The stuff revolutions are made of

In the fourth quarter of last year, the insurance giant AIG lost $61.7 billion. That's more than $20 billion a month. Consequently, AIG has received bailouts of $170 billion from the Treasury department to keep it afloat. Unfortunately we can't let AIG go belly up, because it would take the entire financial system with it. So the taxpayers have to keep throwing good money after bad. As bad as that is, AIG just paid $165 million in bonuses to its employees.

That is money which was given to them by the taxpayers, at a time when millions of Americans have lost their jobs, and millions more are out of work. The company maintains that those bonuses are in the employee contracts, and are required to be paid by law. If it's hard to understand why anyone at AIG deserves a raise (note Exhibit A: the above mentioned $61.7 billion loss) then remember that AIG was actually a profitable insurance company. The company as a whole was making money, except for one unit. The one that engaged in financial engineering, and traded derivatives to bring down the entire company. So they are giving bonuses to the trading department in order to keep those talented individuals in the fold.

I never would have believed it, but Congress has come up with an ingenious solution. Yes, the United States Congress! They are going to sponsor legislation that taxes bonuses received by employees of companies that receive federal bailouts at the rate of 100%. I never thought I would be in favor of Congress inventing new and higher taxes, but I can live with this one. OK, your contract says you have to be paid this $1 million bonus. Now please remit $1 million in taxes to the US Treasury, or we will throw you in prison. Have a nice day, Mr. Expert Derivatives Trader. End of rant.

The price of oil is back up to $48, which I believe is signalling a return to normalcy. Market technicians, and others who read goat entrails say oil has broken above its 50-day moving average, and that's supposed to be good. I can agree with that, and I think it points to better days ahead for the entire commodity complex, especially gold and silver, which can stand on their own, and do not need an economic recovery to do well.