by J Scott Christianson, Columbia Daily Tribune Columnist

There’s a reason I don’t play poker for real money: I can’t stand to fold on the first round. The optimist in me always wants to believe there’s a chance my hand will win, even if the odds are against it. Unfortunately, that is why odds are called odds and not hopes.

Of course, the more money one contributes to the pot, the more invested one is in continuing to play the hand, no matter how bad it is. It gets harder and harder to fold as the ante is increased. This holds true for any investment – throwing good money after bad isn’t an exercise limited to the poker table.

Right now, our government has placed a lot of bets on trickle-down economics: Bear Stearns, $30 billion credit line; Fannie Mae/Freddie Mac, $200 billion investment; IndyMac, $8.9 billion from FDIC insurance fund; AIG, $40 billion stock purchase plus a $110 billion loan; auto industry, $25 billion loan; companies invested in subprime mortgages, $700 billion via yet-to-be-finalized structure.

Of course, now that we have placed such huge bets on these companies and industries, there’s no way we can fold, right?

And like the casino “house,” the companies on whose tables we have laid our bets seem to know we’re in it for good. After receiving its first cash infusion from the public till, AIG thought its execs needed a little retreat from the stress of ruining the company, so they took a $250,000 trip to the spa. When questioned, they explained that this was from a different pot of money and no public money was used for the vacation.

What kind of morons do they think we are? As a lawyer friend of mine has explained to me, “Money is fungible.” In other words, money from the retreat fund could have easily been used to offset losses in the operating fund. Perhaps if they hadn’t received the bailout, they might have had to loot the retreat fund. God forbid!

Now AIG has set aside $500 million for year-end bonuses for its “top talent.” AIG’s defense this time is that it might lose this top talent if it doesn’t hand out the bonuses. Don’t these already well-paid employees have any loyalty to their company? Or to the public that is financing their monthly salaries?

It’s hard enough to get a job at McDonald’s today, and I’m betting financial firms and banks aren’t hiring like they were two years ago. If some of the AIG wunderkinds want to take a hike and take their chances in today’s job market, I say let them. Maybe that will give AIG the opportunity to replace some of this “talent” – the folks who put AIG’s money into extremely risky investments to make short-term gains – with people who will be more conservative with AIG’s, and now the public’s, money.

You’d think that with our government holding $40 billion in AIG stock, it could call a stockholders meeting and have a little discussion with AIG about these policies. Instead, Congress is going to hold a hearing. Yawn.

While the AIG and other bailouts are structured as loans, there is no guarantee that the public will be the first paid if any of these companies do end up folding. If AIG were to declare bankruptcy, there would be a lot of interests showing up in court to get their share. Make no mistake, these are bets we’re placing.

Now the question is whether to place another bet on the auto industry. Once again, the logic is that we can’t let GM go bankrupt. Well, I’m not so sure bankruptcy would be that bad for GM. During bankruptcy, contracts can be renegotiated, unprofitable assets can be sold off to former competitors, dealerships can be terminated, cash flow can be restored and the company can emerge sized appropriately for the current market.

Consider that the size of the additional bailout package that Congress is considering for the auto industry is $25 billion. GM alone burned through $8.5 billion in cash last quarter – about $2.8 billion per month. Losses might not continue to occur at this rate due to some of GM’s internal restructuring, but if losses continue at even two-thirds of this rate, $25 billion will last only 13 months. And that’s if all the money in such a bailout package goes to GM. Do we really think GM can turn itself around and become profitable in the next 13 months?

It might be time to fold before the pot gets much larger.