Why Oh Why Can't We Have a Better Press Corps? (National Review Edition)
"Third Ways" in Theory and Practice


I still remember the morning I woke up to find that the Federal Reserve had bought an insurance company.

Now Felix Salmon has thoughts on the restructuring of the deal:

The Curious Capitalist: The government's dilemma is that the people at AIG responsible for this mess really do deserve to be tarred and feathered, or maybe drawn and quartered. There's ample reason to be punitive. But once they made the decision that AIG was too systematically important to fail--and I'm not saying that was the wrong decision--the Fed and Treasury needed to structure their bailout in a way that allowed AIG to survive, at least until the financial situation improved dramatically. They didn't do that the first time around, which is why they had to restructure the deal on Sunday...

I think this is a significant mistake: the Federal Reserve is handing a present to AIG's shareholders and bondholders that they do not deserve.

I say full nationalization, and then privatization of the insurance company parts of it. It is not clear to me that any private firm has any business offering insurance against systematic mortgage financial risk anyway.