There sure is a lot of finger pointing going on these days. As investment portfolios tank, as jobs are lost and homes foreclosed upon, everybody is blaming everybody else. And it starts at the top—some of the world’s biggest corporations and some of the wealthiest financial institutions on the planet have come begging for bailouts. In most cases, the reasons these huge organizations say they need help is because of “reasons beyond their control.”

That’s not really how it works though, or at least how it should work. Take insurance giant AIG for example. In a misguided effort to make lots and lots of easy money, they literally invented an investment instrument that was essentially a bet that certain other investments would fail. Then, in order to make sure they were covered, they set up offshore banking entities that bet the other way, just in case. The subject of the bets of course was the outrageous mortgages granted to people who had no business getting them in the first place. Well, interest rates climbed, the misguided borrowers defaulted—en masse—and all of the bets came due. So AIG turned around and got bailed out—by us, of course.  Read more...