The taxpayer bill for saving the derivative-gambling casino known as AIG is now up to $150 billion. But don’t worry: It’s really an “investment.” AIG has only come around begging with hat in hand twice since its original bailout, so there’s no way it will be back next week asking for, say, another $50 billion. And the total value of that idiot credit insurance the company wrote is just $440 billion, so even if it does come back, that’s only another $290 billion of taxpayer dollars to go.
As if this latest insult–$40 billion of new taxpayer money and relaxing of the orginal debt terms–weren’t enough, what really chaps us about AIG is that the original shareholders still have $2 of value per share ($6 billion), and the original debtholders are still whole. Why? Why should US taxpayers continue to foot the bill without the shareholders getting wiped out and the debtholders at least getting nicked?
If the government can’t find some other way to dispense with the AIG mess (such as ripping up the CDS contracts, which were never guaranteed by the full faith and credit of the United States of Bailout), we hope it will at least zero out the equity and take, say, 40 cents on the dollar of the debt. Because another week of that $6 billion of remaining shareholder value flashing in our face is more than we can take.
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