Big Government Bailouts: Moral Hazard is Already Rearing It's Head

The Black Hole Gets Bigger: AIG Back for Yet Another Bailout

The Financial Times reports that AIG is up to its old tricks, back again to the trough for more money. AIG’s executives were on Friday night locked in negotiations with the authorities over a plan that could involve a debt-for-equity swap and the government’s purchase of troubled mortgage-backed securities from the insurer. The original loan was ALREADY secured by ALL of AIG's assets. Everything that could be hocked WAS ALREADY hocked. And the government has a 79.9% equity interest. So what is this talk of a debt for equity swap?

This is the essence of AIG's latest proposal:

Man walks into pawn broker. He says to the person behind the counter, "You know that watch I brought in two weeks ago? I know you lent me $85, but now I need another $50. And I will tell you why you will give it to me. I have a gun with me. I will blow my brains out here, right now. With your nice carpet, I guarantee it will cost you more than $50 to clean up your store. And that's before we get into the cost of keeping your store closed while you clean my grey matter off your walls and what my suicide might do to your store's reputation."

The federal government has NO oversight over AIG. Its mess was SOLELY AIG's own doing, and they should consider themselves incredibly lucky that they were so big that the Fed felt it has to intercede.

Yup. They're so lucky that they were too big to fail — and this is the beginnings of exactly why WE, the taxpayers, won't get lucky with a bailout happy Democratic congress & why the coming recession is likely to be deeper and more prolonged (although pro Bigger Government & Higher Taxes Ron Chusid The Useful Idiot of the Liberal (ill)Values Blog sleeps soundly, assured that Happy Days Are Here Again. Good Grief!).