Kedrosky links to what he characterizes (aptly) as "the AIG blackmail note"--nine pages of reasons why we just gotta be their bitch (link). There's a grain of corn in this dunghill, but it beggars all imagination to consider how much of it is almost totally spurious.
They open with a little Mrs.-Thistlebottom lecture "inter-linkages and interdependencies...which could potentially bankrupt or bring down the entire system or market" (Oh, thank you, professor! Now I understand!) They go on to parade a seemingly endless list of horribles that will befall us if they do not get their way. They do make some perfunctory efforts to say that they could peel off some of the viable assets (HEY THAT'S MY WIFE'S PENSION FUND!). But they make it clear that the whole enterprise is fraught with perils that we (or at least, those of us without eight-figure bonuses) cannot possibly expect to comprehend.
There are a few odd and I suspect inadvertent concessions to reality along the way--like when they refer to their "business model" as "a sprawl"--did they clear that one with public relations? and they declare that it has "many inherent risks that are correlated with one another"--as if not noticing that it was they who created such a shambolic juggernaut to begin with ("I've got it, chief! Let's build a business with many inherent risks that are correlated with one another!) And they acknowledge, right there on page two, that it all began with "an over-reliance on US residential-backed mortgage securities" (Bingo!)
They also say that "In the fall of 2008, the Federal Reserve and the Department of Treasury determined that the systemic risk of a failure of AIG was so great that they should provide support by injecting liquidity and equity capital into AIG." You know, I wonder. Okay, I grant that the government did take an equity stake in AIG. But I think a more accurate sentence would have read: "In the fall of 2008, the people in power decided that it had to do everything it could to salvage the wreckage of this ill-conceived folly, but minimal disturbance to the interests of powerful stakeholders whose wrath they did not wish to incur."
The phrase "running dogs of the capitalist system" comes to mind. Boy if we don't have a 100-percent bonus tax by Friday, I'm going to join the guys who are heating up the tar pots.