This is what happens when the derivatives market spins completely out of control for two decades. The government was able to run a special session on Sunday to unwrap the derivatives around Lehman so that only the common shareholders would take a bath. They don’t have that luxury with AIG. An AIG bankruptcy filing would take down scores of banks with it. I say - let it happen. But the folks with the money think differently.
In the early 30’s the fed reserve said screw the banks and let them go under. If we can avoid a recession or depression, its a good deal. We will never know.