When I was reading about the AIG bonuses I was as outraged as anyone else. The first thing that came to my mind was "How could Geithner let them get away with this?" Then I stopped and thought about the days when I managed a half-billion dollar portfolio. Number in the thousands didn't seem very significant. The problem arises from the fact that large numbers contain a lot of digits. Most people working with large numbers drop several digits due to what accountants call immateriality. For example: Most company financial statements have (000) written under the title of the individual financial statement and all of the numbers are in thousands of dollars. So, $1,985 is really $1,985,000. We're talking millions of dollars, not thousands and hundreds of dollars get lost in the shuffle.

So, how did Mr. Geithner miss $250 million? It is easy to do when the bailout is in the billions. Simply, most of the numbers crossing Mr. Geithner's desk were probably written in billions. The bailout package to AIG was probably written as $185 instead of $185,000,000,000. This means that the bonuses would have been written as $0.165. This is a number that looks insignificant in the overall scheme of things and could easily be missed. Especially by a person who is dealing with a national debt number in the trillions. Let's face it, if all day long you're seeing number like $9,654.4 which is the national debt, $0.165 looks like peanuts. That fact that the true numbers are $9,654,400,000,000 and $165,000,000 gets become obscured.

What is needed is to have people working with the Treasury Secretary and the Fed Chairman who understand that apparent small percentage numbers have a high impact when read as whole numbers. People in the rarified air of Washington and New York do not realize that the AIG bonuses could eliminate the debt of many smaller cities and pay for the complete budgets of many school districts. I do not blame Mr. Geithner for missing the impact news of the Bonuses would have on the public. I do blame the loud mouthed critics who would have claimed that the Obama administration was destroying the capitalist system if the bonuses had been blocked. Once the bonus contracts were written, it became a loose-loose situation for the Obama team.

About 15 years ago, when I was working in corporate treasury, my company's insurance broker asked me to write a letter to him expressing my experience in dealing with AIG as the carrier of our Liability and Workers Compensation coverage. My response was that the AIG representatives behave in such an arrogant manner that one would think that you were dealing with the Department of Motor Vehicles. The recent announcement that AIG would be paying in excess of $165 million in bonuses convinces me that nothing has changed.

Remember, AIG is a company that has required tens of billions of dollars in bailouts from the government in order to avoid cascading failures to the world economic system. In addition, AIG's losses have been larger than the GDP's of many medium countries.   Yet, the executives of AIG have the arrogance to believe that they are entitled to huge bonuses. Yes, I said entitled. Executives at AIG believe that they entitled to receive a form government transfer payments similar to the welfare system. However, these payments go to those who are well off: Welfare for the rich.  The executives will claim that government money isn't paying the bonuses. If that is the case then AIG doesn't need the $165 million and the government payments should be reduced by value of the bonuses.

I fear for the future of the United States. We have gone from a country where Adam Smith's enlightened self interest has changed into the arrogance of greed.  I cannot think of any behavior which could do more to convince Americans that there is something wrong with the capitalist system. The executives' actions could not do more for advancing socialism than they could if they were on the payroll of the Socialist or Communist parties.