Clusterstock got me all fired up this morning by pointing out an op-ed in today's WSJ from former AIG CEO Hank Greenberg. Now, more than three weeks ago I addressed the atrocity that was out RE-negotiated bailout terms for AIG - since the terms of the initial bailout were just too reasonable for the US Taxpayers. Hank Greenberg, however, says it's still not fair! Really? Really Hank? AIG took risks they couldn't possibly mitigate, printing profits by doing so for many years, and then when the bill comes due you think it's not fair? Hank writes:
"The role of government should not be to force a company out of business, but rather to help it stay in business so that it can continue to be a taxpayer and an employer."
Huh? Hey Hank - if the government hadn't stepped in, your company WAS going out of business! Also, due to gross ignorance of the risks, they were going to take a lot of other people down with them! As for the bullshit about it being in the government's best interest if AIG remains a taxpayer, a quote from Rounders comes to mind:
"It's a fucking joke anyway. After all, I'm paying you with your money," - Teddy KGB (click the link for the actual audio!)
We're supposed to want AIG to remain a tax-paying entity so they can pay us back with our own money? No thanks Hank.
I read a hedge fund quarterly letter at the end of September from Oaktree's Howard Marks, where he explained that although he's generally bearish, he doesn't bet on the end of the world because if he's right, he won't be able to collect on his bet. AIG's business model was pretty much to take the other side of people who wanted to bet against the end of the world (or lesser transgressions) - AIG provided insurance against such events. Of course, when these "unlikely" events happened, AIG couldn't pay off the bets anyway.
Along these lines, I'm somewhat surprised that there isn't more discussion about the US Government credit default swaps which have widened, last I heard, to around 55bps (from under 10 bps). Why not sell this CDS? If the US Government defaults, we'll all be so fucked anyway that no one will be able to settle these CDS trades... There you go AIG - I just gave you a new line item for your 2009 business plan.