Posted by
Mike Rulle on Thursday, April 02, 2009 12:00:00 AM
Former AIG chairman makes a similar point I have Former AIG chief says bailout 'failed' by stating that :
As for his alternative rescue plan, Greenberg says that “AIG’s
problem was a liquidity problem, not a solvency problem. In such
circumstances, the goal of government should be to provide temporary
liquidity to save jobs and keep the gears of the financial system
operating smoothly. The goal of government should not be to liquidate
large companies that have demonstrated that they can succeed if
properly managed; it should be to restore them so that they can be
employers and taxpayers.”
He may or may not be correct. But his comment is consistent with the
William Lucy study I have been referencing. His solution is
temporary loans, mine was sell the company. The point is that however
irresponsible AIG may have been, the mark to market on its CDS book in
all liklihood did not represent underlying values. Certainly the Street
feasting off the "unwinds" makes that point to some degree.