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Rx Contract Abrogation (Use Only As Directed)

posted by Adam Levitin

Former Credit Slips guest blogger Anna Gelpern has a nice post on AIG and contract abrogation on Nouriel Roubini's RGE Monitor.  Anna argues that there are times when abrogating contracts makes sense, but that AIG just isn't one of them.  Contract abrogation is a powerful tool that should be used sparingly and only to protect macroeconomic welfare, not to express political outrage over the behavior of a single company.  


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