The more I think of it,

the more that I think that this financial bailout is a giant scam.  Follow Bagehot’s rule: Lend freely at a penalty rate if you think that the assets are good.

But that’s what they tried with AIG. Didn’t work, because good assets can become bad assets before the crisis ends.  After all, the Fed was telling us that AIG’s assets were good, they just had a liquidity problem, not a solvency problem.

That could be true, since much of the money is going to collateral, not to pay off claims.  But some are real losses.

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