Accountability? That's fo' SUCKAS!

While we're on the topic of accountability (brought up by Capper...)

What has actually happened is that the government (The Fed and Treasury) have purchased some $46 billion of the "assets" (mostly CDOs and similar things) that AIG wrote CDS against. Since the government now owns "both sides of the bet", the need to post additional collateral (or pay off in the event of a default) has disappeared.

But here's the problem - the loss still happened and still got eaten by government (that is, you), which is being "conveniently" ignored! See, while AIG might not need to pay the $53 billion in bets (the underlying), the reason they were under threat of having to pay out in the first place is that the underlyings - in this case all synthetic instruments with no actual asset behind them - were threatening to have an actual value of zero!

The zero is still happening, but now we're going to hide it in "Maiden III", yet another opaque LLC in which we the people (who paid the check to buy these so-called "assets" - at par, natch) can't look.

In other words, this is yet another rooking of the people, this time to the tune of over $50 billion, where we have essentially pissed into the hurricane of debt deflation and we're not even allowed to see what was bought or at what price.

Now this is, indisputably, bullish for AIG. But it is an outrageous subsidy for this company on the backs of the US Taxpayer, for which we have not been compensated, nor have the acts that led to this situation been punished under the law. The executives at AIG have not been forced to disgorge their bonuses and compensation, they have not been criminally charged, and no punishment has been levied against those who set up this outrageously overlevered mess in the first place.

Paulson continues to jawbone about "increasing lending"; this sort of idiocy from him, Mishkin on CNBC this morning, and similar bleating by Bernanke and others misses the point.

Paulson: The Man Who Inspires "Confidence"!!

Not.

And if you want to see why "Not", then follow the link and look at the chart on the post.

Hint: It's spelled ClintonBush.