Most everyone is referring to the Fed move on AIG as a “bailout,” but Nick Gartmore demurred last night on CNBC:
I’m amused that everyone is calling it a bailout. I’m sorry but AIG is borrowing money at close to 12%. You can borrow money from Nick the Knife for less that that!
Before contemplating a new nickname for Bernanke (Bennie the Blade?) or Paulson (Hank the Shank?), let’s also reconsider the use of “bailout.” It’s true that AIG doesn’t get to walk away free and clear, so perhaps this is best described as a diamond-studded life preserver. Plenty of ways to cut the drowning man, but it’s far better than the alternative. The downside is that diamond can also cut rope, which means the life preserver’s owner also runs a major risk of not retrieving his treasure (but he just couldn’t bring himself to not at least try).