Dark Shadows

The darkest bank of the Shadow System has cast it's pawl over us all, but AIG is just the shadow of evil, as it is with everything else in this economy the true heart of darkness is Goldman Sachs.

With the average American family's wealth down 18% due to the collapsed credit bubble AIG's payment of tens of millions in executive bonuses, finally struck a nerve of an otherwise self absorbed complacent US public. The outrage was heard loud and clear on Capitol Hill and at the White House resulting in political pressure on AIG to give up it's accomplices and wouldn't you know it's the usual suspects, as usual.

American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.

The embattled insurer's disclosure on Sunday came amid outrage on Capitol Hill over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.
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"The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses," Federal Reserve spokeswoman Michelle Smith said.

That plays fine in the big city Michelle, but out here on Main Street they are waking up and know that the billions paid to AIG has nothing to do with the stability of the U.S. financial system. Some are even aware that to getting credit flowing to households and businesses isn't the solution, it's the problem, but it was never about the credit flow or even the bonuses, it was about Goldman Sachs and the banks all along.

Some of the biggest recipients of the AIG money wereGoldman Sachs at $12.9 billion, and three European banks — France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain'sBarclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

Other banks receiving between $1 billion and $3 billion from AIG's securities lending unit include Citigroup Inc., Switzerland's UBS AG andMorgan Stanley.

Goldman Sachs plays Uncle Sam like a cheap flute and always has, so back when Goldman's man in Treasury was Goldman's CEO, and Goldman's counter party AIG was set to go belly up Paulson instead set up AIG as a cash conduit from the main street to Goldman's partners. That $13 billion slid so loosely through the pipe that Paulson probably took bids from the other beneficiaries or made who knows what deals, but the other big banks piled on and all their counter parties partied, and you can bet all the bonuses were saved as the double choke hold of higher taxation and inflation clamped down even tighter on the public already bleed to within an inch of bankruptacy. Conspiratorial you say, well this all occurred when Hank Paulson was Goldman's man in Treasury and your sorry Uncle paid twice as much for it's shares for Goldman Sachs as Warren Buffet did on the open market.

Goldmans CEO buying his own company with the public purse and just coincidentally it's twice the market price. Coincidence theorist please wake up!

Due solely to the public outrage the White House is hopping mad over the bonus bailout in drag and vows to try to stop it, not to stop it, but to try!

— President Obama on Monday vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda.

It's that economic recovery and the associated bleeding of the stuck taxpayer that's the true agenda the rest is all shadowy noise. There were plenty of harsh words to sooth the cuts of a deeply wounded public, but it's all hype and bull sh!t, as you can see this one coming a mile away.

Lawrence Summers, director of the White House National Economic Council, called the payments “outrageous” in an interview on ABC’s “This Week” program yesterday.
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“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at AIG is the most outrageous,” Summers said yesterday on CBS’s “Face the Nation.”

But when it comes down to brass tacks no one demands the bonus to be paid back, and that especially means Summers.

Even so, the administration can’t abrogate existing contractual obligations without shaking confidence in the legal system, Summers said.

“The easy thing would be to just say, you know, ‘Off with their heads,’ and violate the contracts,” he said. “But you have to think about the consequences of breaking contracts for the overall system of law.”

That moral compass is pointed in the wrong direction Larry, all confidence in the legal system has been shaken out principally due to the shakedown of taxpayer all of us who suffer the the consequences of a badly broken system of law and politics. Never before have so few fleeced so much from so many.

The SEC has blatantly manipulated the stock market with arbitrary ban on short selling, the worst credit offenders got billions, in the greatest looting in history, Goldman itself already got bailed out to the tune of $10 billion, and the nations cites are giving the finger to their employees, pensioners, and the unions who represent them.

In the first ruling of its kind, a bankruptcy judge held the city of Vallejo, Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies.

Municipal bankruptcy is so rare that no judge had yet ruled on whether Congressional reforms in the 1990s that required companies to provide worker protections before attempting to dissolve union contracts also applied to public workers' union contracts

U.S. Bankruptcy Judge Michael McManus held March 13 that when Congress enacted 11 U.S.C. sec. 1113 to limit companies from outright rejection of union contracts it limited it to Chapter 11 bankruptcies. By failing to extend the limits to Chapter 9, which covers municipal bankruptcy, McManus said cities have broader latitude to break existing union pacts, In re City of Vallejo, 08-26813-A-9 (E. Dist. Calif.)

"This will have a huge effect nationwide if it is upheld," said Kelly Woodruff, of Farella, Braun & Martel in San Francisco, representing the firefighters and electrical workers unions. Woodruff said the unions would certainly appeal if the city ultimately voids the existing contracts with the two unions. "And I think we have a good chance of success," she said.

"My understanding is that a lot of cities are watching this and particularly this motion," said Woodruff. "If the city of Vallejo succeeds in using bankruptcy to void union contracts I am sure others will follow," she said.

But through it all Larry bravely upholds the sanctity of law for banker billionaires who have ruined or country and economy, put us on the bitter road to a long, deep depression all in pursuit of piling on to their greater piles of wealth. Great Job! And Larry, if you cant get the money back give the job to someone who can, like Laura Wilson.

The plaint that credit default swap-promulgating AIG is contractually obligated to pay out millions in bonuses to the same pitted brass that led the company, the industry, and the entire economy off a cliff is a bunch of horse hooey.
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I sure would like to see those AIG contracts - I’ll bet I can poke a hole in the specious supposition that the company really, really wants to do the right thing, but its little hands are tied. Since the public bailout of AIG, we all have an ownership interest in where the money is going, and are entitled to ask probing questions.
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I know contracts inside and out, at the real-world, down and dirty level, not the black-box, ivory tower, theoretical stratum that gets adjusted as the tectonic plates of business deals crash into each other.

Any attorney who advises that these bonuses are appropriate ought to have his or her head checked.

And if Laura can't do it our self aggrandizing New York State Attorney Andy can.

The attorney general Andrew M. Cuomo of New York said Monday afternoon that he had not received the information he was seeking about theAmerican International Group’s $165 million in bonuses and would issue subpoenas for the data soon.

The payments to A.I.G.’s financial products unit, which was responsible for billions of dollars in losses at the insurance giant, were sent out on Friday, Mr. Cuomo said. The attorney general had demanded that A.I.G. hand over the information by 4 p.m. on Monday.

"I believe in transparency and disclosure,” Mr. Cuomo said on a conference call. “We believe taxpayers have a right to know.”

Well I believe you have hoodwinked us before Andy, but this time the lime light is so bright you can trust Andy to lean pretty hard to shine the light of day on the shadow bank called AIG. As for the shadow government called Goldman Sachs it's all about planning, planing on the the wealth conduit disguised as an economic stimulus, the public bailout of private excesses, which was the fix that was in from the start and is now Obama's main objective and the only threat to the AIG bonus is the threat it presents to that agenda.

The sharp presidential rebuke of A.I.G. is part of the White House effort to distance itself from abuses that could feed potentially disruptive public anger. Mr. Obama’s aides are worried that such anger could make it more difficult to win Congressional approval for the additional bailout packages that Mr. Obama has signaled may be necessary to stabilize the banking system. Already there have been moves in Congress to limit compensation for executives at banks and Wall Street firms that are receiving government help to survive.

It will take more than strong words and sharp rebukes, uttered only after the dam broke, to repay the US taxpayer. You 'll know Obama is serious about the issue when he begins to enforce existing law, instead he goes on yikkitty yacking and the government debates the uptick rule.

In the end AIG will likely pay the $165 million in bonuses so long as the Golden Goose isn't scathed. To ameliorate public opinion Obama and Cuomo will publicly block the payout with much hype and hoopla and several months latter, with too many in the bread lines to notice some back water judge or back door payout will open and the bonuses will fall out.

Until then the government will go on shooting at the wrong target, shooting at the shadow, at AIG, knowing full well that it was Goldman Sachs all along. It was Goldman's man in Treasury, who sunk the fix in, deep and let the payouts out. Now Goldman would gladly flip double or nothing all day for $165 million against $13 billion, and the remaining $105 billion forever.

So far the plan is working, instead of the blood of banks that's spilled on the Street, it's Joe and Jane citizen again getting stuck, for the crimes and mistakes of mighty Goldman Sachs.

If you can’t be good, it helps to be lucky. But don’t expect any of the companies to write thank-you notes to the US taxpayer any time soon, or for Goldman Sachs to think any less of its lofty self.

That's right it won't think any less of its lofty self or any more of lowly you and me US taxpayer.