God said to Abraham, "kill me a son", Abe said "man, you must be puttin' me on", God said "no", Abe said "what?", God said "you can do what you want Abe, but the next time you see me comin' you better run". Abe said "where you want this killin' done?", God said "out on Highway 61" (Bob Dylan--1965)

In this deranged metaphor, Government is God, Financial institutions are Abe,  "Issac" (the "son") is our mortgage market, and our economy is Highway 61. Whatever. Except next time they need to run. As Reagan said, "Government is the problem". Does the AIG situation not spell this out in the blackest and darkest of stark relief?

I am now officially the only person in America not angered over the AIG bonuses. After watching all the Fox news shows last night (on DVR, of course, one gets to see 60 minutes in 15) I am now certain we have gone absolutely mad as a nation. When "my guys" (e.g., Charles Krauhammer, Stephen Moore) actually feel anger at the AIG bonuses, it means we are completely missing in the forest. I have no idea who gets the $163 million for what, or whatever the number is, (which Bill O'Reilly said for some odd reason was $1.2 billion) but I am willing to bet most of it is good for the taxpayers. AIG has 116,000 employees, but only 500 or so are in the so-called "AIG Financial Products" division, where all the $175 billion of collateral calls the Feds have made existed. AIG sells life, auto, workman's comp, property and casualty, liability insurance and a host of other things. I assume, we as shareholders (the US taxpayer owns 80%--a problem but it does), want these guys to make money. The insurance people have nothing, I repeat nothing, to do with the guys who got them involved in the credit derivative mortgage business. Should we stop paying Car Dealers commissions and incentives for selling Detroit's products because we lent money to the US auto companies who themselves could not keep costs down?

OPPORTUNISTIC OBAMA

But I digress.  Why is Obama stoking the flames on this one in the first place? Today he gave us a hint. He is looking into how we can, through regulation, limit such "greed" in the future. Doesn't anyone see where this is going? Once again, like "Mr. Jones" , we are getting sucked into his Socialist nightmare by trickery and diversion.

Ironically, the one bright shining light at the end of this tunnel will be that the AIG fiasco will cause banks to pay back that preferred stock as soon as humanly possible to get out of the snare of Barney Frank and Barack Obama. This is good. Fear of Socialism might actually make these guys do something on their own. But it may already be too late. Obama is taking advantage and encouraging this  ludicrous universal "outrage" over AIG "bonuses", creating our 19th nervous breakdown on "greed" and staging the 5th rerun of the Nuremburg trials. Why? So it can write pay limits into bank regulation.

Does anyone but me have any cognitive dissonance over (for one example among 10 million) the fact that Senate Majority Leader Harry Reid can direct for himself a $8 billion dollar Levitation train from Disney to Vegas and we have no similar outrage as the AIG "bonuses"? Does anyone think $8 billion is the real number (ask Boston about its Tunnel project)? And how much more will it lose than Amtrak on an annual basis? Can anyone spell the words "diversionary tactics" regarding AIG bonuses? I believe it was the Nazi Goebbels who said  “If you tell a lie big enough and keep repeating it, people will eventually come to believe it". Well, the big lie here is Obama is screaming outrage at AIG "bonuses" while shoving Socialism right in our face.

All so called insiders who followed markets knew in September that Goldman Sachs and others were on the hook for double digit billions owed them due to collateral calls on unsecured, 100% self financed, maximum leverage loans---otherwise known as Credit Default Swaps---effectively made to AIG (the technicalities are complex, the reality is simple) by these firms. But Hank Paulson and his junior side kick in waiting, Tim Geithner, never revealed that to the public. All the money that is being "paid to AIG" by the Feds is just pass through dollars to Goldman and others.

In a PR move Tuesday,AIG named counterparties to whom it owes collateral and, lo and behold, Goldman Sachs is high on the list. Think about this. Banks like GS "lend" to AIG, use poor risk management, lose a ton, AIG cannot pay, the banks petition to the high lords for help, so the Government provides the collateral that AIG could not. All the AIG money is just being passed through to the "Street". The same "Street" who stupidly exposed themselves to enormous credit exposure to AIG. It is they who are also being bailed out, not just AIG.

But Goldman and Morgan still pay their people "bonuses". Why is there not equal outrage? Because this is not about bonuses. Its about Statism and using this issue as a wedge to help make it happen. Goebbels' social policy was Satanic, but his political tactics were quite modern. We are witnessing them in full rebirth today.