There's been a big flap over the executive bonuses recently paid out by bankrupt insurance giant AIG at taxpayer expense. Less has been said about the "bonuses" they paid out to their political friends back in 2008 according to OpenSecrets.org, including:

Obama, Barack (D-IL) $104,332
Dodd, Chris (D-CT) $103,900
McCain, John (R-AZ) $59,499
Clinton, Hillary (D-NY) $37,965

Note that several of the players now on center stage were directly responsible for the deregulation (during the Clinton administration) that allowed the enormous AIG insurance scam to proceed unchecked in the first place.

"Credit Default Swaps purported, in theory, to let banks remove loan risk from their balance sheet onto others such as AIG, an insurer. It was based on a colossal fraud using flawed mathematical risk models... AIG then issued of hundreds of billions of dollars worth of CDS instruments to allow banks to make their balance sheets look safer than they really were... How could that be allowed? The level of venal corruption in the Clinton and then Bush Administration rivals that of the last days of Rome before its fall..." -- William Engdahl

"AIG was essentially collecting huge and steadily climbing premiums by selling [bogus] insurance for the disaster it thought would never come... The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age... " -- Matt Taibbi

"There's no question that the bonuses are sickening, a moral outrage. While some of the benefactors may have done little or nothing wrong, many are known to have worked in the specialised London unit whose creative trading gimmickry effectively ruined the company. Those people are more worthy of jail cells alongside Bernie Madoff, the loathsome Ponzi king, than new vacation homes." -- Michael Crowley

"Here's the problem with all the hoopla over the $135 million in AIG bonuses: This sum is only less than 0.1% -- one thousandth -- of the $183 BILLION that the U.S. Treasury gave to AIG as a "pass-through" to its counterparties. This sum, over a thousand times the magnitude of the bonuses on which public attention is conveniently being focused by Wall Street promoters, did not stay with AIG. For over six months, the public media and Congressmen have been trying to find out just where this money DID go. Bloomberg brought a lawsuit to find out. Only to be met with a wall of silence." -- Michael Hudson

All of the articles above are worth reading in their entirety.

"Excessive intervention in economic activity and blind faith in the state's omnipotence is another possible mistake. True, the state's increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent.

The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation. In the 20th century, the Soviet Union made the state's role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state." -- Vladimir Putin speech

These remarks were made by Russian leader Vladimir Putin -- who also happens to be a Ph.D. economist -- at the recent World Economic Forum conference in Davos, Switzerland. This sounds more libertarian than communist, doesn't it?

"If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of -borrowed money, and imagine what they'd fetch in a fire sale. The vast assemblages of highly paid people inside the firms were essentially worth nothing...

'The thing we couldn't figure out is: It's so obvious. Why hasn't everyone else figured out that the machine is done?... They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.' "

-- Michael Lewis

"The problem politically is that control of the U.S. long ago was turned over to the bankers and the financiers... it's the same phenomenon that first created and then ruined the British Empire, and it's what created and is now ruining the American Empire today. A side-effect of control by the bankers and financiers is that they are also Zionists, so we have the added multi-trillion dollar burden of trying to conquer the Middle East on behalf of the international oil interests and the state of Israel.

The American people...have been so lulled to sleep by the financier-owned media that we have allowed these disasters to take place and are now reaping the consequences. We have been the fodder for their wars and the signers of their loans... The bankers and financiers do not care if nations and empires destroy themselves and each other, because they are internationalists. In fact, the more war and mass starvation there is the better off they feel. All they need is a base from which to operate." -- Richard Cook

"Capitol Weekly reported that [Rep.] Richardson walked away from the mortgage on her $535,000 Sacramento home, letting the house slip into foreclosure and disrepair less than two years after she bought it with no money down.

'While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, and eventually walked away from it, leaving nearly $600,000 in unpaid loans and fees,' the publication reported." -- L.A. Times

At least she is truly representative of the people that elected her.

"The luck of investment bankers is due more to their proximity to credit than to their ability to foresee the future... The leveraged overreaching by investment banks in the 1920s caused the Great Depression of the 1930s and their more recent overreaching in this decade, the 2000s, is about to cause another Great Depression in the next, the 2010s." -- Darryl Robert Schoon

"One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear... A Goldman Sachs trader in New York said: "Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we're just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow."

In the UK, Michael Taylor, a senior market strategist at Lombard, the economics consultancy, said on Friday night: "We have all been talking about a 1970s-style crisis but as each day goes by this looks more like the 1930s. No one has any clue as to where this is going to end; it's a self-feeding disaster." -- The Independent

"All of the brokerage houses are highly leveraged, with a high ratio of assets to shareholders equity, a sign they have used debt heavily to build up positions in hope of greater returns. Morgan Stanley, which will report Wednesday, had a leverage ratio of 32.6-to-1 at the end of last year, nearly as high as Bear Stearns 32.8-to-1. Lehman was leveraged 30.7-to-1, and Merrill Lynch 27.8-to-1. And the would-be rock, Goldman Sachs? It was leveraged 26.2-to-1.

Remember, Carlyle Capital was leveraged 32 to 1 ($22 billion equity) and went 'poof' in a matter of days when it couldn't scrape together a measly $400 million for a margin call. How vulnerable are these other maxed-out players now that the credit bubble has popped and the whole system is quickly unwinding?" -- Mike Whitney

"Since January 24, when South African power utility Eskom shut down South Africa's mining sector, little time has been available to calculate the potential direct and indirect damages... AngloGold Ashanti, a Tier I global gold digger, said it anticipated losing about 400,000 ounces of gold from its South African operations in 2008. Even that assumes that a perfect and sustainable 90% power supply is achieved for the remainder of the year." -- MoneyWeb, South Africa

Ayn Rand's classic "Atlas Shrugged" describes the pattern: A society dominated by socialist political hacks and incompetent freeloaders collapses rather quickly once the "men of the mind" decide -- for whatever reason -- to stop maintaining it, and the productive machinery grinds to a halt. No nation is immune to this disease, but some are more susceptible than others. Take Zimbabwe, for example...

"Our modern shadow banking system craftily dodges the reserve requirements of traditional [regulated] institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever. Financial derivatives of all descriptions are involved but credit default swaps (CDS) are perhaps the most egregious offenders... According to the Bank for International Settlements (BIS), CDS totaling $43 trillion were outstanding at year end 2007, more than half the size of the entire asset base of the global banking system...

The withdrawal of deposits from our new age shadow banking system has frightening potential consequences because a thinly capitalized banking system is always at risk relative to its more conservative counterpart." -- Bill Gross, PIMCO Bonds

A "rogue trader" at Societe General makes the news over a 5 billion euro gamble on stock futures, yet who are the crafty dodgers responsible for setting up this massive global pyramid scheme which is ten thousand times larger? When a corporate bigwheel mentions "our New Age" in a financial article, that's a clue.

The financial debacle which is unfolding today as the pyramid of unsupportable debt begins to collapse is no accident. Exactly 100 years ago, the engineered Bank Panic of 1907 set the stage for the secret Jekyll Island conference where a group of New York bankers established the Federal Reserve system, which was then sold to the public as a means to prevent such crises.

"Wall Street speculation brought on the Panic of 1907. The depositors' funds were loaned to gamblers and anybody the Money Trust wanted to favour. Then when the depositors wanted their money, the banks did not have it. That made the panic."

-- Charles Lindbergh, Sr., Congressional testimony, Dec 15, 1911

Some 20 years later, after the Crash of 1929 and the onset of the Great Depression, the Chairman of the House Banking Committee had this to say:

"Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks...This evil institution has impoverished and ruined the people of the United States, has bankrupted itself, and has practically bankrupted our Government...

Some people think the Federal Reserve banks are United States Government institutions. They are not Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."

-- Rep. Louis T. McFadden, speech to Congress, 1932

UPDATE: The New Yorker recently posted an article on this same topic, although it portrays banker J.P. Morgan as a "hero" and makes no mention of J.D. Rockefeller's role in the crisis. Both bankers were represented at the Jekyll Island conference.