Rotten AIG

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Writes Jason Gordon: “Regarding AIG, their ‘conservance’ can be seen as a kind of gangsterism (banksterism) by the Federal Reserve.

“The analog would be a guy who owns a popular and profitable pizza parlor who is going to loose his shop because of some stupid investments e.g., a pizza-delivery helicopter. By all rights this guy should fail — not because the pizzeria model is inherently flawed — but because of poor investment risk management.

“Now, in steps the mobster who thinks it would be nice to have pizza and convenient use of a helicopter whenever he wants. Flush with ill gotten cash the mafioso offers to keep up the helicopter payments for the pizzeria owner who can pay him back over time.

“The owner might initially be tempted to raise pizza prices to pay off the debt (fuggetaboutit pal) but realizes he’s better off as a wholly owned Mob front that can lower prices with impunity and price out the competition — who might be helped by a stimulus package of their own.“The neighborhood is lost when the ownership consortium adopts an outreach to the community to ensure the propping-up coffers are kept full, lest the residents go without local shops. It’s long past the point when competition is blocked by artificially low prices. Now the prices are only going up.

“Distorting the market by changing the rules of the game and encouraging compliance is how government and business understand one another.

“All the current calls for more regulation just mean a future of increased collusion, codependence, and manipulation between bad businessmen and worse government officials.”

10:29 pm on September 17, 2008