AIG driving GM into bankruptcy

sorry for the bad pun.

continuing to prove that government intervention will only make problems worse, here's an article that explains how the 100% payment of AIG counterparties will lead directly to GM going bankrupt.

GM: Bankrupt, UNLESS....

basically, since a lot of the bond holders of GM (who have control over whether to ok a haircut or force GM into bankruptcy) also own a lot of CDS on GM (issued by AIG), it's in the bond holders' best interest for GM to go chapter 11. now, i know a get a lot of complaints (well, just one from Ivan but that's 12.5% of my regular readers) when i blame the leftist, interventionists like Geithner and Obama for making matters worse than they already were, but here seems to be a clear case example showing how the rescue of AIG resulted in the failure of GM. of course, GM would have failed earlier without government intervention. but now, the taxpayers are out of trillions AND GM is still going bankrupt AND AIG counterparties (like foreign banks) are made whole. certainly, this will result in fewer (if any) benefits to GM pensioners and a massive loss of jobs - which means a further burden on taxpaying americans. for those that disagree, please explain how the "best and brightest" that obama has supposedly brought in are actually making things better.

post updates

i got a lot of flack for suggesting Geithner was a crook. however, i'm apparently in good company. even the left wing huffington post published an article essentially comparing him to nixon.

What Did Geithner Know and When Did He Know It?

the pitchforks are beginning to come to goldman sachs. about 100 to 150 people protested outside of goldman's NY headquarters yesterday. i would like to include this in the i told you so category but since the protest was planned (although unknown to me) before i wrote the post, i don't think it quite makes it.

geithner is either a crook or clinically stupid or both - please vote in comments

tim geithner is either a crook or stupid. my vote is for crook. i hope he comes after me and sues me for libel because i would love for him to prove in a court of law that he is not a crook.

in anticipation of the court case, let's go through the evidence we have to date. i have no doubt, over time, there will be plenty more evidence of illegality and gross malfeasance.

1. he is an admitted tax cheat. if you or i cheated on our taxes, we would probably be incarcerated. let's be clear about his problems which he described as "unintentional". the man cheated on his taxes, not one year, not two, but for four consecutive years. so, either he is clinically stupid and has no right to be in any position of power or he is a criminal. the man went from cheating the IRS to being head of the treasury department which oversees the IRS! al capone did the same crimes and went to alcatraz (before it was a tourist attraction). i understand in the rush to put someone in there, congress was bullied. but when you put stupid and/or criminals in charge, bad things happen (see #2-5 below).

2. he was preceded as ny fed chief by william mcdonough who helped destroy merrill lynch. why does no one talk about this? how convenient that the fed crammed merrill lynch down the throat of bank of america but did nothing for lehman brothers. mr. mcdonough's role at merrill was to, "assist senior management in the company's business development efforts with governments". I will bet anything that when andrew cuomo gets the list of merrill execs with big bonuses mr. mcodonugh will be on the list. and guess who was the head of the ny fed which had purview over new york banks like lehman and merrill? that's right - tim geithner!

3. the AIG bonuses. while i don't care about $165 million compared to the hundreds of billions that this crook has doled out, it has clearly captivated the public. and geitner of course was the one who engineered the bailout of AIG while he was head of the NY Fed.

4. the continued funding of AIG to pay off foreign banks. i'm shocked there's not more outrage on the counterparties to AIG. i like how the press reports that AIG lost $60 billion last quarter. they didn't "lose" the money. they're not scratching their heads thinking, "now where did i put that sack of money." it was a wholesale money transfer from taxpayers to other banks. included in those other banks are foreign banks like HSBC or Soc Gen. Why, why, why is the treasury secretary of the united states of america taking my tax payer money and giving it to foreign banks without any concession from them?

5. the lack of a cohesive plan. whether or not you believe his other actions are correct or not, clearly whatever plan he may have is ambiguous. tough decisions need to be made. but geithner is not making those tough decisions. in fact, it's unclear, what he's doing.

i know a lot of people say don't change a horse midstream but they are simply wrong. the argument seems to be that give him a chance... well, if he has screwed up this badly so soon, imagine what he good do if we gave him more months? intrade already says there's a 15% he's gone by june 30. joseph barr was only secretary of the treasury for 31 days. geithner has already outlived him. hopefully, not for much longer.

so is geitner just plain stupid or actually criminally complicit in giving money to his buddies (like he did at merrill lynch)? please vote in the comments.