[dirtboy]

If AIG failed like Lehman failed, the treasury would not have been a dime richer. It would have been several trillions poorer. So would a lot of other people, probably including you, but that is neither here nor there.

And now you are going in circles. You first say that AIG made good on the CDS obligations, yet now say that if the fedgov had NOT intervened, AIG would NOT have been able to meet those obligations and the likes of GS could have failed. You just made my point about the failure of GS risk management for me, in your efforts to spin this.

Companies such as GS, in their zeal to increase their leverage, were on the hook to AIG for billions of dollars in CDS coverage - obligations that by any objective standard, AIG could not meet, hence the need for a federal bailout. GS only got the AIG CDS money because of a government bailout. That meant they were not properly assessing risk - it meant that whether or not they stayed in business or went out of business like Lehman was entirely up to the willingness of the goverment to perform a bailout of AIG.

And yet you have the unmitigated gall to hector me for pointing out what is obvious to ANYONE who has to deal with risk management on any level. Go stuff your pom-poms where they will do more good.

[JasonC]

The treasury did intervene. Your pretending that it should not have is exactly a fantasyland between your ears. Other men are not required to live and act in that fantasyland of cascading collapse as authorities stand around grinning and doing nothing, because they didn't and predictably didn't. Other men get to live in the real world in which AIG was able to make good on its debts. Your wishing that AIG was not able to make good on its debts, your wishing that the treasury hadn't supported AIG, are not facts or realities. They are your wishes, and unreal. Other men do not need to take them seriously at all. You aren't in charge of anything about it. Responsible men who were, acted correctly and enabled AIG to cover its debts. Other men saw this. Their reliance on it was not a mistake on their part. Their predictions about how things will happen is judged by the real world and the actual events, and not by your make believe or your fantasy policies.

That is the first point.

The second point is that your fantasy policy is stupid and that is why it was not followed by the responsible men actually in charge of the matter. Not because it helped Goldman or AIG or your Aunt Mabel, but because it helped the US treasury. They tried the puritanical no bailouts line with Lehman, and attempting to "save" the treasury about $60 billion that way, for all of 72 hours, cost the authorities $2 trillion in necessary interventions by the following Friday's close. Starving a panic is stoopid, it doesn't work. Some of them had to be beaten over the head by events to admit this, but admit it they did; you still haven't. If they had continued on the no bailout policy, it would not have saved them another $185 billion or whatever on AIG. It would just have cost them another $2 trillion, or $5 trillion, in another month or so.

In the long run, the treasury is only solvent if the financial markets in which they live are sound. There was never any prospect of the treasury not being on the hook, or just backing away and pretending that others could take all losses. All the losses would have multipled 10 to 100 fold and ended up in a big steaming pile at the treasury, after first taking down more intervening institutions and wrecking more future economic growth.

Your approval isn't required for any of those propositions either. Any more than a stone needs your permission to fall under the force of gravity.

The treasury did the right thing, it did not harm you in the slightest, it benefited you. It benefited other men too, and this apparently bothers you. Tough freaking toenails. None of the rest of us are under any obligation to give a damn about your raving lunacies and your false fantasy alternate realities. And I for one don't.