The AIG bailout is getting more and more representational of a monumental screw- up than a legitimate government assistance bailout.

If you remember, the government agreed in September to give $85 billion to faltering AIG to avoid a collapse in the economy (mmmm, how did that work out for you?).

When Mexico was in serious financial straights the US said the (Mexican) government needed to stay out of the way – the market knows best. 

When Russia was on financial brink, again, the US said government intervention should never happen – you should be like us.

When Thailand was….nevermind…you get the idea. 

We are real good at telling other governments they need to stay out of their country’s “free market” affairs even when the result includes joblessness and domestic turmoil. The economic system will correct itself…well, unless it happens to us – then the rules change. 

The Federal bailout is approaching (and will pass) the Trillion-Dollar mark. What is on the table so far? 

$300 billion for failing mortgages.

$200 billion loans to banks

$200 billion to buy Fannie Mae and Freddie Mac

$87 billion to JPMorgan for financing Lehman trades

$85 billion to buy (79%) of AIG

$29 billion to JPMorgan to buy (failed) Bear Stearns 

Is this a glimpse of a US move towards Socialism? Well, the government will now basically control the lions’ share of mortgage lending (Fannie Mae and Freddie Mac) and Insurance (AIG).

I think Sen. Jim Bunning (R-KY) summarized it pretty well. “The only difference between what the Fed did and what Hugo Chavez is doing in Venezuela is Chavez doesn’t put taxpayer dollars at risk when he takes over companies. He just takes them.” 

Think about it. The US, with taxpayer dollars, has taken over failing companies for billions of dollars. If they are right, and companies rebound, the government has serious intervention into the once private sector. If they are wrong, and the companies fail, taxpayers deal with more loses and ongoing repercussions. Sounds like a no-win situation to me.

I don’t think we should have bailed the companies out. Yes, I know jobs would have been lost. I know the economy would have suffered as it worked its way back to manageable levels. But I also know that “just print more money” is not the path to recovery.