Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
|--John Maynard Keynes|
Bear Stearns opened the floodgates. Once the bailouts began, there was no end to them. Citigroup took $25 billion, and came back for another $20 billion, plus $250 billion in guarantees on its toxic assets. Bank of America—its name more appropriate now than ever—was also a three-time supplicant, getting the same $45 billion as Citi, plus $300 billion in guarantees. AIG has been back to the well four times—and counting—for a total of $173 billion of bailout green, so far.
Another hard lesson learned: Once executives get a taste of corporate welfare, they want more. Do you have any idea how hard it is to earn $30 billion in a year? Flying commercial—or even driving—to Washington, D.C., for an afternoon of hostile Q&A is a lot easier than having your company make $30 billion. The return on investment (ROI) on the day trip is fantastic.
The queen of corporate welfare is AIG. In addition to its multiple bailouts, it more or less threatened to blow up the rest of the world if more money wasn't forthcoming. In a special report to the Treasury Department titled AIG: Is the Risk Systemic?, AIG claimed that without a fourth bailout it would collapse, ...