Mark, you make a terribly important point. As a general matter, the anger about the AIG bonuses is understandable and probably largely well-placed, but our elected officials really need to think before they speak, because they’re sending a message to the potential future investors and financial sector workers who will be crucial to a recovery that perfectly legal contractually arranged payments and profits are subject to arbitrary retroactive rescission at the whim of panicked politicians. These lawmakers are not fundamentally acting out of anger, they’re acting out of fear that they will be blamed, and some of the steps they are publicly contemplating are worse than the problem they’re trying to address.

For the financial system to recover, a certain type of investor and banker will have to take risks again, in the hope that they will be amply rewarded. To undercut that hope is to increase the risk and so to delay the recovery. That’s not to say that the AIG bonuses are not outrageous, but the severe and ugly overreaction we’re seeing (and especially the prospect of micro-targeted punitive taxation, let alone personal threats) is very bad for American capitalism.