Links roundup: More AIG fallout; what’s a central bank to do?

Insert your punchline here...
Insert your punchline here…

The friends of AIG…

“Every day, insurance companies sell policies to homeowners to cover the cost of damage in the case of fire. Why would those companies agree to pay out in full to a policyholder even if a fire had not occurred? That is the type of question being asked about the federal government’s bailout of American International Group in which the insurance company funneled $49.5 billion in taxpayer funds to financial institutions, including Deutsche Bank, Goldman Sachs and Merrill Lynch…

“Critics argue that the government’s decision to pay buyers of A.I.G. credit insurance in full and across the board was an inappropriate use of taxpayer money. In addition, these people say, options not pursued by the government could have allowed taxpayers to benefit from future gains or at least have done a better job of limiting the potential for losses.”

“AIG’s counterparty payouts draw criticism,” NYT Dealbook blog

Whither the stock market?

“I’ve argued that the latest bear market sucker’s rally–the one going from late November 2008 to early January 2009–would fizzle out, and new lows would be reached. Indeed, like previous bear market rallies of the last year, this one went bust–falling over 20 percent–and the DJIA and the S&P fell below the 7,000 and 700 upper limit of our range for U.S. equities. With the DJIA and the S&P now well below the “7” range, the next test for the markets may well be 6,000 and 600 for the two indexes.”

“How low can the stock markets go?,” Nouriel Roubini in Forbes

Will the Fed start buying Treasuries?

“Federal Reserve policy makers will likely determine today that the U.S. recession is still deepening, while clashing on what to do about it….

“Policy makers have disagreed on just how to be more aggressive. They have at least three options: increase the $1 trillion Term Asset-Backed Securities Loan Facility aimed at restoring consumer and business lending; expand purchases of mortgage-backed securities and agency securities; or begin purchasing long-term Treasuries.”

“Fed wrestles over how to inject credit into economy,” Bloomberg

More:

Is AIG bonus scandal a “tipping point?”
U.S. credit card defaults rise to 20-year high
Credit card issuers choke small biz with rate hikes, lower limits
Number of U.S. millionaires sinks to lowest level since ’03
Moody’s list of U.S. companies with highest default risk

Comments (2)

  1. Submitted by John N. Finn on 03/18/2009 - 09:18 am.

    Here’s an AIG link, just for fun:
    http://www.balloon-juice.com/?p=18752

  2. Submitted by Steve Titterud on 03/18/2009 - 11:11 am.

    Steve – I really appreciate your posting of these links from time to time. They help me filter through a virtual ocean of information, most of it low-quality, untimely, or just plain propaganda, to imbibe a few useful spoonfuls from good sources.

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