Money Well Spent

Can't say I'm surprised:

NEW YORK (Reuters) – American International Group (AIG.N), once the world's largest insurer, owes around $10 billion to other financial services firms for trades that have gone sour, the Wall Street Journal reported in its online edition on Tuesday.

The report, citing people familiar with the matter, says the trades have not been explicitly disclosed before, and are not covered by terms of a current $150 billion U.S. government rescue package.

I don't get this; the bailout was supposed to free up money for all the banks and make currency flow again...right?

Right?

In the market equivalent of shoveling cash under the mattress, hordes of buyers were so eager on Tuesday to park money in the world’s safest investment, United States government debt, that they agreed to accept a zero percent rate of return.

The news sent a sobering signal: in these troubled economic times, when people have lost vast amounts on stocks, bonds and real estate, making an investment that offers security but no gain is tantamount to coming out ahead. This extremely cautious approach reflects concerns that a global recession could deepen next year, and continue to jeopardize all types of investments.

While this will lower the cost of borrowing for the United States government, economists worry that a widespread hunkering-down could have broader implications that could slow an economic recovery. If investors remain reluctant to put money into stocks and corporate bonds, that could choke off funds that businesses need to keep financing their day-to-day operations.

Ruh-roh.