Friday, March 20, 2009

Josh Marshall on AIG

Politicians on both sides are demagoguing the AIG bonuses for all they are worth. This is a red herring because the dollar amounts involved are very small compared to what has already been spent bailing out the insurance giant. President Obama is saying that it is in everyone's interest not to allow AIG to fail because they owe most of the world's major banks so much money on derivative trades that they, in turn, would fail causing a systemic meltdown if the insurance giant went down. OK, I don't like it, but it makes sense.

Josh Marshall cuts through the political posturing and articulates the core issue beneath popular outrage over the bonuses.

The problem is what appears to be the president's mortifying impotence in the face of bankers and financiers who created the problem. The president speaks and acts for the federal government, which is to say, the American people, who have mobilized more than a trillion dollars and all powers of the state to repair the damage emerging out of the financial sector. And with all that, he's jacked up on a employment agreement between a company the government now owns and derivatives traders who sank the world economy and may quite likely be looking at criminal charges for their activities in the not too distant future?

We're paying them off, either in full or in part, out of fear that pulling the plug on these contracts would so destabilize the global economy that paying it is a better solution than not. But we're doing it for us. Not them. They are, at best, collateral beneficiaries...But fundamentally Obama needs to start showing that he's in charge, that he's operating as the American people's advocate and that he has the power to do it -- which these stories of getting jacked up by some Gordon Gecko wannabes in London just terribly undermines. But to do that, to show that, it has to be true. And that might require some real changes in policy and possibly in personnel too.

--Ballard Burgher

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