I take this to mean that if a bunch of AIGFP managers quit because they didn't receive bonuses promised in their contracts, then France could, if it wanted, to appoint its own designee. And if that happened, then it would equate to a default and those contracts would kick in, at a cost to AIG the US government of at least tens of billions.

In other words, I take this to be a threat: "if you don't give us our bonuses, we'll trigger a default event that will cost AIG the US government tens of billions of dollars." It's just a polite way of saying, "Pay us the $100 million ransom or we start exploding the suicide bomber vests we're wearing."

Frankly, I have no idea whether this particular threat--France responding in a way that would set off a default--is real, or whether there are similar events that those AIGFP managers demanding their ransom could easily trigger.

But what they're doing is pointing to one relatively preventable area, noting that we might be able to defuse the explosion before it went off if we worked hard enough with the French, but saying that that, in general, is the kind of thing the AIGFP managers might contemplate if they don't get their bonuses.

AIG agreed to pay the guys whose gambling AIG the US government insures hundreds of millions of dollars in bonuses. And the gamblers are now saying they would be willing to blow their own gambles--ignite their semtex vests--if we refuse to pay up.

That makes more sense than AIG being afraid of being sued for breach of contract, which doesn't make a lot of sense. I mean, the worst thing that happens under that scenario is that the courts sort out the mess and these guys are given their bonuses sometime in the future. I would guess that everyone would be happy to kick that can down the road. There's some other reason why the administration and congress are reluctantly agreeing that these bonuses must be paid even though there's a terrible political price to pay for it. Perhaps this is it.

But then, it may just be the Billionaire Boyz Club closing ranks. Jane Hamsher reports on some of the AIG miscreants and points out:

AIG would have been a smoking hole had taxpayers not started bailing it out last year. It would not have had the money to pay anybody anything if it had gone bankrupt.

And we already know how the masters of the universe see that:

As for how he and his fellow Wall Streeters could still afford such afternoons, he said: “We all made so much money in the past five years, it doesn’t matter.”

A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.”

In every conversation I've had about this (and it's come up spontaneously over and over again over the last 24 hours) people have been gobsmackede that the AIG executives wouldn't have voluntarily given up their bonuses, if only for PR sake. It's such an in-your-face defiant act that it's enraged the public. (I am not surprised, however. John Galt would never give up any compensation -- it would be immoral.)

People instinctively know that these assholes are taking the taxpayers for a ride. And if Marcy is correct they may be holding a big gun to the taxpayers heads as well. It's not going to end well.

Firedoglake has put together a petition to deliver to the House this week in anticipation of its AIG hearings.

We'll be delivering our petition to Congress when Barney Frank's House Financial Services Committee holds a hearing on AIG at 10am ET this Wednesday. You can sign it here and leave your comments.

Update: Greenwald has more on the employment contracts as does Talk Left.

Update II: It's good that Obama is saying that he's angry about this, but we'll see if they are able to finesse it. I am suspicious that there is more to this than mets the eye. Something doesn't track --- unless the AIG guys really do want to make it impossible for the government to fix the financial system. And thats certainly possible. They seem to be on a mission to do just that.

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