Propping Up Zombie Entities

From Ritholtz's The Big Picture blog:

AIG Unlikely to Payback Bailout $ This Century

by Barry Ritholtz

Let’s not mince words: AIG is on the hook for $182.5 billion dollars to the taxpayers. And it high-grade, enzyme-free manure to pretend this is going to be repaid anytime soon.

Chief Executive Officer Robert Benmosche may be a nice guy, and possibly capable of squeezing some performance out of AIG, but the massive amounts of money involved means bailout it will be a very very long time coming.

Not likely in your lifetime.

Consider that if the company comes up with an extra $2 billion dollars per year — $1.83 billion too be precise — it would take a full century to repay the taxpayers the $182.5 billion.

Note that AIG’s profit last quarter was $1.82 billion. Thus, they could accelerate the repayment dramatically if they decided to turn over every last cent of profit to Uncle Sam for every quarter for the next 25 years. That assumes they can continue to maintain profitability, and not have a losing quarter.

I don’t know about you, but I am not holding my breath.

This ignores any interest on the money that taxpayers gave to AIG. At a low rate of even 5%, AIG would owe $9 billion per year on their $182.5 billion debt. With Ritholtz's optimistic annual income of $7.3 billion for AIG, that company can't even cover the interest payments. They will never repay the bailout. Sadly, the taxpayer's money has gone into the pockets of billionaires and centi-millionaires. It came from people earning as little as $8/hour. It is given to plutocrats so they can buy their $100 million mansions, their $80,000 knickknack wastepaper baskets, their jet setting lifestyle, and their guarded, gated "communities". Obama has allowed this to stand. Tragic.

While the average American has had to tighten his belt, accept huge losses in retirement money, suffered unemployment from a recession caused by the financial games these plutocrats played, lost 30% of their home equity value, the plutocrats get to "play on" with bailout money that has covered their losses. They laugh at the idiot Americans who are paying through the nose to let these overpaid bonus "Masters of the Universe" frolic in their wonderland of wealth extracted via taxes from the benighted many who never got a say in this process. What was that "no taxation without representation" cry that I thought I once heard? Where did the American people get any political say in this handout to the rich?