the economy? I mean everyone knows I've expected the worst, and I haven't wanted to continually complain and warn folks. But just in case anyone thinks the "resolute action" by tne Treasury/Fed this week solved our problems, I thought I'd post a little caveat.
The AIG Insurance melt down is shocking but not unexpected, and the problem is not just that they made some bad mortgage loans. The problem is their credit derivative and default swaps. I wrote about them a year ago, and I don't want to copy my earlier post so I found a good article at Storm Watch (one of my linked sites). Bill O'Brien used to say he liked Scientific American, because the articles started simply enough then got more rigorous, and you could quit whenever you wanted and still get something out of it. Why did the govt take a majority interest (ownership) of AIG, instead of just lending them the 85 billion? Could it be because they plan to tell the insurance companies and pension funds, "You cant sue Uncle Sam." when those folks seek to collect on the insurance on their investments AIG sold them?
What is troubling is that politicians are "appalled" at the magnitude of the problems they've been forced to acknowledge. "Nobody expected such a thing could happen" sounds a little like "Everyone thought the Iraqis were developing WMD's" Yes we did, and no we didn't. It's a kind of culpable deniability. And they're not going to level with us about how bad the prospects really are.
The problem is they'll bankrupt the nation trying to stave off each lesser "disaster", pretending to be oblivious of the really big disaster that's rushing towards us.
We now return you to scheduled broadcasting...
Subscribe to:
Post Comments (Atom)
1 comment:
Hi Just checking out your blog. Cool football photos. It looks like they were playing in the rain. Logan needs some football pointers. This is his first year playing football. He doesn't quite understand the game. I don't either so I can't help him. I think he is having fun though and next year should be easier for him after he learns the game.
Post a Comment