COMMENT Many responses to the financial crisis have been leaps into the dark. But that is not a reason to avoid turning on a light. Details of AIG’s counterparties have been released, illuminating some of the companies effectively being bailed out by the US government. This should only be the start.
The AIG rescue is a particularly unpalatable part of the US response to the crisis. The US government is now pouring good money to back bad policies written by the feckless insurance giant, fronting up $160bn so far. In addition to being numbingly expensive, the bail-out is also grossly unfair and distortionary.
