Here is how the New York Times reported it on March 20th:
Hoping to reduce a swirl of speculation over its role in the bailout of the American International Group, Goldman Sachs reiterated Friday that its direct losses would have been minimal if A.I.G. had failed.Funny, here was one of those much talked about AIG counterparties indicating that they wouldn't have collapsed along with a dissolving AIG. I thought the danger of just such an occurrence was the entire basis for the bailout from the very beginning.
In fact, I seem to recall that last fall we were forced to accept the bailout of financial firms like AIG or face the prospect of total global financial collapse due to a complex web of interrelationships. I am pretty sure that the threat also indicated an AIG collapse would cause clocks to run backwards, epidemic male-pattern baldness, previously obedient canines to refuse to roll over, and that gangs of wayward youth would overrun our streets, jaywalking and stealing candy from babies at will.
Sure enough, here is then-Secretary Paulson discussing the bailout last September:
“It would have been, in my judgment, unthinkable for AIG to declare bankruptcy,” he said, outlining “catastrophic” impacts on financial markets, money market funds and the savings of individuals and families.So that was Saturday. I then spent two days snatching spare moments to think about how I would blog that the bailout was unnecessary and sold to the American people on false information (sound familiar?). It was going to be this great Gotcha! moment. And then today I read Eliot Spitzer in Slate:
What risk—systemic or otherwise—was being covered? If Goldman wasn't going to suffer severe losses, why are taxpayers paying them off at 100 cents on the dollar? As I wrote earlier in the week, the real AIG scandal is that the company's trading partners are getting fully paid rather than taking a haircut.Scooped by Slate! No doubt thousands of other blogs probably covered this same topic, but I didn't read them, so I still felt like I was adding to the discussion, not just the noise. But once I read Spitzer's piece I thought well, what do I have to add.
Getting scooped is one thing, but getting scooped by the former governor of New York who resigned after it was revealed he engaged the services of call girls*, well, that's hard to top. Unless Bill Clinton starts a blog.
*The news coverage on Spitzer often seemed to include the fact that the governor wasn't just trolling darkened alleys for your average street-walker. But let's face it, a call girl is just a high priced hooker. Econ majors that are too clever for their own good like to tell people that prostitution is good where high prices are used to signal quality. When you get right down to it, though, you can jack up the sticker price and call it a Lexus, but underneath it's really just a Toyota.