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AIG and the Asteroid…..
What, you say? AIG and what Asteroid? Well, using my friend Jeff Brown’s analogy (read it here), today has sort of played out like a horror movie. The world was coming to an end (at least the financial world was). We were teetering on the brink of financial armageddon and wondering if the markets were going to do a total meltdown (as opposed to the sunburn it got on Monday).
Our stars, Super Hank and Bountiful Bernie, at first said that it was Mission Impossible and they couldn’t save the world (cue the Video below)
But as is the case in all good suspense movies, the good guys decided that even if they were going to get their clothes dirty, maybe even get hurt a little, it was much preferable compared to the world coming to an end.
So what’s this all about? It’s what the Fed and the Treasury did today. Late tonight, they came out with a “bailout” plan that will save AIG and the financial world from financial Armageddon.
Did the Fed blink? Yep, they did. Are they wimps because of it? No, I don’t really think so. The more that I’ve been hearing and reading about what could have happened if AIG had filed for bankruptcy tomorrow, the more comfortable I am with the fact that the Fed did the right thing.
Is it the best thing? Well, the best thing would have been to have our financial markets to be ruled less by greed and ethical lapses and more by financial integrity, but since that seems to be lacking, this definitely was preferable to a total financial meltdown.
I’m not going to go into the specifics of what the plan is about, because others have covered that better:
and
Cover it well.
A couple of additional points:
1. The markets will, I believe, breathe a collective sigh of relief and move on to worrying about other issues (yep, we aren’t any where close to out of the woods on these things).
2. The mortgage market will remain volatile but will probably feel better and I think therefore a bit calmer.
Dodged this bullet, but the bad guys aren’t out of guns yet….
Stay tuned.
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