Comment

Stock Market Free Fall Monday

318
SixDegrees3/02/2009 1:46:48 pm PST

So, I have a question. Today’s market plunge was triggered by awful news from AIG, coupled with the government’s announcement that they are trying yet another plan to prop the company up. The continuing plans followed by failures followed by yet another plan is, I think, more responsible for the market’s downturn than AIG’s losses themselves.

The argument for this continuing support goes something like, “AIG is so large and so tied in with so many other institutions that it’s failure would have a catastrophic ripple effect.”

What I wanna know is - what effect would that be, exactly? At what point do we stop shoving our hand and taxdollars up this corpse’s backside, and decide that the costs of failure are outweighed by the costs of continued support? What, exactly, is it that is supposed to happen if AIG crashes and burns that is so horrible that we’re throwing sums exceeding the GDP of most of the world’s nations at it, while mortgaging our own nation’s future in the bargain? At what point is failure an option?

I’d like to see a detailed projection of what would ensue following AIG’s collapse, rather than simply being brushed off with non-excuses like “It would be bad.” Right now, I’m thinking that failure can’t possibly be any worse than the decidedly nebulous solution we’re pursuing.

Can anyone paint a fact-based picture? Not a worst-case scenario - a likely scenario.