Greece and AIG – could get nasty.

A report originally in Frankfurter Allgemeine Zeitung ( very respectable german paper) a few days ago, said that insolvent Greek banks may themselves have insured Greek debt but AIG might also have written CDS’s on Greek debt.

If the first is true then we have the insolvent insuring themselves. That certainly has the ring of financial truth to it. If the later is true then break out the imodium and tuck in those trouser legs. Because if AIG insured Greek debt this means the US taxpayer will get the bill – part of it at least. Now the amounts aren’t that huge BUT Americans are still smarting form AIG’s last back-door bail out of Soc. Gen. and Deutsche.

If it now turns out they HAVE to bail out Greek debt – and it’s the ‘have to’ that hurts – then I think this will get nasty.