In early 2005, back when Eliot Spitzer was taking his first pot-shots at American International Group, Inc., I wrote this blog post explaining how even mighty AIG could suffer a fate similar to that of Enron Corporation.

Inasmuch as AIG had a net worth of about $80 billion at the time coming off a previous year of $11 billion in net income on almost $100 billion in revenues, no one (including me) thought there was much of a chance that what I was suggesting could happen to AIG would actually happen to the firm.

Less than four years later, AIG would have suffered the same fate as Enron but for a massive federal government bailout.

The lesson here is that if creditors trust the federal government, then the government’s credit standing will remain high regardless of what the New York analysts say. In reality, the market rates the government’s credit continuously each moment of every day. Just look at fluctuations in interest rates on government debt.

So remember, regardless of what the Washington pols suggest, this is not rocket science.

Quite simply, it’s mostly about trust.