Wednesday, September 17, 2008

So the Fed has decided to bail out AIG in return for an 80% equity stake in the insurer. Extraordinary times!

So now the question is... when exactly is a company too big to fail?

According to The Big Picture's post on The Terrible Lessons of Bear Stearns:

Go Big: Don't just risk your company, risk the entire world of Finance. Modest incompetence is insufficient -- if you merely destroy your own company, you won't get rescued. You have to threaten to bring down the entire global financial system. The fear and disruption caused by a Bear collapse is why it was saved. (AIG has the right idea on this)

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