"The market says in cases where an entity poses a systematic risk to the entire system, bailout is necessary because the cost of doing nothing outweighs the cost of doing something. In AIG case, I don't see the systematic risk they posed. Their problem was selling CDS to more sophisticated banks without having any collateral to back it up. The banks should have been forced to take a pay cut for making bad bets; it is not the tax payers responsibility to bail them out."
Yeah..that should have been the banks problem.
I still don't get why the government of the United States bailed out GS. GS is a trading company. It's ridiculous. Trading companies should not be bailed out. I mean I do get it...Politics.