Good morning, fellow AIG shareholders! If you're an American, you now own a chunk of the country's "largest" insurance company... not counting the debt obligations that make it insolvent.

The U.S. government seized control of American International Group Inc. -- one of the world's biggest insurers -- in an $85 billion deal that signaled the intensity of its concerns about the danger a collapse could pose to the financial system.

The step marks a dramatic turnabout for the federal government, which had been strongly resisting overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy. Just last weekend, the government essentially pulled the plug on Lehman Brothers Holdings Inc., allowing the big investment bank to go under instead of giving it financial support. This time, the government decided AIG truly was too big to fail.

The U.S. negotiators drove a hard bargain. Under terms hammered out Tuesday night, the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points. (Libor, the London interbank offered rate, is a common short-term lending benchmark.)

First, I say let these companies fail. Oh, I know, it'll be the end of the world! Really? One day after Lehman Brothers went bust Barclays wants to buy them. The financial system won't go poof if these companies fail... but a lot of our elites will be out on the street.

Second, that's exactly what should happen. Here's my suggestion for a bailout law: if your company is SO important that we have to bail you out to avoid a total collapse of the world economy (*cough*), then when we do so the top 1% of all earners go to jail. The CEOs get life sentences, and we can work our way down from there.

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