From the “Broken Clock” Department: Glenn Beck is, quite surprisingly, entirely correct in pointing out that all the ecumenical outrage directed at AIG over their planned disbursement of $165 million in “bonuses” is nothing but a piffling distraction in the greater scheme of things.
Somewhat ironically, this is much akin to all of the partisan histrionics over Congressional earmarks that made up less than 2% of the federal budget. In the case of the AIG bonuses however, the debt to equity ratio of grotesque stupidity is amplified by several orders of magnitude when the relatively trifling sum involved is regarded in the context of the $170 billion in taxpayer money that’s been lent so far to the troubled insurer.
Ah, but we can’t let Beck get off this easily… For while he may be on the right track when suggesting that the real scandal here is that AIG has used “bail out” money from the Fed to reimburse counterparties to all the convoluted financial instruments of its trading partners (e.g., Goldman-Sachs, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, et. al) that have gone bust, he’s still compelled to frame the scam within the parameters of a simplistic political structure — taking cheap shots at Barney Frank, for example, and heavily suggesting that successive government dictats to the secondary mortgage market to expand the scope of their lending to low-income borrowers was the root cause of the problem.
Sadly, no. A better explanation might be that such well-intended initiatives (aka “shameless pandering to the voters”) were deliberately misconstrued and then exploited with methodical ruthlessness by bankers as a lucrative short-term revenue opportunity, then compounded by Wall Street speculators who coined sophisticated derivative instruments incorporating them as ballast, that were subsequently backed by phantom credit default swaps. All well and good of course in the wacky world of high finance, until this elaborate house of cards abruptly collapsed in the wake of the first passing breeze.