Re: AIG
- From: Nobody <nobody@xxxxxxxxxxx>
- Date: Wed, 18 Mar 2009 21:42:27 +0000
On Wed, 18 Mar 2009 22:01:49 +0100, Frithiof Jensen wrote:
In a developed society, banking and insurance are critical infrastructure;
they *genuinely* cannot be allowed to fail.
Thats what The Experts claim - i.e. Bankers and Insurance people! Taxpayers
will disagree!!
Of course they will. And they would have disagreed equally vehemently if
they government had allowed them to fail. The grass is always greener on
the other side.
The problem isn't that the state is now bailing them out, it's that it
never collected the premiums for the insurance it was effectively bound to
provide.
They did collect premiums - the problem is that there is not enough money in
the entire world to cover all the naked options they wrote and they just got
called on them!!
If they had insisted upon collecting premiums commensurate with the actual
risk, the insurers wouldn't have been able to take such risks. OTOH, the
bubble would have just burst that much sooner.
It's in the nature of the system that the politicians don't care whether
the economy is headed for a train wreck, so long as they can delay it long
enough that it doesn't happen on their watch.
It's MBAnomics: maximise short-term profit at the expense of long-term
security, then use your "success" to get a job elsewhere before the
chickens come home to roost.
.
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