On Wed, Mar 11, 2009 at 2:13 PM, Jim Devine <[email protected]> wrote: > > I understand this chain of events sounds a bit like a conspiracy. And > Unfortunately, we can’t very well stop the flow of that money now. The > bankers have already walked away with their profits (though many more > of them deserve a subpoena to a Congressional hearing room). Allowing > A.I.G. to collapse, out of spite, could cause a financial shock bigger > than the one that followed the collapse of Lehman Brothers. Modern > economies can’t function without credit, which means the financial > system needs to be bailed out.
But can we bail out AIG's debts at 100 cents on the dollar. AIG has 20 trillion worth of credit default swaps outstanding, more than the U.S. annual GDP. Of course these are contigent debts, only triggered in certain conditions. But given the crashing economy, what percent of them have NOT been triggered. Are AIG's creditors deliberately avoiding calling in what they are owed because they know the equivalent of a "run" makes their assets worthless? Or, since these are triggered on a case by case basis, are a lot people who own the credit default swaps not actually owed any money? _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
