Yes, Senator Charles Grassley suggests that bonus-wielding AIG execs resign or drive swords into their guts. But cooler heads may yet prevail in the drama playing out in the American outrage arena. The Wall Street Journal argues that politicians are focusing on the bonuses because the tougher question about why contractual obligations to banks should be paid is far trickier and more costly than the somewhat spurious argument that AIG needs to retain top talent.

According to the Journal, counterparties – well, at least Goldman Sachs – were hedged against losses from credit default swaps written by AIG. So if AIG had gone bankrupt, voiding these contracts, the damage to the global banking system may not have been as catastrophic as had been feared.

Why these counterparties should be getting tens of billions of dollars in bailouts if they were hedged anyway is a question that needs to be answered. Investors who bought AIG-written CDS as investments rather than insurance, whether they be French banks or freewheeling U.S. hedge funds, would hardly be surprised to have lost their money in this environment. Might they have been even more puzzled to be paid off?

At the risk of repeating ourselves, we still consider this to be the bed that the U.S. government made for itself when it deemed AIG too big to fail and yanked it from the jaws of a perhaps well deserved bankruptcy.

Deals of the Day:

* Brazil’s largest meat processor, Sadia, said it was considering a business tie-up with Perdigao, another major meat processor and exporter.

* Indian engineering conglomerate Larsen & Toubro is talking to private equity firms such as Blackstone and The Carlyle Group to jointly bid for Satyam Computer Services, the Economic Times reported.

* Lenders, including billionaire financier Carl Icahn, plan to bid on the Atlantic City Tropicana casino, and the trustee overseeing the resort is seeking state approval for the transaction.

* Canadian fertilizer maker Agrium put its hostile bid for U.S. rival CF Industries in motion, formally offering to acquire all CF’s outstanding shares.

* Oman’s largest lender Bank Muscat will sell its entire stake in India’s HDFC Bank as it seeks cash to weather a possible rise in provisions this year as the financial crisis bites.

* Norwegian telecom group Telenor will take a larger stake in India’s Unitech Wireless than previously stated as a result of a $1.2 billion investment in the Indian group announced last October.

* Czech generic drugs maker Zentiva called an extraordinary shareholders’ meeting for April 2 to discuss Sanofi-Aventis’ planned takeover of the company, it said.

* Belgium’s dominant telecom operator Belgacom said it is taking a 40 percent stake in Tunz, a Belgian firm specialising in payment systems over mobile devices.

* Polish telecom company MNI is still interested in buying a stake in larger rival Netia after being outbid by financial investors earlier this month, MNI’s chief executive was quoted as saying on Tuesday.

* Air Berlin said it was in advanced negotiations for a cross-shareholding with TUI Travel’s TUIfly that would give it access to the unit’s route network.

* British defence and support services firm VT Group plans to begin an acquisition spree in the autumn and hopes to use the extra scale to bid for $3 billion worth of U.S. contracts.

(PHOTO: US Senator Charles Grassley (R-IA) on Capitol Hill in Washington, January 21, 2009.  REUTERS/Brian Snyder)

Don’t expect Campbell Soup Co to take advantage of its relative strength — and the weakness of some competitors

Speaking at the Food & Agriculture Summit in Chicago, Campbell Chief Executive Douglas Conant said “we only want to compete in some narrow areas. We only want to compete in geographies that we exist. Staying close to home will take you a long way.”

Conant said there are very few good properties available since assets bought by private equity are still tied up by those firms, and carving out a brand from a larger company is difficult.

“We’re not interested in buying a troubled asset,” Conant said.

Campbell previously sold off some assets in the United Kingdom and Ireland. It sees Russia and China as a leading growth opportunity to expand on its own. Conant said there are no assets to buy in those markets since most food consumption comes from homemade soup.

The company plans to spend about 10 cents a share to expand into those new markets, where it expects to be profitable in the next five years.

“We still know how to make soup and we can add a lot to that,” Conant said.