I'll use my 600th post to say this:
Worst. Idea. Ever.
I guess I have one question. If a rich person loses a million dollars at Vegas on a blackjack table, am I expected to pick up the cost?
Why is the government intentionally making bad investments with my tax money? Do we really need to? Why not just let the investments sour? (Okay, I had more questions.) We can bail out some smaller investors who stand to lose from investment house bankruptcies via the FDIC - that's what it's there for, after all - but bailing out the houses who knowingly took a risk and lost is just a horrible idea. It's their fault for making stupid investments.
And so what if AIG fails? Market vacuums don't last long - someone will take their place. Like I said earlier - insure some of the individual investors via the FDIC, and let competitors who didn't make dumb choices fill the gap.
Here's what this bailout makes me think of... a bunch of suits walking around on the street with a "The World Is Coming To An End" sandwich-board on and their hands out. Although beggars have more dignity than this.
Update: Hey look, the market's already responding. Morgan Stanley (where I usually invest) and Goldman Sachs are planning on getting into retail so they can have a larger capital pool to draw from in case investments go pear-shaped. The Fed will force them to lower their debt-to-equity ratio, but will give them access to cash if they need it. Oh, and all the investments in other places were all bought up by other banks.
So if the market and the Fed can deal with this okay, and it looks like they can... what's the point of the bailout again?