From the brilliant Thom Hartmann who should have listeners all over this great land:
AIG's taxpayer-bailout was not because of it's insurance division, but its investment division, which came up with the idea of selling credit-default swaps - financial instruments premised on the idea that home values would never decline.
According to Time Magazine coming Monday....
The CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the U.S. stock market (which is valued at about $22 trillion and falling) and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market, notes Harvey Miller, senior partner at Weil, Gotshal & Manges. "It could be another - I hate to use the expression - nail in the coffin," said Miller, when referring to how this troubled CDS market could impact the country's credit crisis.
That said, what have we learned from the AIG debacle? AIG's downfall was hastened by its inability to honor $40 billion in credit default swaps (CDS), after taking advantage of a CDS market that went "from zero" in 2005 to a peak of $62 trillion. So maybe the place to begin is by figuring out which regulator should watch CDS.
No less a culprit of the economic crisis than former SEC Chairman Christopher Cox acknowledged as much when testifying before Congress:
The $58 trillion national market in credit default swaps - double the amount outstanding in 2006 - is regulated by no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market ..As the Congress considers fundamental reform of the financial system, I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets.
Shouldn't the taxpayers of America who are now investors in AIG, be demanding not only that senior AIG employees voluntarily give up their bonuses but also shouldn't also the people who perpetrated this economic nightmare that has caused "main street" America to lose their jobs, their 401Ks to fall, the values of their houses to plummet and the very fabric of this nation to unravel - be hunted down and prosecuted?
As unemployment rises and people lose their homes in a worsening economy - there are reports of tent cities (Bushvilles) popping up across America.
The AIG senior employees should not only give up their bonuses willingly with apologies to the American public - or perhaps they should personally deliver their bonus' to the new Bushvilles of today where in Sacramento alone the official count of homeless people is 1,226 people. The homeless are spilling out to the tent city because the housing shelters are full. One of the shelters is turning away more than 200 women and children a day.
In other news former VP Dick Cheney emerged from his den to give an interview to CNN's John King to slam President Obama and his team.
CHENEY: "I worry a lot that they're using the current set of economic difficulties to try to justify a massive expansion in the government, and much more authority for the government over the private sector, I don't think that's good. I don't think that's going to solve the problem."
And this exchange...
KING: Since taking office, President Obama has done these things to change the policies you helped put in place. He has announced he will close the Guantanamo Bay detention facility. He has announced he will close CIA black sites around the world, where they interrogate terror suspects. Says he will make CIA interrogators abide by the Army Field Manual, defined waterboarding as torture and ban it, suspend trials for terrorists by military commission, and now eliminate the label of enemy combatants. I'd like to just simply ask you, yes or no, by taking those steps, do you believe the president of the United States has made Americans less safe?
CHENEY: I do. I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11. I think that's a great success story. It was done legally. It was done in accordance with our constitutional practices and principles. President Obama campaigned against it all across the country. And now he is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.
This from the Bush/Cheney administration that….
Blundered into Iraq, a war of choice, in the greatest military disaster ever - 5 Million Iraq War Casualties, 1 Million Killed, 4 Million Refugees plus 5 million orphans.
Presided over raising the national debt by more than $4 trillion - the biggest increase under any president in U.S history. The national debt now stands at more than $9.849 trillion. - a 72 percent increase.
Delivered to us a dangerous recession that threatens to turn into the next Great Republican Depression with over 3.8 million homes in foreclosure (from 2007 - Jan. 2009), and the loss of over 4 million jobs and counting.
Stood by while 47 million individuals lacked health insurance coverage of any kind plus 25 million Americans who can't afford to cover the gap between what their insurance covers and their medical bills demand.
Watched as millions of good factory jobs disappeared, 2.7 million since 2001 alone, largely from corporations moving operations offshore in a race for the cheapest labor costs. This doesn't include the 1.7 million private sector jobs over the past three years and 750,000 high tech jobs in 2002-03. The University of California at Berkeley estimates that 14 million jobs are vulnerable to moving overseas in the next few years.
Perhaps Vice President Dick Cheney should join the senior AIG employees in tent city for a glimpse of post Bush/Cheney world. Conditions are a bit primitive, with no water supply or proper sanitation so they should be careful when they visit. Tammy Day, a homeless woman and resident, who cooks potatoes on an open campfire can help them out with lunch. While they are there they could say hello to former car salesman Corvin and his wife Tena, some the newest residents of the tent city. Could they offer advice to Tena who says "I have a 35-year-old son, and he doesn't know. I call him, about once a month and on holidays, to let him know that I'm well and healthy. He would love me anyway, but I don't want to worry him." Many of those living in the tent city are pinning their hopes on President Obama's new stimulus package which is aimed at rescuing the economy and creating jobs. The one that Cheney just dissed claiming it's an "expansion of Government."
Call your members of Congress today and demand investigations into the Bush/Cheney era tasked with discovering and revealing past wrongdoings. Then there will be hope of resolving the conflict that many American's feel. Only then can we move forward to develop an economy that serves main street America and abolish the Bush/Cheney meme that we were just here to serve the economy. They had it backwards.