APRIL 2, 2009
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.
(posted at 2:44 pm by Mike Rulle)