Alan Young

Analyzing Larry Summers

Well, most people who comment on this have picked sides, and are just polishing their "bad guy" rhetoric here. I don't think the story is that simple. Even if senators, regulators, and managers made bad decisions, it doesn't make them *all* irredeemably evil, or even irredeemably clueless.

The previous administration was too married to the ideology of deregulation to pay any attention to fixing the problems as they emerged. By the time it was a crisis, they were lame ducks and not interested. Being skeptical about the benevolence of any political party is a valid part of truth-seeking, but it's a matter of degree. To say that the new administration shares the culpability and lack of credibility of their predecessors is to extol cynicism over facts.

Fallen Giant, by Ron Shelp: The Uneven History of AIG

Nice review.

It doesn't take too much inside information to figure out how Cor-NEL-ius got to be called "Nell."

Asking the Fed: Let's See the Transcript of the AIG Bankruptcy Negotiations

You are dreaming if you think that notes of a consultation between the Fed (or any other agency) and its attorney will be made available to the public. Attorney/client privilege would protect it in any case.

Why This Rally Is Unsustainable

Good analysis, but your narrative lost me about halfway through. Maybe fewer digressions would help.
Clearly GS is manipulating prices on a daily basis. I don't understand why non-GS quant funds can't figure out how to compensate for the obvious ploys.
Good luck with your shorts. The market can stay irrational longer than most of us can stay solvent.

Banking Reform: Value for Value

Very well said, Steve--I hope my senators take that last paragraph, especially, to heart.

Seething Over Liddy's AIG-Goldman Connection

I was misinformed. I thought we had a new administration in Washington. Now I understand that this is just the 16th (or so) year of the Goldman-Sachs administration.

Bring in the Antitrust Division (on Banking)

John L---
I like "too big to tolerate."
But "could evolve into 'reverse nationalization'"? No, that process has been evolving for decades, and is now about 75% complete already, I think, judging from who runs treasury policies.

Are the Banks Telling Us the Truth?

If anyone in the prior administration had cared to investigate fully before throwing money at these clowns, we might have learned something. But now, after so much political capital has been invested in persuading us that the bailout was just what we needed to get through the liquidity crisis, there's not much chance of anyone associated with the government saying, "oops! we just wasted hundreds of millions of dollars...."

So, I'm pretty sure we are going to hear more of the same, and be no closer to knowing the truth.

Why It's Better to Bail Out Borrowers than Banks

Right on--I love the quote from Steve Waldman.
But isn't this an over-simplification? If we could get more wonkish and start analyzing who the borrowers are, I imagine we'd find not just Alt-A mortgagees, but also other banks, real estate developers, and other such high-rollers. The devil is in the details.

Preview from Europe: All Fools' Day

Great commentary, and I love the George Carlin clip.... Calling it "on the bailouts" is a bit of a stretch, since it was recorded in December of 2006, but that just shows how "plus ça, change, plus c'est la même chose."

Who's Gaining from the AIG Unwinds?

It's not just the US taxpayers who are getting screwed; it's holders of US Treasury bonds (and probably all other long-term, dollar-denominated bonds). Because as all this new Treasury debt gets turned into money, it won't be long before the value of US $$ takes a dive and interest rates go up.

Goldman Divulges Some More About Its AIG Exposure

Let's see. GS bought coverage from AIG for bets they thought would go bad--that's good business (except for the part about making stinky investments in the first place). They hedged their exposure to AIG; same answer. Does anyone think they had nothing to do with Paulson's decision to bail out AIG, after letting Lehman die? No; they were right there in the room. So, how many sides of this bet are they taking, when you add it all up? And if this is all just good, prudent business practice, then why is it costing the taxpayers so much?

It's the "golden rule" at work: Them that's got the gold, makes the rules.

Why AIG Wasn't Allowed to Fail

We've saved (for the moment) a few greedy corporations, at the expense of the entire nation. The cost of these bailouts will be sapping our wealth for the foreseeable future, and in a decade or two the American dominance of the economic world will evaporate, just as the British did after the previous Depression. Quite a price to pay.

Note to ANANDAKOS, vis-a-vis MIKE HYDES' comment: no, the "ex post facto" law only applies to criminal penalties. Congress probably could invalidate the contracts, although (1) whether it would be useful, after being tied up in court for years, is another question; and (2) if Congress had the political will to really attack this problem, they would be doing it, instead of this elaborate Kabuki theater about the bonuses.

The AIG Bailout: Why Was the Onus Placed on Taxpayers?

To Nuh-huh: I agree with your points, but you meant to say "privatize profits and socialize RISKS," didn't you?

Greg, great article, but for one point. They wouldn't have been fighting over the assets in bankruptcy court, because (according to what I've read) derivatives holders can make claims on a the issuer BEFORE it goes to bankruptcy. So AIG would have been -- and still could be --stripped bare of any assets by the gamblers and high-rollers, leaving NOTHING for bondholders, while the taxpayers still get stuck with the cost of making whole the policyholders of the basic insurance business.
Ugly, ugly, but that's the way the "free market can do no wrong" people wrote the law.

Bernanke's Call for Better Regulation

Although I haven't read or heard the entire speech, the most interesting bit that was reported was his suggestion that the "mark to market" rule should be modified. That, rather than government assistance or CEO pronouncements about profitability, would truly make the banks much more able to survive this crisis, and IMHO that's what the market was reacting to today. If this idea gets backed up with some substance, bank stocks, which are now trading at a fraction of (nominal) book value, could easily double or triple.