Fearing a financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group. Full Story »
Posted by Woozy Duck
The article does a good job of presenting the arguments for the bailout. It notes the regulatory gap which allowed what more and more looks like fiscal catastrophe to happen. But I think what is missing in this and other coverage is that at some point every institution involved in these messes will need to do massive revaluing (downward) of assets. Apparently AIG has divisions that are doing well and can be sold to raise capital; obviously Lehman had, too. But the current situation is just one more in a long history of financial 'panics'. Somehow all these savvy free market people in the private sector can't seem to recognize a bubble when they're inside one! Aren't they glad there's a government to rescue them.
