Felix Salmon

Why AIG Wasn’t Allowed to Fail

Justin Fox wonders whether we should have just let AIG fail — or at least the holdco and the AIGFP subsidiary. They certainly deserved to fail. So why did we bail them out? Because of the systemic fragility of the CDS market, is the answer — it’s basically the same reason why the government stepped in to prevent Bear Stearns from being forced into liquidation. It feared a cascade of counterparty failures which could kill the entire financial system.

How Much Worse Can AIG Get?

Today is a day for dark warnings about what might happen at AIG should the bonuses not get paid:

Goldman Wealth Datapoint of the Day

Truly the recession is biting:

One former Goldman partner estimated that a quarter of the bank’s roughly 100 partners are now worth $5 million or less because of losses on their company stock and other investments.

Are You Qualified to Make Stock Forecasts?

In the wake of Nouriel Roubini’s latest 6,000-word jeremiad on the subject of the fate of the stock market, Joe Wiesenthal writes:

Why Houses Now Are Like Stocks in 2002

An astute comment comes today from wcw, whose blog seems to have sadly gone dormant:

How to Not Pay the AIG Bonuses

Barack Obama is a lawyer — and a very good one, too, by all accounts. Andrew Cuomo, too, is a lawyer, and is attorney general of New York. And neither of them seem remotely impressed by AIG’s protestations that it’s contractually obliged to pay out $165 million in bonuses to members of the very financial products group which brought the company to its knees.

Stanford’s $4 Million Victim: His Nonexistent Lawyer

Alan Stanford, obviously, needs a lawyer. But his assets have been frozen, so he can’t afford one. It’s just not fair, according to one lawyer Ashby Jones spoke to:

The Roubini Portfolio

Is Nouriel Roubini really 100% invested in equities, as Eddy Elfenbein and John Authers think? I asked him directly, and of course it’s a bit more complicated than that.