Martingale Watch

Today's New York Times (h/t Kathryn Jean Lopez) reports that the multi-billion dollar bets that the government has made on several too-big-to-fail institutions don't look like they are going to pay off -- but that the big institutions have a plan that they think can turn things around: just have the government put even more money down, and eventually it has to payoff…

The government’s boldest rescue to date, its $150 billion commitment for the insurance giant American International Group, is foundering. A.I.G. indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance as losses have mounted.

Separately, the Obama administration confirmed it was in discussions to aid Citigroup, the recipient of $45 billion so far, that could raise the government’s stake in the banking company to as much as 40 percent.

The Treasury Department named a special adviser to work with General Motors and Chrysler, two of Detroit’s biggest automakers, which are seeking $22 billion on top of the $17 billion already granted to them.

At this point, is there anyone who seriously believes that the collective thinking behind too-big-to-fail bailouts is significantly different from the thinking of a gambler doubling down at the roulette wheel every time he loses as he plays a doomed martingale strategy?