A political aside

Maybe I am desensitized because I am not living in America - but I do not think so.

$220 million has been paid out in bonuses since AIG received bailout money totaling $170 billion. I hear people are upset, feeling it is unreasonable that executives that put a financial institution (slash national economy slash world economy) into a financial free fall should be getting bonuses for their hard work. I understand Obama and his administration do not have much choice but to address this situation in some way - but it is dumb that they do not have this choice.

It is dumb because $220 million/$170 billion = .0013 or 0.13%. So 0.13% of the bailout money is going into the pockets of people that probably made bad decisions by buying credit-default swaps (does anyone know what these are yet?) and sent AIG, a company so important and so large that it is deemed "too big to fail" by the U.S. government, into a nosedive.

But, big deal. What does that 0.13% buy the U.S.? Well, probably a few things, but the most important is a big label that says "We respect contract law (even in times of financial duress and/or crisis)."

It seems unlikely anyone will be able to get this money back: the stimulus bill stipulates bonus contracts written before February of this year need be honored. But the fact they are trying might (should) scare potential investors and intellect - especially those looking on from abroad (where half of the recipients of this bonus money are living) and who have a choice where to put their money and skills. Governments attempting to intervene and renegotiate, void or bypass private contracts made long ago sends strong signals, perhaps beneficial in terms of short term political clout, but what about long term financial-economic-political integrity?

Like I said, it seems the people over on the east coast have little choice but to respond to public outrage, and it seems the CEO of AIG has little choice but to pay a visit to congress to justify these bonuses while the question of how to effectively utilize the other 99.87% of the bailout money is subordinated. Yes, they have little choice; it is just the public that ought think for a minute.