Wednesday, September 17, 2008

AIG

In a fit of prescience in a thread over on p.o.t. I acknowledged Invisible's remark that the current credit crunch had a lot to do with the mindset of those involved, to be specific it was all to do with confidence.

So now AIG has been bailed out by the Federal Reserve and why? Well as the BBC put it "the banks didn't want to take the risk" which you have to admit is quite funny when you consider the reasons we're in this mess.

Like the Bank of England the Federal Reserve acts as a lender of last resort, and sadly as with here its intervention is likely to cause "The company is falling" chicken cries. In this instance of course they're apparently right as AIG was about to file for bankruptcy and collapse in one big mess.

The trouble is that it is still likely to collapse, but hopefully will be doing so in a more orderly fashion and be able to parcel out its obligations with a lack of frenzy, or at least that's what it should be doing. Cynical old me I'm guessing the first item on the board's agenda is the awarding of bonuses to the board for the prevention of AIG's bankruptcy.

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