Time for MATH.............

It’s hard to wrap your mind around $2.7 trillion.

The average median income (that means half made less than this and half made more) in America was $48,200 in the 2006 census.

There are 111,162,259 households.

$2.7 trillion would give each of those households an additional $24,288.82 which means that if the money went to the people instead of the banks, the median household would increase their income by 50%.

If the people received it, they would likely spend the money setting the economy on fire. The banks instead, will use it to pay off bets they took with foreign counter parties, possibly their own personal offshore accounts and that money will never set foot in our economy.

Where did this money come from? It’s being printed out of thin air in a year, will make each dollar less valuable because there are more of them. It will probably express itself in a rise in interest rates.

62,000,000 Americans............

Didn't vote for Obama.

Governor Sonny Perdue

Nice to meet the Governor of Georgia at the Bass Pro Store today.

He looked healthy, tan and ready to go turkey hunting.

Good luck Governor Perdue! Don't miss.

Healthcare Obama style.............

Eighty-six year old Grampa Doug Parisian drove out of Spicer in his car and entered Rice Hospital in Willmar yesterday morning bright and early. His hernia surgery was to be at 8am with Dr. Kidd. Following orders, the previous night he only drank water. The surgery went perfect according to the surgeon and Doug was placed in Room 1811 for an overnight stay and release the following morning to make sure all was well.

As background, he was required to take several tests last week prescribed by his internist to make sure his general health was sound to handle the surgical procedure. He was very put out by these tests and was very vocal to the medical personnel that they were just "running up the bill" because he has very good medical insurance. Remember, it was 10 years ago last week that his wife and my mother passed away after a very long 8 year ordeal that rang up millions in medical expenses for his insurance carrier and the state of Minnesota. Unfortunately I remember that all too well. I think Doug does too.

Along about 2 pm Doug began to get hungry and irritated with all the noise on the floor and found his cell phone in his pants pocket and decided to call his good buddy who lives in Spicer across the street from him. This fine gent just 3 weeks ago underwent heart by-pass surgery in St. Cloud. Doug got out of bed, dressed and told the nurses he was "just fine and getting the hell out of there because it was too loud and that all they wanted was to run up the bill". He said he was going home to get some rest. His buddy picked him up and off they went around the parking lot to Doug's car and then they headed to Spicer.

That was the Doug Parisian style of cutting back on health care costs. It would make Obama proud.

Unfortunately..........

Chippewa Partners wasn't invited to a gathering of Native American small businesses at a White House event on Monday when President Barack Obama announced plans to help entrepreneurs through the recession.

As a conservative I doubt anything in Indian Country will change under this President but let's hope so. Change is hard to come by in Indian Country. Just getting off "indian time" would be change!!

Oh well, maybe the next conservative President will invite me.

http://perotcharts.com/2009/03/cbo-estimate-of-the-obama-budget-2009/

Obama TV...........

When President Obama is on TV, live or taped I tune out.

I have had enough. He reminds me of the Bureau of Indian Affairs trying to "help" the American Indian. Likewise, when Geithner talks, I hit the mute button.

When you see some "change", feel free to let me know. I won't hold my breath.

Watch this link...........

http://blog.indecisionforever.com/2009/03/13/jon-stewart-and-jim-cramer-the-extended-daily-show-interview/

The Welfare Office.........

A guy walked into the local welfare office to pick up his check

He marched straight up to the counter and said, "Hi. You know, I just HATE drawing welfare. I'd really rather have a job."

The social worker behind the counter said, "Your timing is excellent. We just got a job opening from a very wealthy old man who wants a Chauffeur and bodyguard for his beautiful daughter. You'll have to drive around in his 2008 Mercedes-Benz CL, and he will supply all of your clothes. Because of the long hours, meals will be provided. You'll also be expected to escort the daughter on her overseas holiday trips.

This is rather awkward to say but you will also have as part of your job assignment to satisfy her sexual urges as the daughter is in her mid-20's and has a rather strong sex drive. A two-bedroom loft type apartment with plasma TV, stereo, bar, etc. located above the garage, will be designated for your sole use and the salary is $200,000 a year."

The guy, just plain wide-eyed, said, "You're bullshittin' me!"

The social worker said, "Yeah, well . You started it."

The greatest barnyard.........

The little red hen..... She called all of her Democrat neighbors together and said, 'If we plant this wheat, we shall have bread to eat. Who will help me plant it?'

'Not I,' said the cow.
'Not I,' said the duck.
'Not I,' said the pig.
'Not I,' said the goose.

'Then I will do it by myself,' said the little red hen, and so she did. The wheat grew very tall and ripened into golden grain.

'Who will help me reap my wheat?' asked the little red hen.

'Not I,' said the duck..
'Out of my classification,' said the pig.
'I'd lose my seniority,' said the cow.
'I'd lose my unemployment compensation,' said the goose.
'Then I will do it by myself,' said the little red hen, and so she did.

At last it came time to bake the bread. "Who will help me bake the bread?' asked the little red hen.
'That would be overtime for me,' said the cow.
'I'd lose my welfare benefits,' said the duck.
'I'm a dropout and never learned how,' said the pig.
'If I'm to be the only helper, that's discrimination,' said the goose.
'Then I will do it by myself,' said the little red hen.


She baked five loaves and held them up for all of her neighbors to see. They wanted some and, in fact, demanded a share. But the little red hen said, 'No, I shall eat all five loaves.'
'Excess profits!' cried the cow. (Nancy Pelosi)
'Capitalist leech!' screamed the duck. (Barbara Boxer)
'I demand equal rights!' yelled the goose. (Jesse Jackson)
The pig just grunted in disdain. (Ted Kennedy)

And they all painted 'Unfair!' picket signs and marched around and around the little red hen, shouting obscenities.

Then the farmer (Obama) came. He said to the little red hen, 'You must not be so greedy.'

'But I earned the bread,' said the little red hen.
'Exactly,' said Barack the farmer. 'That is what makes our free enterprise system so wonderful. Anyone in the barnyard can earn as much as he wants. But under our modern government regulations, the productive workers must divide the fruits of their labor with those who are lazy and idle.'

And they all lived happily ever after, including the little red hen, who smiled and clucked, 'I am grateful, for now I truly understand.'

But her neighbors became quite disappointed in her. She never again baked bread because she joined the 'party' and got her bread free. And all the Democrats smiled. 'Fairness' had been established.
Individual initiative had died, but nobody noticed; perhaps no one cared...so long as there was free bread that 'the rich' were paying for.

EPILOGUE

Bill Clinton is getting $12 million for his memoirs.
Hillary got $8 million for hers.

That's $20 million for the memories from two people, who for eight years, repeatedly testified, under oath, that they couldn't remember anything.

IS THIS A GREAT BARNYARD OR WHAT

Life at 55...............

I watched snow clouds whip across Mt. McKinley. I gave the eulogy at my Mothers funeral. I viewed the magnificent Ware Collection of Glass Flowers at Harvard University. I watched two healthy sons come into the world. I have seen the pristine beauty of New Zealand. I waded into the “crowd” on the floor of the New York Stock Exchange. I hunted elk in the Big Horn Mountains above Yellow Tail Dam with Robert Yellow Tail. I hunted dinosaur fossils in the Badlands. I stood at Michael Milkens X-shaped trading desk in the Beverly Hills office of Drexel Burnham Lambert. I have shot 10-point bucks in their beds. I was accepted into 5 law schools. I have eaten in the lobster houses of Baja. I know the thrill of Space Mountain. I looked down from the Eiffel Tower. I caught fish in Canada till my arms ached. I walked the Salomon Brothers trading floor in 7 World Trade before the 9/11 disaster. I have seen the treasures of King Tut. I know the biggest components of net worth are great health and the ability to function. I made long ocean swims in the cold. I looked down from a helicopter over Yankee Stadium. I learned that if it is a problem about money it is not really a problem. I felt the heat and humidity in Tahiti. I know the sting of frost-bite.I still want to be the winning jockey on the winning horse in the Kentucky Derby. I was in the Swiss Banks in Geneva. I have seen the Crown Jewels. I watched schools of tuna in a feeding frenzy. I watched 3 space missions blast off. I sipped scotch at the Ritz in Paris. I have walked the most beautiful beaches in the world. I have eaten shrimp the size of lobsters and octopus the size of shrimp in Australia. I bucked off bucking horses. I know the best hugs come from your own children. I am still pained by the massacre at Wounded Knee. I saw aurora borealis so bright I thought I was seeing heaven from earth. I have heard the primordial howling of coyotes across many sunsets. I partied in the original Hotel California. I have seen death in many forms. . I looked Mona Lisa in the eye. I sailed from Catalina Island to the mainland. I was awarded a college degree. I learned I chose excellent parents. I admired Mt. Blanc from Café di Midi”. I trapped hundreds of fox. I shot antelope at 600 yards and missed coyotes at 8 steps. I have been in planes that have landed on ice, on water and in pastures. I have ridden a motorcycle across much of America. I have felt hypothermia. I identified hundreds of different birds. I have been lost in the Louvre. I watched the Challenger explode on TV. I have had more fun than any man should have. I have broken bones. I have been to the diamond cutters in Amsterdam. I grew up in the poorest county in America. I lived in LaJolla. I marched as a cadet at the United States Military Academy at West Point. I know leverage works both ways in the stock market. I lost my best friend to a lightning strike. I miss my grandparents more every year. I saw two million birds in one flock. I know a wide smile and hitchhiking go hand in hand. I learned that success has nothing to do with money and everything to do with how you feel about yourself. I never smoked a cigarette. I have felt the roar of a rushing Minnesota river in the spring. I danced in Studio 54. I know the beauty of Diamond Head. I know the laughter of friends and the spite of enemies. I know the power of big surf. I trapped coyotes in Montana’s Bob Marshall Wilderness. I looked into the crater of Mt. Saint Helen’s. I have been to two Olympic Games. I still dream big dreams. I know the gurgle of the Mississippi River headwaters. I know Native American racism. I have owned my share of winning stocks. I always questioned my dentist. I remember the Blizzard of 1975. I nearly capsized by migrating whales. I only eat sushi with chopsticks. I ate breakfast at Harry’s in LaJolla and lunched at Harry’s on Wall Street. I was on the flight deck of the USS Kitty Hawk during F-14 training operations. I looked down on Chamonix from the French Alps. I have become a better trader every year. I know that a house is not a home without family. I know the real party is in Heaven. I skied first tracks at Vail. I cruised Pacific Coast Highway in a convertible. I was in New York for Fashion Week. I enjoyed the Changing of the Guard. I completed triathlons. I shopped Rodeo Drive. I’ve ridden cable cars in San Francisco. And, I believe living well is leaving things behind well.

Yo, Chris Brown......

You have a problem pal. So, getting text messages that make you angry are an excuse to beat the daylights out of your girlfriend? Awesome. You are really something.

You POS............!

Money is not the solution to this problem

American Indians and Alaska Natives have the highest suicide rates in the United States revealing a shocking 70 percent higher rate of suicide than in the general population. Native youth ages 15-24 have suicide rates more than three times higher than the national average. Across the Great Plains, this rate is even higher.

Senator Jon Tester (D-MT) told Native American Times, “We need to get to the root of the problem, which is poverty and a lack of hope and opportunity in too many Indian communities. As a member of the Senate Indian Affairs Committee, I’m working hard to create jobs, and to improve education, health care and housing throughout Indian Country. This will restore hope and opportunity to Indian communities, and it will provide the tools these communities need to become self sufficient.”

Senator Tester has reason for concern when statistics reveal that Montana’s general population of 15-24 year olds have suicide rates that rank third highest in the country, behind Alaska and North Dakota. Addressing suicide is at the top of the list for many health organizations and Tribal representatives all across the Great Plains.

Robert Moore, elected Councilman of the Antelope Community, Rosebud Sioux Tribe of South Dakota spoke to the hearing participants as the representative for the Great Plains Tribal Chairman’s Association. He reminded the participants of the obligations held in the 1868 Treaty of Fort Laramie that requires the U.S. Government to provide health care to the Tribes.

“Over the past several years in the Rosebud Sioux Tribe alone, we have witnessed dozens of suicides and hundreds of documented suicide attempts. The situation became so bad that in 2007 our Tribal President declared a State of Emergency in order to draw attention and resources to the problem,” explained Moore.

Senator Byron Dorgan stated that the lack of funding and ignoring treaty obligations was another part of the problem when addressing Native suicide rates at epidemic proportions.

“We need to go back and read the treaties that signed the federal government up for its obligations. Right now, health care rationing takes place on every Indian reservation in America. That is shameful,” Senator Dorgan reminded the hearing participants

“Forty percent of Indian health care needs go unmet,” stated Dorgan.

Senate Majority Leader, Harry Reid, who lost his father to suicide, also attended the hearing. Reid explained from his personal experience that, ”It’s important to break the silence about suicide, too often a taboo subject, and to talk openly about it.”

Perhaps the most moving testimony at the hearing came from Dana Jetty, a 16-year-old high school student from Fort Totten, North Dakota. A member of the Spirit Lake Tribe, Dakota Nation, Jetty recounted the painful events surrounding her 14-year-old sister, Jami, who committed suicide in November.

Jetty told hearing members that her mother had been concerned about her sisters’ well-being, and “did everything right” by taking her sister to doctors and counselors. Following the evaluations, each professional had diagnosed Jami as a “typical teenager.” Then, in November, Jami took her own life.

Dealing with young people on Ihanktonwan Makoce, the Yankton Sioux Reservation is the daily responsibility for Oitancan Zephier, Athletic Director, Assistant Varsity Boys Basketball coach and Physical Education teacher for K-12 students at Marty Indian School in Marty, SD.

Zephier told Native American Times that funding addresses only part of the needs in Indian country as it applies to suicide rates among young people. “We do need more funding. However, we need more community involvement in the teaching of our children. The more involved our communities are in accepting and praising our youth for their accomplishments, the stronger they will be.”

“In the old days, we had buffalo hunts and battles to prove ourselves and earn recognition. These days we have basketball, football, and other avenues to do that. Yet, in my own community, the people, although they love basketball, don’t see the children as winners. Therefore, the children don’t see themselves as winners and don’t have a winning attitude. They don’t develop the self-confidence needed to compete and become strong individuals,” Zephier explained.

“Elders, parents, teachers, and leaders need to promote healthy lifestyles and extra curricular activities. The funding needs to include such things. The federal or state government will give us millions of dollars for a program targeting children with special needs. They won’t give money to prevent those children from becoming problems in society,” Zephier said.

Robert G. McSwain, Director, Indian Health Services, in written testimony provided for the suicide hearing explained that, “Traditional knowledge, along with the role of Elders and spiritual leaders, needs to be respected and validated for the important role they play in healing and wellness. Understanding and decreasing suicide in our communities will require the best holistically and culturally sensitive, collaborative efforts our communities and the agencies that serve them can bring together. We will strive to bridge concepts between American Indian and Alaska Native communities, government agencies, and non-profit organizations in order to effectively prevent suicide.”

Though many recommendations, successes and failures were discussed during the Senate Indian Affairs hearing on suicide, the clearest and most heart-felt plea for action came from Dana Jetty in testifying about her younger sister, Jami.

Jetty left the committee members with her own words to serve as guidance to the leadership by saying, “I ask that you support suicide prevention programs in our tribal communities and I ask that when you have your discussions on the issue of suicide, you remember my sister. She was 14-years-old. She was a beautiful, outgoing teenager with her whole life ahead of her. She was my sister and she is what suicide looks like in Indian Country.”

Maybe, just maybe................

http://obamaclock.org/

Dad............

Dad is having some minor surgery on Monday. At 86 maybe there isn't such an animal as "minor" surgery. Growing up in some very remote and poverty-stricken places on the Great Plains was my youth. I don't think our family ever thought we were "poor". I didn't. I had a horse that cost my Dad $50. I had the freedom to ride that horse anywhere I wanted, never mind that my saddle cost $20 and I usually rode bareback. North, south, west and as far east as the Missouri River afew miles away. To this day I don't know anyone in North America who ate more wild game growing up than I did. I shot and cleaned more sharp-tailed grouse than most people have ever seen. Hundreds. Deer and ducks between the grouse. I didn't have access to youth baseball, football, or track. There wasn't money for school sports, only basketball. Dad always tried to give of his time to me, it was all we had. He did good. I appreciated that time and to this day the memory of his "time" burns bright. The following story sort of sums up my appreciation of that time. It makes me appreciate the time I get to share with my sons. They are growing up fast.

"In the faint light of the attic, an old man, tall and stooped, bent his great frame and made his way to a stack of boxes that sat near one of the little half-windows. Brushing aside a wisp of cobwebs, he tilted the top box toward the light and began to carefully lift out one old photograph album after another. Eyes once bright but now dim searched longingly for the source that had drawn him here.

It began with the fond recollection of the love of his life, long gone, and somewhere in these albums was a photo of her he hoped to rediscover. Silent as a mouse, he patiently opened the long buried treasures and soon was lost in a sea of memories. Although his world had not stopped spinning when his wife left it, the past was more alive in his heart than his present aloneness.

Setting aside one of the dusty albums, he pulled from the box what appeared to be a journal from his grown son’s childhood. He could not recall ever having seen it before, or that his son had ever kept a journal. Why did Elizabeth always save the children’s old junk? he wondered, shaking his white head.

Opening the yellowed pages, he glanced over a short reading, and his lips curved in an unconscious smile. Even his eyes brightened as he read the words that spoke clear and sweet to his soul. It was the voice of the little boy who had grown up far too fast in this very house, and whose voice had grown fainter and fainter over the years. In the utter silence of the attic, the words of a guileless six-year-old worked their magic and carried the old man back to a time almost totally forgotten.

Entry after entry stirred a sentimental hunger in his heart like the longing a gardener feels in the winter for the fragrance of spring flowers. But it was accompanied by the painful memory that his son’s simple recollections of those days were far different from his own. But how different?

Reminded that he had kept a daily journal of his business activities over the years, he closed his son’s journal and turned to leave, having forgotten the cherished photo that originally triggered his search. Hunched over to keep from bumping his head on the rafters, the old man stepped to the wooden stairway and made his descent, then headed down a carpeted stairway that led to the den.

Opening a glass cabinet door, he reached in and pulled out an old business journal. Turning, he sat down at his desk and placed the two journals beside each other. His was leather-bound and engraved neatly with his name in gold, while his son’s was tattered and the name “Jimmy” had been nearly scuffed from its surface. He ran a long skinny finger over the letters, as though he could restore what had been worn away with time and use.

As he opened his journal, the old man’s eyes fell upon an inscription that stood out because it was so brief in comparison to other days. In his own neat handwriting were these words:

Wasted the whole day fishing with Jimmy. Didn’t catch a thing.

With a deep sigh and a shaking hand, he took Jimmy’s journal and found the boy’s entry for the same day, June 4. Large scrawling letters, pressed deeply into the paper, read:

Went fishing with my dad. Best day of my life."

US $$$$$$$'s..............

Why is the US dollar so strong?

I don't have a clue. The "genius's" in Washington DC are doing their best to knock the dollar down faster than Grant took Richmond. It just takes some time.

It won't be pretty when this "bubble" bursts. Ugh........

Hey Democrat, think again..........

If you think health care is expensive now, just wait until it is free.

Americans Again Shafted.............

By JOE NOCERA New York Times
Published: February 27, 2009

Next week, perhaps as early as Monday, the American International Group is going to report the largest quarterly loss in history. Rumors suggest it will be around $60 billion, which will affirm, yet again, A.I.G.’s sorry status as the most crippled of all the nation’s wounded financial institutions. Recent quarterly losses suffered by Merrill Lynch and Citigroup — “only” $15.4 billion and $8.3 billion, respectively — pale by comparison.

At the same time A.I.G. reveals its loss, the federal government is also likely to announce — yet again! — a new plan to save A.I.G., the third since September. So far the government has thrown $150 billion at the company, in loans, investments and equity injections, to keep it afloat. It has softened the terms it set for the original $85 billion loan it made back in September. To ease the pressure even more, the Federal Reserve actually runs a facility that buys toxic assets that A.I.G. had insured. A.I.G. effectively has been nationalized, with the government owning a hair under 80 percent of the stock. Not that it’s worth very much; A.I.G. shares closed Friday at 42 cents.

Donn Vickrey, who runs the independent research firm Gradient Analytics, predicts that A.I.G. is going to cost taxpayers at least $100 billion more before it finally stabilizes, by which time the company will almost surely have been broken into pieces, with the government owning large chunks of it. A quarter of a trillion dollars, if it comes to that, is an astounding amount of money to hand over to one company to prevent it from going bust. Yet the government feels it has no choice: because of A.I.G.’s dubious business practices during the housing bubble it pretty much has the world’s financial system by the throat.

If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially
constitutes the entire Western banking system.

I don’t doubt this bit of conventional wisdom; after the calamity that followed the fall of Lehman Brothers, which was far less enmeshed in the global financial system than A.I.G., who would dare allow the world’s biggest insurer to fail? Who would want to take that risk? But that doesn’t mean we should feel resigned about what is happening at A.I.G. In fact, we should be furious. More than even Citi or Merrill,
A.I.G. is ground zero for the practices that led the financial system to ruin.

“They were the worst of them all,” said Frank Partnoy, a law professor at the University of San Diego and a derivatives expert. Mr. Vickrey of Gradient Analytics said, “It was extreme hubris, fueled by greed.” Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. And yet — and this is the part that should make your blood boil —the company is being kept alive precisely because it behaved so badly.

When you start asking around about how A.I.G. made money during the housing bubble, you hear the same two phrases again and again: “regulatory arbitrage” and “ratings arbitrage.” The word “arbitrage” usually means taking advantage of a price differential between two securities — a bond and stock of the same company, for instance — that are related in some way. When the word is used to describe A.I.G.’s
actions, however, it means something entirely different. It means taking advantage of a loophole in the rules. A less polite but perhaps more accurate term would be “scam.”

As a huge multinational insurance company, with a storied history and a reputation for being extremely well run, A.I.G. had one of the most precious prizes in all of business: an AAA rating, held by no more than a dozen or so companies in the United States. That meant ratings agencies believed its chance of defaulting was just about zero. It also meant it could borrow more cheaply than other companies with lower ratings.

To be sure, most of A.I.G. operated the way it always had, like a normal, regulated insurance company. (Its insurance divisions remain profitable today.) But one division, its “financial practices” unit in London, was filled with go-go financial wizards who devised new and clever ways of taking advantage of Wall Street’s insatiable appetite for mortgage-backed securities. Unlike many of the Wall Street
investment banks, A.I.G. didn’t specialize in pooling subprime mortgages into securities. Instead, it sold credit-default swaps.

These exotic instruments acted as a form of insurance for the securities. In effect, A.I.G. was saying if, by some remote chance (ha!) those mortgage-backed securities suffered losses, the company would be on the hook for the losses. And because A.I.G. had that AAA rating, when it sprinkled its holy water over those mortgage-backed
securities, suddenly they had AAA ratings too. That was the ratings arbitrage. “It was a way to exploit the triple A rating,” said Robert J. Arvanitis, a former A.I.G. executive who has since become a leading A.I.G. critic.

Why would Wall Street and the banks go for this? Because it shifted the risk of default from themselves to A.I.G., and the AAA rating made he securities much easier to market. What was in it for A.I.G.? Lucrative fees, naturally. But it also saw the fees as risk-free money; surely it would never have to actually pay up. Like everyone
else on Wall Street, A.I.G. operated on the belief that the underlying assets — housing — could only go up in price.

That foolhardy belief, in turn, led A.I.G. to commit several other stupid mistakes. When a company insures against, say, floods or earthquakes, it has to put money in reserve in case a flood happens. That’s why, as a rule, insurance companies are usually overcapitalized, with low debt ratios. But because credit-default swaps were not regulated, and were not even categorized as a traditional insurance product, A.I.G. didn’t have to put anything aside for losses. And it didn’t. Its leverage was more akin to an investment bank than an insurance company. So when housing prices
started falling, and losses started piling up, it had no way to pay them off. Not understanding the real risk, the company grievously mispriced it.

Second, in many of its derivative contracts, A.I.G. included a provision that has since come back to haunt it. It agreed to something called “collateral triggers,” meaning that if certain events took place, like a ratings downgrade for either A.I.G. or the securities it was insuring, it would have to put up collateral against those securities. Again, the reasons it agreed to the collateral triggers was pure greed: it could get higher fees by including them. And again, it assumed that the triggers would never actually kick in and the provisions were therefore meaningless. Those collateral triggers have since cost A.I.G. many, many billions of dollars. Or, rather, they’ve cost American taxpayers billions.

The regulatory arbitrage was even seamier. A huge part of the company’s credit-default swap business was devised, quite simply, to allow banks to make their balance sheets look safer than they really were. Under a misguided set of international rules that took hold toward the end of the 1990s, banks were allowed use their own internal risk measurements to set their capital requirements. The less risky the assets, obviously, the lower the regulatory capital requirement.

How did banks get their risk measures low? It certainly wasn’t by owning less risky assets. Instead, they simply bought A.I.G.’s credit-default swaps. The swaps meant that the risk of loss was transferred to A.I.G., and the collateral triggers made the bank portfolios look absolutely risk-free. Which meant minimal capital requirements, which the banks all wanted so they could increase their leverage and buy yet more “risk-free” assets. This practice became especially rampant in Europe. That lack of capital is one of the reasons the European banks have been in such trouble since the crisis began.

At its peak, the A.I.G. credit-default business had a “notional value” of $450 billion, and as recently as September, it was still over $300 billion. (Notional value is the amount A.I.G. would owe if every one of its bets went to zero.) And unlike most Wall Street firms, it didn’t hedge its credit-default swaps; it bore the risk, which is what insurance companies do.

It’s not as if this was some Enron-esque secret, either. Everybody knew the capital requirements were being gamed, including the regulators. Indeed, A.I.G. openly labeled that part of the business as “regulatory capital.” That is how they, and their customers, thought of it.

There’s more, believe it or not. A.I.G. sold something called 2a-7 puts, which allowed money market funds to invest in risky bonds even though they are supposed to be holding only the safest commercial paper. How could they do this? A.I.G. agreed to buy back the bonds if they went bad. (Incredibly, the Securities and Exchange Commission went along with this.) A.I.G. had a securities lending program, in which it would lend securities to investors, like short-sellers, in return for cash collateral. What did it do with the money it received? Incredibly, it bought mortgage-backed securities. When the firms wanted their collateral back, it had sunk in value, thanks to A.I.G.’s foolish investment strategy. The practice has cost A.I.G. — oops, I mean American taxpayers — billions.

Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the
illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful.

I asked Mr. Arvanitis, the former A.I.G. executive, if the company viewed what it had done during the bubble as a form of gaming the system. “Oh no,” he said, “they never thought of it as abuse. They thought of themselves as satisfying their customers.”

That’s either a remarkable example of the power of rationalization, or they were lying to themselves, figuring that when the house of cards finally fell, somebody else would have to clean it up.

That would be us, the taxpayers.