The descent into the bottomless pit of bailouts continues. Today, American International Group, Inc. (AIG) is expected to report a $60 billion quarterly loss, the largest in corporate history. According to news reports AIG is getting another $30 billion in lifeline support from the government. Details are meant to be forthcoming today as well.
And for what? For having held our entire financial system up to ransom through possibly the most self serving and misguided exercise in mismanagement in the annals of American business. All the while the malign bumpkins who got AIG and us into this mess sit fat and happy in their sinecures in the corner offices of their bleeding company, counting the munificent paychecks and bonuses they cashed in along the way.
Please, don't take my word for it, but do read Joe Nocera's "Propping Up A House of Cards" in Saturday's New York Times. It will make your hair stand on end. Given all the mumbo jumbo and purposeful obfuscation that have become part and parcel of this financial disaster, it is reportage that for once is clear and lucid and permits one to fully understand the dimensions of the self-serving greed that has gotten us all to this place. To quote from Nocera's article, "It was extreme hubris fueled by greed."
It was the whole mindset in the banking/insurance casino industry that permitted obfuscation as a key element in "getting away with it," because no one but insiders could fully understand what was happening. One example cited is the term "credit-default swaps." What does it mean? If you know, well and good. But for most, it draws a blank, and yet it is an instrument that has put AIG, and now us, at risk for nearly $400 billion, bringing the entire financial system to the edge of the cliff, flirting with systemic disaster. Had it been called "credit default insurance," which in essence is what it is, clarity might have permitted earlier action. And worst of all, the inclusion of the word "insurance" would have obligated AIG to set aside mandatory reserves which might have permitted it to navigate through this mess. Anyway, read Nocera and you'll understand how we have all been taken to the cleaners.
By the way, one needs wonder why Joe Nocera and Gretchen Morgenson (another terrific columnist on the Business Pages of the New York Times) are not given their own column on the ever more somnolent op-ed pages of that heralded newspaper. Certainly what they are writing about strikes at the very core of today's issues. But then again the "Old Grey Lady" must know what it is doing as it navigates these treacherous shoals.