Management at AIG has calculated exactly how much money the Treasury and Fed will have access to after all of the TARP, financial stimulus, and mortgage bailout projects have been funded. The insurance company then plans to ask for whatever is left to fund its deficits so that it can stay in business, effectively making the federal government insolvent.
I am sorry I had to reread this one twice. Then I had to make sure I was reading Time and not some crazy blogger.
Just like Detroit, Bank of America (BAC), and Citigroup (C), AIG is playing a game of chicken with Washington that the government does not feel it can afford to lose. Imagine what it would be like if all of these businesses failed at the same time.
-2000 points in the DJI in one day?
It is actually worth imagining. The government has so many balls in the air between the financial systems and deteriorating parts of the industrial sector that it may not have either the capital or intellectual capacity to go around.
And I thought I was negative!
In the intricate global financial system, there is no such things as one big player going down in a vacuum.
I was thinking the other day about the Vietnam war and when Cronkite call the war unwinable. I think we are approaching the point in this war against the bailouts.
It is unwinable. Where we go from here is going to be exciting if nothing else.
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