Tuesday, March 17, 2009

Lazarus Speaks! About AIG no less!

He was dead. He was worse than dead. He was ruined. Ruined by greed, by ego, by lust.

I'm referring to former Governor Eliot Spitzer, who resigned in disgrace after it was revealed he invested thousands of dollars on an industry - prostitution - that he had sought to shut down.

And now he's back - bringing us a message from the dead about the scandal known as AIG. In an op-ed piece appearing in Slate, Spitzer warns that the $165 million in bonuses paid to AIG execs is not what we should be protesting right now. His issue is with the fact that the recipients of TARP funded AIG payouts are the same banks who've capitalized nicely from TARP investments - the investments made by the government to protect those firms from the fact that AIG would not be able to make such payments.

It is a circular flow of money that is at first confusing. But if true, we've sent out nearly a trillion dollars so that firms like Goldman Sachs could get twice the money out of their AIG investment - from AIG - and from the feds.

As Spitzer sees it, "...the AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already."

And according to Spitzer, "the appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation."

In reading this, it is hard to say what is more absurd - the nicely orchestrated payment of billions of dollars from the government to banks and other companies who seem not to have urgently needed this money.

Or the fact that it's a dead man talking - a man who resigned in disgrace, filling us in on what he feels is a disgraceful alliance between the feds and the capitalists on Wall Street.

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