AIG Bailout a Bad Thing?

That's an interesting point of view.  I agree with you that it was a dire situation, but unfortunately bailouts of any private industry has an indirect, long term economic consequence that is much more harmful than the good it can do for a single entity.  Simply put, if you save one job in a failing sector with bailout money from a productive sector (ie not failing) then you have actually eliminated one productive job.  Why?  If the productive sector has to give the failing sector money then that productive sector has exactly that amount of money less to invest in their own production.  The long term consequences of this are staggering when you think about it.  Taking that productive job away not only prevents a person from getting hired, but it reduces the overall productivity of that sector of the economy.  This means supply cannot go up and thereby prices do not go down.  By this mechanism we reduce the overall standard of living for everyone by saving a job that needed to fail anyway. 

This applies to the AIG case as well.  Instead of going through bankruptcy court and being allow to restructure in a healthy economic way, we bailed out their terrible insuring practices and gave them no reason to have a deterrent to do this in the future.  Furthermore, we've allowed Federal Government influence over these and other sectors of the economy where the Government has no business being.  In this sense, you can see that they are not preserving the U.S. economy.  In fact, they are fundamentally changing it.  

An interesting book that you might want to check out is here:

http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232/ref=sr_1_1?ie=UTF8&s=books&qid=1259626994&sr=8-1

It goes over the principles above in way more detail and will show you just how treacherous not only bailouts are but pretty much all of the economic policies of this and the previous administrations over the last 50 odd years.  Hit me up on Facebook some time if you want to discuss this more.