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Strategies & Market Trends : Value Investing
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To: Dale Baker who wrote (33896)3/20/2009 6:25:00 PM
From: Madharry  Read Replies (1) of 78744
 
what you are saying i dont believe is true. what it would have meant would have been that anyone who was relying on aig for counterparty risk would not be able to rely upon it. It would have shown the dervative risk for what it truly is. now if the federal governemt chose to step in and save a specific institution who was going down because of it then that decision could have been made. what happened to moral hazard? somewhere in the bank system people have to determine how much risk they are extending to one party or another. if I take out insurance on my house the insurance company is regulated. Why should the US taxpayer be responsible for the obligations of financial gamblers no matter what the scale is. all of a sudden we arent supposed to rely on bankruptcy as the solution for capitalistic failure? why not? these are the delibrations that congress, the treasury and the federal reserve should have been engaged in before this money was shoveled out the door. I for one would have felt much better knowing for sure that aig campaign contributions didnt cloud anybodys judgement.

Also to blame aig foolishness on Uncle Sam is like blaming Uncle Sam for letting sophisticated investors buy hedge funds and lose money on them. all the parties were supposedly sophisticated institutions that should have known that by their own lobbying efforts they were dealing in an unregulated arena. all the more reason it was stupid to use taxpayer money for this bailout. if the institutions are run by such stupid people they should fail. its not difficult to start a bank, or to take one over. the only thing that can wreck it is stupid/greedy management.
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