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Rambling thoughts on who knows what... Because not everything is as the conventional wisdom would have it... BLOGS I SORT OF LIKE... Volokh Conspiracy ProfessorBainbridge MarginalRevolution Patterico Powerline Ace Wizbang JustOneMinute XRLQ Betsy's Page HE WHO USED TO LINK ME EVERY NOW AND THEN InstaPundit Email Steve
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Monday, March 02, 2009
Maybe it's the reporter, maybe the headline writer, but the headline "Despite bailout. AIG reports massive loss illustrates that someone at CNN doesn't understand what is happening (no surprise, the competence of business journalists is usually no better than their political colleagues).
The bailout (then and now) is a consequence of the losses AIG has incurred as the value of their holdings have and continued to drop. The bailout was intended to restore in part AIG's capital in order to allow it to continue meeting its obligations thus avoiding (hopefully) an even broader collapse in the credit markets. Simply put, the government gave AIG $100 billion to replace the $100 billion or so that AIG had lost and paid out as collateral to buyers of its debt securities. The previous bailout did nothing was really wasn't intended to do anything to increase or even stabilize the value of AIG's holdings... which is what needs to happen for AIG to stop reporting losses.
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