Prof. James Hamilton digests the pure rage AIG's decision to pay its executives 165 million dollars in bonuses, some of them to people who no longer worked for AIG. Hamilton writes:
"One of the reasons this is so outrageous is that the promise of such bonuses was in fact one of the very factors that caused our current problems, creating incentives for managers of AIG to get out of solid insurance underwriting and into hedge fund gambling. If anyone had supposed that AIG had "learned its lesson", this report seemed to dash that hope against the wall like a plate of china."
On a slightly lighter note, here's MIT's Ricardo Caballero on more constructive solutions to the crisis.