More Socialism For Corporations
I just saw this: Fed in AIG rescue – $85B loan
NEW YORK (CNNMoney.com) — In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.
The Fed authorized the Federal Reserve Bank of New York to lend AIG the funds. In return, the federal government will receive a 79.9% stake in the company.
Officials decided they had to act lest the nation’s largest insurer file bankruptcy. Such a move would roil world markets since AIG has $1.1 trillion in assets and 74 million clients in 130 countries.
An eventual liquidation of the company is most likely, senior Fed officials said. But with the government loan, the company won’t have to go through a tumultuous fire sale.
Who in hell thinks it is a good idea to let these people obligate the US government for this much debt and buy a corporation without any Congressional oversight? Whatever happened to the free market and capitalism?
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Whatever happened to the republican ideal of smaller Government? LOL Now they’s in the insurance biz! I don’t know exactly why the Bushmorons did this… but you can bet it’s bad for the majority of citizens, and probably most of the World.
This does not bode well.
AIG has been losing money for the last 9 months. It has billions in obligations that can come due at any time. This is like buying up all of the wind damage insurance policies just before the hurricane comes ashore.
No one is going to do business with AIG because they know it is going bankrupt eventually, so there is no way of improving the situation. Their regular insurance business is going to die as people get insurance from other companies when their policies come up for renewal.
This has been going on a long time, and nothing was done until it was too late.
This has been going on a long time, and nothing was done until it was too late.
That pretty much sums up the entire *Bushmoron’s Reign of Terror!*(tm) On second thought, it’s more like: This has been going on a long time, and nothing was done. 🙂 This Bushmoron Government *ONLY* and I emphasize *ONLY* does anything when it’s in their own personal interest to do so. They care nothing for anyone else at all, even *friends*, once their *friends* stop having any value for them.
The Bushmorons make Communism, or even Fascism, seem like a great idea. At least you know and expect to be screwed and not enjoy it much.
Whatever happened to the free market and capitalism?
Well, they haven’t really been around in the US for a long, long, time….if ever beyond niche markets.
And, yes, it is not a good idea to bail out AIG.
But, then, the gov.. bails out the defense industry to the tune of 100s of billions every year.
And the ethanol industry….
And the list can go on and on…
On the bright side, if you like skiing, we (the taxpayers) now own Stowe Mountain Resort.
Wonder if the mercenary firefighter branch of AIG will still be kept running.
Well, I assume that everyone now knows the value of an Ivy League MBA – nada, zip, zilch.
The whole purpose of incorporating these days, Steve, seems to be to enroll for welfare payments. I had to compete against corporations for contracts and doing a better job quicker and cheaper was no match for an “Inc.” after the company name. Small businesses supply the jobs in this country, but the government is damn sure not working in their best interests.
Well, that makes sense, Jill, as global climate change will make skiing in Vermont all but impossible in a few years, so it is another losing proposition.
I watched the local *Currant Affairs* program after the nightly news. People, especially the soon to be retiring, and superannuation funds managers, are NOT happy. It seems AIG owns over 20% of our super funds. And everyone outside the USA knows the US Gov is broke… The dollar dropped to 78c. *sigh*
I hear that China is happy to extend the US loans… for a big price! Expect a new round of trade negotiations and deregulation.
It’s gonna get ugly. We, and most of the World, do NOT want the US Gov holding our Super funds!
Mmm does this mean that it will be more than Atrios calling it “The Big Shitpile”?
Retirees are screwed. I’d feel worse for them if they didn’t think the sun rose and shown out of Bill O’Reilly’s ass. They hung on his every word, and I’m sure they think he’s going to be suffering with them.
I think its time for me to start getting more firearm practice in 😉
Lovely, just lovely. What will the FED buy next? Auto manufacturers? Commercial buildings? Retail malls? Because, you know, they will want their handout too. This mess needs to be cleaned up, not propped up and swept under the carpet. I thought the FED could only lend to banks. Silly me, I must have missed the loophole memo.
Those of us without pensions will never be able to retire. The government is hell bent on destroying any wealth I may have accumulated in my 401(k). And last night the clowns and talking heads on the news shows were still telling us “the financial markets are sound” and “don’t move your money out of the markets”. Yeah, right. Smart money has been pouring into cash for the past year.
Today I read that for the first time ever a money market has gone under the $1 per share value; it was due to losses after writing off $785 million of debt issued by Lehman. And I’m thinking, what kind of money manager keeps that kind of garbage in a low risk fund? One that thinks the US Govt will bail them out, that’s what kind.
(LadyMin then spent the morning reading the semi-annual reports of her money market funds to determine risk on those supposedly safe investments. Sigh.)
Well, that’s a nice little cross-cultural difference, Kryten – in the US “Superfund” refers to the money set aside to clean up toxic waste sites. Sounds like it will have the same meaning in Australia in the near future.
The older people who still remember their childhood, Map, like my Mother, have been in cash for a while because they remember the Great Depression as a child and remember what they were taught about how it started. They saw the signs and bailed out.
It’s odd that you mention Bill O’Reilly, because I live in the Reddest of Red areas and I have never heard anyone mention him. Outside of blogs, I don’t know anyone who has ever seen his show. It would be odd if the bulk of his audience was lefty bloggers.
While the US is now the principle sponsor of the Manchester United football club with this purchase, Lady Min, and they make money but not for their sponsors.
AIG has been in trouble since 2005, and they never bothered to clean up their act. The mantra was always the same – AIG is too big to fail, they can absorb huge losses. Yeah, well, the people who said that had a very limited view of “huge”.
Everyone is tied to the mortgage market in one way or another, so the bursting of the housing bubble affects everyone connected to finance. The major players all went to a limited number of MBA programs and live in their own clubby world. There is a generation of CEOs who think the only thing a corporation sells is stock, and that’s all they worry about.
A trillion dollars worth of assets evaporating into thin air sorta re-defines “huge”.
Unfortunately, if AIG folds, the loss of that trillion dollars that’s still on the books as assets (but that everybody knows is fictitious) gets actualized, and the whole house of cards that is the U.S. money supply turns into a deflationary spiral and the economy turns into a toad. At the moment, we have only bad options, or even worse options. It’s as if you see an adorable 5 year old child playing with the actuator to a nuclear bomb that will blow up the entire city, and you have a sniper rifle’s scope zoomed in on her forehead and your finger on the trigger. Do you pull that trigger? Or do you let her push that button on the actuator and blow up the city? The Fed chose to off the child by printing the money for this “loan”. But the other option would have been the complete collapse of the banking system and a Great Depression that would make the first one look merely depressing, rather than ruinous.
There’s no doubt they had to do it because of the “International” in AIG, their failure wouldn’t have been limited to the US, the corporation was worldwide and so would have their bankruptcy.
It was a matter of the worse case rather than the worst case, as you say.
The Hedgemony and Greedspin refused to do anything when this would have been a scratch, so now we have gangrene in the market.
And just when you thought you’d heard enough …
An unholy trio proposes to create an entity to buy the bad loans.
Kinda like the Resolution Trust Corp, only worse. All the risk and no benefit. Brilliant.
They can call it the “Irresolution Lack of Trust Corpse”.