Geithner Needs To Exit Stage Left

WSJ is running this story.

http://online.wsj.com/article/SB10001424052748704204304574543822135042160.html#printMode

All Tim Geithner does nowadays is backtrack and lie. After that he lies some more for good measure.

Geithner makes the point that the underlying insurance contracts not AIG CDS were the real systemic risk. Unreal!

What was the point of the bailouts then?
I know! To make Wall Street 100% whole!

AIG is a holding company.
AIG Financial Products (AIGFP) counter parties thus had no legal claim to make a run on the insurance assets of AIG.

http://online.wsj.com/article/SB10001424052748704204304574543822135042160.html#printMode

So Geithners point is patently false. He should have made the banks take a haircut. Screw the French when they say its against their laws. He should have threatened to take AIGFP into bankruptcy instead of backstopping AIG entirely. Threatening to put AIGFP into bankruptcy would have provided the leverage to induce the banks to take a haircut.

I simply state that the fact that AIG had guaranteed the obligations of AIGFP, this would constitute a default by AIG, but that wouldn’t affect AIG’s insurance subsidiaries, which could stand alone quite nicely as insurance companies get most of their money from customer premiums. Do you actually think Goldman Sachs would sue to control underlying AIG Insurance Premiums?