The Political Jungle
It sucks to be the slowest zebra.
But in God’s perfect world of natural selection the swift and healthy zebras survive and procreate while the slow or careless zebras get served with toast points at a lion’s dinner party. The point is that there are winners and losers in these scenarios of survival. Even though the careless zebras suffer the ultimate penance for their carelessness, the lions benefit from their loss. It is the law of the jungle, survival of the fittest.
Unless of course the zebra happens to be designated as too important to fail, in which case congress steps in and provides him with life saving assistance. That action, regardless of intent, throws off the whole balance of a perfect program. It allows the careless zebras to live another day and forces the lions to go hungry until they too need assistance to prevent them from perishing. Such is the case with the current imbroglio centered on the bailout of AIG.
Aside from the fury being directed at AIG for their use of $165 million in taxpayer dollars to pay contracted bonuses to employees, the latest AIG outrage is focused on who they paid off with the bulk of the $105 billion they received.
Professional politicos and the media alike are investigating payments to foreign banks like Societe Generale of France, Deutsche Bank of Germany, Barclays of Britain and Switzerland’s UBS. These foreign financials received a collective $53 billion, or just over half of the bailout money given to AIG.
Several major American concerns also received AIG payment such as Bank of America, Merrill Lynch, Goldman Sachs and Citigroup. In all the American banks were repaid approximately $27 billion. There was an additional $12 billion that went to municipalities covering their guaranteed investment agreements. The outrage being directed at these payments is beyond my ability to comprehend.
AIG was once the biggest, fastest, smartest zebra in the herd. But resting on its legacy of being the smartest it lost focus of the risks in the environment in which it lived. It became careless of the risk and too slow to react once it became apparent, causing it to almost be devoured. The bloodletting of this giant would have been brutal, and while the hungry lion/creditors would have feasted on its lifeless carcass there would not have been enough left to sate any of the hungry diners.
In stepped congress with a bailout plan whose sole intent was to satisfy the entities that were owed their due from AIG’s loss of focus. As is the case in the law of the jungle, for every loser there is a winner. Where AIG had bet wrong on the housing and mortgage markets these other banks had bet right. While AIG invested heavily in credit default swaps that predicted continued growth in the housing market these foreign and American concerns had invested equally on its decline.
For politicians to shamelessly attempt to garner favor with the American public by feigning outrage at the payments to foreign banks is disingenuous if not downright disgraceful. Anybody with the IQ of a houseplant could have figured that a company named the American International Group, or AIG, would have international debts that would be paid out of the bailout funds. I simply can’t imagine what else congress thought AIG would do with all that money if not use it to pay their debts.
The reality is that the AIG bailout is probably the single best stimulus package congress put in place. By giving AIG $105 billion they saved not only this business from certain death, but equally as important the money was used to repay debts at other troubled financial firms helping to bolster their ailing capital as well.
Unknowingly congress not only saved the careless zebra but they also fed the hungry lions. But even when they actually do something correct somehow this congress can find a way to make it look bad.
This AIG zebra had better learn quickly that a lion looking for a bite is nowhere near as dangerous as a congress member looking for a sound bite.
Because in this political jungle its survival of the feckless.
