I don't like it either, all I'm saying is that the financial system as a whole would collapse. AIG falling would trigger a domino effect among the bad banks and then the good banks and even the main street small banks would fail. No others would take their place for maybe years to come. Industries would shut down as there would be no short term credit. Ditto for all other companies including farmers. Utter destruction financially is what we're talking about.
I'm sure you'll say that this is all hyperbole -- however, by financial theory, that is exactly what would happen. Logically, that is also what would happen
.....then the good banks and even the main street small banks would fail.
Perhaps you can explain why the good banks would necessarily fail? Only reason I can think of is massive unemployment, and people stopping their loan payments in mass. Even during the Depression, some big banks failed, but most did not.
Again, how many trillions $$ is AIG on the hook for? And now, by extension, the taxpayer. Either way, the taxpayer takes it in the shorts. Right now, I think we the financial equivalent of a chicken with its head cut off. We thrash around like we’re alive, but we’re already dead.