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You wrote "were AIG to force it's counterparties to 'take a haircut' then the bond ratings on any of these insurance guarantees would immediately drop down below AAA levels and thousands of bonds would be required to be dumped by pension plans, investments groups, etc. that only hold the top-grade bonds."
Here's my question: Since AIGFP was in the biz of selling CDS contracts, and since CDS contracts don't require the buyer to actually have any ownership or otherwise insurable interest in the instruments for which they are seeking CDS, what exactly is your evidence that in the case of, say GS, that forcing a haircut would have any effect on bonds they don't own what so ever?
