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Says who??? Credit markets were already frozen, that is one of the reasons AIG needed a bailout. Why would they give equity control of their company if they could have gotten "credit"? I will tell you - they couldn't. And---shareholder value was at or below zero - the people being protected were the people in management and the other firms that played along side AIG. If AIG went bankrupt the insurance companies would have been spun off or acquired by other companies because those entities had value.
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this, ace, isridiculous.
the reason it's ridiculous is that in order to make this silly analysis happen, you have to pretend that aig is just another insurance firm.
so we're back in that tiny, blinkered world of econ 101 modelling applied in a diletante manner to real-world situations--conservative economic theory in other words.
you can't get to the premise of an actual conversation about aig, but you talk anyway.
same problem obtains for your pseudo-analysis of the aig bailout.
and a big reason that people like paulsen were in over their heads is because they're conservatives appointed by a conservative administration BECAUSE they do not and seemingly can not think in other than neoliberal terms.
so when neoliberalism crumbled OF COURSE they're in over their heads.