP that bought us a bunch of shares of worthless companies that continue to need cash.

If we bought the homes, we wouldn't have to boot the occupants. In fact, we could make them pay rent!!! We would also have to hire people to manage and maintain these government homes. Hey, new jobs. Hmmm...that's a pretty rational plan. Right?

But no. The government was afraid to allow their big fat cat friends to loose money (under my scenario, they would at the worst, break even). Just check out the list of politicians who received contributions from AIG and Freddie and Fannie (the two government subsidized mortgage lenders who hold 55% of the bad mortgages). You can read the lists here, and here.

I really don't care if people loose their equity if they can't pay the mortgage. That's the risk of investment and why I rent and have rented for the last 20 years. I'm not going to buy a house until I know that I can afford it.

This is a major clusterfuck on all levels. These government clowns are wasting our money and making bad decisions. If more than half of you voted for "Hope and Change" aren't you a bit disappointed that it's business as usual?

I sure as hell am.