Ok, I'm throwing my 1.3 cents in on the AIG bonus outrage, the biggest controversy of the week.
Yeah, the bonuses are an outrage. Huge rewards for greed and failure can't be justified in good times, let alone an economic crisis. Collecting millions for losing billions is a hard act to justify. It's an 'in-your-face' action by members of a group of elites who consider themselves above the rules of common decency. And the hard working public has every right to be outraged.
But it's small potatoes. 1/1000th of the bailout money. The bonuses are merely a symptom of the failure of the greater economic Ponzi scheme that came to dominate the past decade. AIG, and a host of other major financial institutions, have engaged in a long running scheme to generate huge sums of money by exchanging paper "obligations" with no regard for actual value, knowing that they wouldn't be subject to any oversight under the shrub administration. Deregulation meant that no one would be held accountable until the house of cards collapsed, and now we're seeing some of the vultures tearing off the last bits of flesh from the rapidly decaying corpse.
The real problem, yet to be solved, is that the overall economic system is now untenable. The value of a dollar is based on a belief system that is no longer realistic, but nobody wants the consequence of the dollar collapsing.
The Obama administration inherited this mess (amongst many), and is now tasked with finding some sort of fix. The current firestorm over the fatcat AIG executives is great theater, and the political and populist outrage will dominate the media for a while, but in the end it's only a distraction. It's a simple story to explain, as opposed to the complexity of the real economic issues ahead. The real challenge will be finding a way to stabilize the current economy long enough to allow repairing the underlying fundamentals and to establish regulations and enforcement to prevent future collapses. And that is going to be a hell of a lot more difficult than scapegoating a few greedy bastards.
(BTW: This doesn't mean that I think the greedheads shouldn't be held accountable-they should. And we have a right to try to recover their ill-gotten gains, although I'm skeptical about the current congressional efforts. I'm just saying that this shouldn't be our focus. The real problems are much larger.)
Added: Congress is trying a new tax...like that has worked in the past.
