OK, Harry, what do we do?
"'No one knows what to do."
Well, that explains why we just bailed them out then. We didn't know what else to do.
Maybe Chris Dodd knows if this was the right or wrong decision:
Dodd is chairing a hearing later this morning to examine the events surrounding the Bear Stearns bailout. "I think they made the right decision," Dodd said in a television interview. (WSJs Market Watch, by Greg Robb) - Senator Chris Dodd on April 3, 2008
Dodd said he opposed the government's decision to guarantee the sale of Bear Stearns to JPMorgan Chase in March. (Courant, by Eric Gershon) - Senator Chris Dodd on Sept 16, 2008
So does the later no trump the earlier yes or do we just hedge and then claim both that way when we really know you can claim to be right all along.
Look, I don't pretend to know enough about AIG's position and holdings, bad debt and good debt, cash position, etc. I do know that if you don't let these things fail, however bad things get, you set a very bad precedent and one that is applied both capriciously and arbitrarily.
If AIG were allowed to fail perhaps the government would be forced to re-examine their regulatory and tax role in both the market and the lives of ordinary Americans. That last bit is probably just wishful thinking.