AIG Creditors’ Hold on U.S. Treasury
“I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter, but now I want to come back as the bond market. You can intimidate everybody.”
–James Carville
If Carville were to update his answer today, he’d no doubt substitute “AIG creditor” for the bond market.
In a world where equity investors have been chopped in half and and Lehman Bros. creditors were fed to the (bankruptcy) lions, AIG’s creditors are being made whole. By the U.S. Treasury — in other words . . . us.
So far, the amount paid out to AIG’s creditors is approaching $200 billion.
The two questions dominating the “blogosphere” at the moment are: 1) exactly why are AIG’s creditors being bailed out — at 100 cents on the dollar, no less?; and 2) who are they?
