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Matt Taibbi of Rolling Stone argues that the financial bailout and economic collapse isn’t necessarily about money.  It’s about power.  And the government is losing. 

People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

At the center of this takeover was  a pudgy, balding Brooklynite named Joseph Cassano – the head of AIG’s Financial Products division.

Update: I’ve read this article twice now and it’s a frightening, frightening thing.  Everyone is in bed with everyone else and if you think Obama’s administration is going to change anything then you’re sorely mistaken.  Many of the people in his administration are the same goons who helped bring about the downfall.  I’m angered and saddened by this whole messy affair.

AIG uses tax payer money to sue their majority owner, in this case the US Government, to recover some $306 million in tax payments, some related to offshore tax havens. 

The lawsuit, filed on Feb. 27 in Federal District Court in Manhattan, details, among other things, certain tax-related dealings of the financial products unit, the once high-flying division that has been singled out for its role in A.I.G.’s financial crisis last fall. Other deals involved A.I.G. offshore entities whose function centers on executive compensation and include C. V. Starr & Company, a closely held concern controlled by Maurice R. Greenberg, A.I.G.’s former chairman, and the Starr International Company, a privately held enterprise incorporated in Panama, and commonly known as SICO.

The lawsuit contends in part that the federal government owes A.I.G. nearly $62 million in foreign tax credits related to eight foreign entities, with names like Lumagrove, Laperouse and Foppingadreef, that were set up or controlled by financial products, often through a unit known as Pinestead Holdings.

United States tax law allows American companies to claim a credit for any taxes paid to a foreign government. But the I.R.S. denied A.I.G.’s refund claims in 2008, saying that it had improperly calculated the credits. The I.R.S. has identified so-called foreign tax-credit generators as an area of abuse that it is increasingly monitoring.

The remainder of A.I.G.’s claim, for $244 million, concerns net operating loss carry-backs, capital loss carry-backs, a general refund claim and claims for refunds of other tax-related payments that A.I.G. says it made to the I.R.S. but are now owed back. The claim also covers $119 million in penalties and interest that A.I.G. says it is due back from the government.

This is all unrelated, of course, to Congresses approving a 90% levy on bonuses paid to AIG yesterday.  It’ll remain to be seen how the lawsuit to recover taxes affects the governments plan to tax bonuses. 

AIG should start treading on careful ground.  One gets the sense that they are beginning to play the role of Marie Antoinette and King Louis XIV in an American version of the French Revolution.  But honestly?  If that’s what it takes to get the message to these robber barons, then maybe that’s what has to be done. 

It’s high time people in this country began to get angry.

From  Balloon Juice:

If our entire era could be described in a single picture, it would be this one (from Fairfield County Look via TPM): the current head of AIG Financial Products (the division that lost all the money) wearing a Che Guevara tee-shirt at a cocktail party.

Gerry Pasciucco is a criminal douche on an entirely different level.