"In short, welching on these debts would likely lead to exactly the problem that the government has decided must be avoided." I think this is true of the payme

"In short, welching on these debts would likely lead to exactly the problem that the government has decided must be avoided." I think this is true of the payments made to AIG's counterparties, not so much of the bonuses being paid to the financial services division. Pretty much everyone on Wall Street's compensation has gotten hosed so I don't think trading partners are going to flinch about seeing employees go bonus-less. There's a bit of irony in me saying this (think about who I might be doing technology for[and it's not AIG] that would make my words the most ironic...), but bonuses only work as a positive motivator up to a point. Past that, you end up getting people doing the wrong things for the wrong reasons--there were a few good HN posts about this concerning case studies conducted on bonuses and why companies should pay above the market average but not be at the top percentile.