What John said.

Justin: This really misses the significance of what’s happened.

First, is populist rage really the ONLY THING that can stop the fixes we need? We have yet to hear from Obama/Geithner exactly what they plan to do by way of fixes except in broad strokes that I could have painted. So how do we even know what else stands in the way of fixes?

Second and more important, this “populist rage” is not misplaced or a distraction. It goes to the heart of the questions we all face now:

– Are we right to be spending trillions of dollars of public money to bail out big financial firms?

– If so, which firms and how much should they get?

– What if anything should we require in return for the bailouts? Ownership? Return on the money? Obeisance? New public policies? Stricter regulation?

– Are there counter-risks to pouring these trillions into bailouts? What are they? How do we know where and how they will pop up?

– Who is or should be responsible for making these decisions? The President and his Treasury Secretary? Congress? The Fed? All three?

– Can we trust the judgement of those who will decide? Should we trust them and why?

The situation with respect to AIG seems to be one that can be summed up this way: Based on assertions that an AIG failure would lead to disaster, the company has been given $170 billion by two Administrations in actions expressly authorized by Congress and now, no one seems to know what the company is doing or why it’s doing it or even who changed the language of a recently enacted law or why they changed it. To make matters worse, our trust in all of these public officials is undermined by a daily shifting of stories and attempts to avoid blame.

So how can we have trust and confidence in any of these guys to handle the trillions yet to be spent.

It’s not even about the bonuses. It’s about the control and direction of critically important public policy. Personally, as I have written on my blog, I believe AIG should be nationalized today, split in two, and the toxic half placed in a federal receivership.

Why don’t all those members of Congress who were grandstanding, competing with each other in how nasty they could be to Liddy, and pointing fingers at each other stay up nights to figure out how to clean up the mess? And why is Obama holding a campaign-style rally and appearing on Leno in the midst of all this? To shore up his poll numbers? Come on.

But Justin, your commentary feels dangerously close to apologetics for the Congress and administration. While the dollars are relatively small potatoes, the problem itself is a clear indicator that the government: Bush, Obama, McCain, all of them, had no real understanding of what they were doing back in October nor did they bother to think about the possible consequences of their actions. And this same, go-fast-ask-no-questions approach was used in the “stimulus” bill. The government is making the problem worse, not better. Are we still holding out for a smart government solution in light of how they’ve handled these small potatoes?

The AIG bonus plot thickens, but only slightly….