Even AIG has admitted that its neverending bailout isn’t a bailout of itself, but a bailout if its counterparties. AIG (AIG) is just a “conduit” admitted CEO Ed Liddy.
But the government refuses to say who those counterparties are, ridiculously claiming that those CDS buyers entered into legitimate transactions with expectations of privacy.
But that’s rubbish. Those banks are getting bailouts, just like all the TARP recipients are, and if they didn’t want the bailout money they could voluntarily rip up those credit default swaps.
Why isn’t the government telling us who they are? Probably because they’re afraid over the reaction when people learn they’re in large part European.
Your tax dollars are going into European banks. Of course, systemic risk is systemic risk. Were those banks to collapse, it could be just as damaging as when American banks collapse. But pollitically it’ll go over way worse.
That’s the best theory we can come up with. Any others?