Why AIG blew up

The NY Times has a good article today which examines why we’re stuck paying hundreds of billions in bailouts to AIG.  The article is titled Propping Up a House of Cards.

It’s a good article, and it does a good job of explaining what happened, but I think it draws the wrong conclusion.  The NY Times says we need to continue the bailout of AIG regardless of the cost.  I say we should simply let them fail and let the house of cards collapse.

No, the result won’t be pretty, but it will be over. A lot of large banks will go under, both here and in Europe, but some will be left.  And the trillions of dollars of losses will have been taken by the people who invested in AIG and the banks that relied on them – and that’s the way it should be.


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