Dan M <[EMAIL PROTECTED]>
> Hmm, how is this happening. Let's say I took a stupid risk (I didn't, but
> let's say I did) and bought AIG one year ago. I would have bought it for
> just under $70. Today's value is $3.00. I would have lost over 95% of my
> investment.
> I'll tend to agree with you that that, by rights, that should be 100%. But,
> 95% loss is close enough for me.
Why are you neglecting the creditors? The bondholders and other lenders lost
nothing. It is odd that you place so much emphasis on the credit market, and
then suddenly ignore it.
> The Feds. got 80% of the company, which does have assets that will be worth
> something besides the toxic loans. So, given the fact that a cascade effect
> would drop tax revenues, it was probably a good bet for the Feds. to do the
> deal.
Your model is far too simplistic. By bailing out the companies, the government
affects many other variables which, compounded, could lead to huge losses.
But all these things are unknowable by mere mortals.
Bottom line, if the government is so good at predicting the future, why didn't
they predict the current events? Bernanke and Paulson repeatedly got the
housing and mortgage market predictions wrong. There is no good reason
to trust their predictions now.
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