AIG's " three-syllable license to lie"

[WhiskeyGirl]

"Czars to Serfs: Shut Up, and Pay Up"

America probably crossed the economic event horizon during the October Revolution of 2008, which saw Congress ratify the creation of a corporatist economic dictatorship within the Treasury Department.

Just as it's impossible for light to escape the gravity well of a black hole, it is impossible to penetrate to the inner workings of the engine of plunder created through the TARP legislation. However, just as we can learn about the conditions that create black holes by examining gamma-ray outbursts, the supernova of corruption that created the TARP singularity resulted in some revealing after-effects.

"To be honest with you, I really hope it blows up," exclaimed an employee of AIG, the worthless insurance and investment conglomerate that was bought with taxpayer money in September 2008. "I think the U.S. taxpayer deserves to lose a trillion dollars over this thing for the way they have behaved."

This outburst took place during a March 2009 conference call between Gerry Pasciucco, the official hired to unwind AIG's financial services portfolio, and employees in the conglomerate's offices in London, Paris, and Hong Kong.

As of May 2009, AIG's financial services sector consisted of "44,000 often complex, long-dated derivatives with a notional value of $2 trillion," according to the Newark Star-Ledger. The key to that description, of course, is the cute little modifier "notional," a word that serves as a three-syllable license to lie. Using exactly the same approach I could claim that my "notional" assets are valued somewhere in the high seven figures, irrespective of the dismal reality reflected in my actual bank balance.

Prior to September 2008, AIG was involved in "insuring" – by way of credit default swaps – Goldman Sachs' immensely lucrative and entirely corrupt traffic in sewer-grade mortgage-backed securities. After the bubble burst, AIG was left owing huge sums to its "counter-parties," including Goldman. The federal buyout of AIG was actually a payoff to the insolvent company's counter-parties, beginning with Goldman.

If the insurance company had gone bankrupt, it would have been required to make an equitable distribution of whatever assets it had (which could be rounded up to nothing) among its creditors; this meant that Goldman would have eaten a huge loss. Instead, thanks to the nationalization of the AIG under comrade Bush, 100 percent of Goldman's potential losses were subsidized by the taxpayers.

This represented an interesting update on Marx's famous formula: The Feds had the ability to extract wealth from the taxpayers, and Goldman had the need. AIG provided a convenient conduit for this act of redistribution, and its corporate cadres were just the right kind of public-spirited people to accept huge salaries and bonuses in exchange for rendering such a service.

Corporate socialist: AIG financial services director Gerry Pasciucco is the tool second from the right wearing a sportcoat over a Che Guevera t-shirt.

more here - http://www.lewrockwell.com/grigg/grigg-w135.html  This piece is towards the bottom of the page.

[WhiskeyGirl]

The answer, of course, is that rather than creating wealth, Wall Street's kleptocrats are carrying out exactly the same fraudulent schemes they pursued before the bubble collapsed; this time, however, they had "the full financial support of the U.S. government" – which means, of course, official promises to extract as much wealth as possible until the economy is a desiccated, lifeless husk.

It's tempting to refer to our present condition as "serfdom," but that term is a poor fit. Serfs, after all, enjoyed greater economic mobility than we do.

The gambling casino is still open and taxpayers are providing the cash.