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To: Dale Baker who wrote (33896)	3/20/2009 6:20:27 PM
From: Madharry	Respond to of 78742

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.

To: Dale Baker who wrote (33896)	3/20/2009 6:25:00 PM
From: Madharry	Read Replies (1) \| Respond to of 78742

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.

To: Dale Baker who wrote (33896)	3/25/2009 3:57:52 AM
From: Madharry	Read Replies (1) \| Respond to of 78742

this from an editorial in Barron's Dale- which pretty much makes my point: The AIG problem is a result of two administrations' cowardly belief that bankruptcy for AIG would sound the death knell for the world financial system, and their timorous refusal to admit that a generation of government subsidies for credit, especially housing credit, created the problem. Secrecy is the real problem here: In good times, regulators and investors never demanded adequate disclosure of financial wizardry as long as the fees and profits flowed. In bad times, they tried to kid the public to avoid loss of confidence in government and the banking system. Bankruptcy would have been far preferable to the current mess, which justifiably erodes confidence. If officials come out of the darkness and speak in the light, and if they proclaim the state of banks on the housetops, there will be plenty of confidence. In order to solve problems, we must properly identify them. For those who claim that their secret knowledge will keep confidence intact, there should be no bonus payments and no bailouts.