Let AIG Go Bankrupt for Good of US?

Jim Rogers, a favorite bear of mine from my old Lou Rukeyser-watching days (head bows for a moment in remembrance of sweeter if not much better times - the 80's), brought up an issue on CNBC Tuesday that bothers many people when he stated that we should "Let AIG Go Bankrupt" to save the U.S. (Some editing was necessary for clarity - Ed.)

because keeping it and other sick financials alive on government support risks ruining the US economy. AIG, whose $61.66 billion fourth-quarter loss was the largest ever for a US company, received $30 billion more in government funds Monday. The insurer's financial health hasn't improved despite getting as much as $150 billion from the government last year. "Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the whole US goes bankrupt," Rogers said. "AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we'll never start over." On Monday, CEO Edward Liddy told CNBC that the insurer is far more stable and secure than it was last Fall but acknowledged that it was "difficult to say" if AIG will need even more money from the government in the future. Bailing out the banks is going to increase the debt spiral and finally cause the destruction of the world's biggest economy, Rogers said.

Rogers went on to say that "I think it's astonishing, they're ruining the US economy, they're ruining the US government, they're ruining the US central bank and they're ruining the US dollar."

You are watching something in front of (y)our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world's most powerful country.

Rogers calls our attention to what we are risking by ignoring Japan's financial history.

Japan's economic "lost decade" was caused by trying to bail out the banks, and the West risks running out of money if it doesn't let the bad banks fail now, Rogers warned. Systemic risk is going to be the same in 10 months, 5 years o(r) 10 years if the fundamental problem is not solved, he added. "The idea that you have too much debt, too much borrowing and too much consumption and you're going to solve that problem with more debt, more consumption and more borrowing? These people are nuts." Wall Street and the City of London are going to be "disastrous" for years, like in the 1950s and 1960s, and in 30 years, finance will "dry up and wither away" as we are entering a "long period of hard times," he said. "Power is shifting now from the money shifters, the guys who trade paper and money, to people who produce real goods. What you should do is become a farmer, or start a farming network," Rogers said.

Reminding me once again of the late 60's/early 70's when my "Back to the Land" hippie comrades argued for a simpler life filled with non-X-box pleasures as the gate to Heaven . . . And then, out of nowhere, Eric Margolis hints that U.S. troops (combat-ready, you betcha!) will never leave Iraq and that the public will soon forget that it's not Obama's and the Democrats' war, and that none of the real perpetrators will ever be held accountable. (As if it's like a real plan!)

President Obama says U.S. combat troops will leave Iraq by the end of 2011. However, the U.S. military occupation will not end. What we are seeing is a public relations shell game. The U.S. has 142,000 soldiers and nearly 100,000 mercenaries occupying Iraq. Obama's plan calls for withdrawing the larger portion of the U.S. garrison but leaving 50,000-60,000 troops in Iraq. To get around his promise to withdraw all "combat" troops, the president and his advisers are rebranding the stay-behind garrison as "training troops, protection for American interests, and counterterrorism forces." At a time when the U.S. is bankrupt and faces a $1.75 trillion deficit, the Pentagon's gargantuan $664 billion budget (50% of total global military spending) will grow in 2009 and 2010 by another $200 billion to pay for the occupation of Iraq and Obama's expanded war in Afghanistan. Throw in another $40 billion to $50 billion for the CIA and other intelligence agencies. Obama insists the U.S. will withdraw from Iraq. But his words are belied by the Pentagon, which continues to expand bases in Iraq, including Balad and Al-Asad, with 4,400-metre runways for heavy bombers and transports.

Say it ain't so, Joe! Suzan ________________________