Conservative talk radio in Los Angeles was abuzz this week. “Balderdashes” were flung too and fro. The best and brightest conservative minds cleverly implied that the pervasive effect of allowing AIG to fail was such a complex economic problem that no little liberal peon could possibly understand it all. Nevertheless, what is utterly incomprehensible to this little liberal peon is that not one member of the conservative intelligentsia proposed that ANY corporation that is too large fail is quintessentially a TRUST, legally defined as such by the Clayton Antitrust Act, and by that very definition, is too large to allow to exist in the first place.

It stretches the limits of the realm of belief that a nation with the intellect to land machines on the surface of the moon and distant planets; a nation who has mapped such complex structures as the human gnome and has superseded the Peta flop barrier could be so gullible as to believe and accept the propaganda that a company is too large to be allowed to fail.

No company in the world, at least the United States of America, should be allowed to become so large that its failure could cause a world wide recession, let along collapse of the country’s financial markets.

Government cannot be all things to all people, however, its prime duty is to protect its citizens. In 1890 congress passed the Sherman Antitrust Act to break up huge conglomerates which they deemed to be dangerous to the economy. People's life savings were not tied up in 401-K pension funds at the time. The huge trusts had little direct impact on the average consumer of that day. The government nevertheless saw the danger in any one company having too much power within their prospective markets. The government saw the danger in any company becoming so large that it could challenge government itself!

The Sherman Antitrust Act was later amended by the Clayton Antitrust Act which itself was amended twice, the last time in 1950, to prevent excessive intercorporate stock holdings. In simple terms, it was designed to prevent a company from being so interwoven with the financial sector that it could bring down the banking system (The Columbia Electronic Encyclopedia.).

Bill Saporito of Time Business quotes AIG saying “the extent and interconnectedness of AIG's business is far-reaching. A failure of AIG could create a chain reaction of enormous proportion."

Fed Chairman Bernanke said recently, "AIG exploited a huge gap in the regulatory system. There was no oversight of the Financial Products division. This was a hedge fund, basically, that was attached to a large and stable insurance company."

And Bernake's solution? "We have no choice but to stabilize it or else risk enormous impact, not just in the financial system but on the whole U.S. Economy," said Bernanke, according to Saporito.

Australian blogger, Sean Carmody, put the whole AIG drama into perspective. He said that the Lehman Brothers bankruptcy of $150 Billion was the largest in history, hitherto. He further said that even Argentina, the eighth largest country (land mass) in the world, owed less than $100 billion when it went bankrupt in 2001 – 2002.

We have already loaned AIG $177 Billion.

Jason Simpkins of Money Morning said that the government loans to AIG began in September of 2008 when we loaned them $85 Billion. After a dismal fourth quarter, the feds “restructured” the $85 Billion dollar loan; so now AIG owes the government only $60 Billion on its first loan. Poof - there goes $25 Billion. Then, in November, 2008, the government “replaced” a $37.5 Billion loan with a $52.5 Billion dollar loan. By the way, this $37 Billion was a separate loan from the previous $85 Billion. Nevertheless, by “replaced” I think he means that the government refinanced the $37.5 Billion and wrote a new loan for $52.5 Billion which swallowed up $37.5 Billion. Finally, the Feds have made $40 Billion in additional loans available to AIG, which totals $177.5 Billion in loans, so far.

Dismal, yes; but it does not end there. Simpkins further said that AIG and the Treasury and the Feds have agreed to exchange $40 Billion in a class of stock that AIG put up as collateral for previous loans: stocks the government already owns that pay a dividend of ten percent, in exchange for another class of stock which pays no dividend at all.

Somewhere along the way American has abandoned good old fashion horse sense. AIG reported income of $6.2 Billion in their 2007 annual report. We have loaned them $177 Billion which means if AIG could sustain net income of $6.2 Billion per year, committed their entire net profits toward paying off the loans, with no interested being charged, it would take AIG 28.55 years to pay off what congress had dolled out to them, so far.

In any circle - the AIG loans are, at best, sub-prime.

In 1998 the Department of Justice sued Microsoft under the Sherman and Clayton Acts because it bundled Internet Explorer with its Windows operating system which made it difficult for Netscape and other browsers to compete. It is hard to understand the reasoning that goes behind our government's actions. I'm not defending Microsoft, but I'd rather be stuck with IE than lose my life's savings.

Since then, antitrust law books have collected dust.

After Ronald Regan's election economics professors all across the U. S. and the world have been touting “supply side” economics which essentially says that an unfettered market will govern and correct itself. A “hands-off” approach is best because markets are inherently competitive, and this competition will give consumers better choices because consumers determine through their purchases which business will survive and which will perish. Everything can be explained with an economic model which consists of sophisticated algorithms and dazzling graphs.

The inherent problem with economics is you cannot quantify human mystery. I am not a god dammed statistic. I am a middle-aged man with a back ache who can't find a job. Saying we have over ten percent unemployment desensitizes us to the reality that in real numbers that means over one and one half million wage earners have lost their jobs. One and a half million people who cannot pay their bills and who frequently lose their savings, homes and life's work all because some greedy son of a bitch has exploited the financial system.

Have we learned nothing from history? Everyone has a price, whether it be money, power, prestige, fame or something else. There has never been, nor shall there ever be a free market which governs itself. The 1880s resoundingly proved that laissez-faire economics does not work. It did not work then. It does not work now, and it will never work because no economic model or theorem or graph can quantify greed. Consequently, a market without regulation is the haven of the crook and fast buck artist.