AIG government bailout. ?

financial podcast I listen to. said this on a recent show.... typed it best I could while they were talking lol. I think you get the idea..


here are some thoughts about this bailout... if the govt. steps in.

if the govt uses tax payer $ to take on this level of debt, in order to make the pain go away.... who's problem is it now? the governments. And the taxpayer ultimately.

the day of reckoning will come when someone says (like foreign countries) "I will no longer loan the US govt the money they want to keep the system alive".

then the govt. will raise taxes to a rate so high to help pay for this temporary plan, where individual taxpayers can't save money... because their tax burden will become worse than It currently is....

the US govt will become slave (hostage) to foreign lenders (countries) that have more cash and money then the US govt does... And that puts them at a serious advantage over the USA..



very interesting viewpoint... this is dangerous ground were treading on here....

What happens when the US govt cant' get money and needs to go to foreign countries for help?

Well I want to take an Aussie's perspective on this whole situation.

If the US economy sneezes then our economy (Australia) gets a cold. So most of the experts here are hoping for a resolution to this as well. As am I. But I think this whole mess is a group effort. As in the public, business and government caused it.

Public: They buy everything on credit. And replace everything just cause it's old. But it still works fine though, just out of fashion. So the cumulative effect of all of this on top of the interest rates for houses and cars and things going up forces people to default on their mortgages and things. Sure if they tightened their belts it'd still br really hard but not lose everything serious. And yes this is a broad generalisation but many people have said it. And I think here is Aus we are going that way too.

Business: All said by everyone above. Banks giving loans to eveyone with two legs and a pulse. The same store credit and credit cards.

Government: As also said above. They want to fix this mess. But many people pointed out earlier of the issue and were then ignored. Plus those wars in Iraq and Afghanistan didn't help the economy all that much.

I just think us other countries need to help out the US as well. Because we need them as much as they need us. A global effort.

Don't forget the public's problem of never reading or understanding what they're signing and then having a complete lack of personal responsibility when it bites them later.

Not to say there aren't crooks out there, but honestly, a majority of these cases are caused by lazy people who don't want to educate themselves on what they're doing, buying, or agreeing to.

As for business, it's more than just loose lending. It's the greed and shell-game tactics of the Wall Street investment banks.

To be honest, I think in the end, we will probably see the ushering in of more finance regulation than we saw after the Great Depression. Wall Street's party days are certainly over...at least for awhile.

PowerBookG4 said:

Its not 10k a household, thats just an average they like using to scare the average person. The number is more likely in the few hundred dollars per household, while the top 1% and more specifically the top %0.5 percent of the country will likely be paying most of this burden.

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Considering that the top 1% are the ones who made most of the money off the deception, lies, and scum tactics of Wall Street over the last 30 years that caused most of this mess (thank you Reagan?), and considering that the bailout will mainly benefit that same 1%, they should be the ones to repay it IMHO.

schweb said:

Considering that the top 1% are the ones who made most of the money off the deception, lies, and scum tactics of Wall Street over the last 30 years that caused most of this mess (thank you Reagan?), and considering that the bailout will mainly benefit that same 1%, they should be the ones to repay it IMHO.

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I didn't say they shouldn't be, I just said they would be.

I think it all boils down to one thing. Greed.

Giving home loans to broke people that should not be buying homes was a crazy idea. (sub-prime loans).

it's no wonder that the loans were defaulted on.... did the people giving the loans expect anything different?

one things for sure, no amount of government legislation is going to fix this mess.

macgig said:

I think it all boils down to one thing. Greed.

Giving home loans to broke people that should not be buying homes was a crazy idea. (sub-prime loans).

it's no wonder that the loans were defaulted on.... did the people giving the loans expect anything different?

one things for sure, no amount of government legislation is going to fix this mess.

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But you can't absolve those asking for the loans in the first place either. Most of those people knew exactly what they were doing and knew they couldn't afford what they were buying.

Predatory situations are different, but in the grand scheme of things, that population is very small.

Greed went both ways here.

The really worrying thing is where is the money to come from?

Latest reports suggest China - which will lead to them becoming the world superpower and where does that leave the rest of the world considering their not too generous welfare and concern for their own citizens?

The United State Government Bail Out

Very well put everyone!!!! What a joke - these people are useless, and by people, I'm referring to the politicians. For every one of you useless democratic and republican politicians that voted for this bill to be passed - I can only hope your is up for election next month and the people boot your useless waste of space out of office. What kills me, what friggin kills me, each one you useless politicians preach in your campaigns, oh we care about people, we want better education, we want to take care of the elderly, this and that, blah, blah, blah - I don't know call me stupid - with 700 BILLION DOLLARS - I believe you can cure many other problems the citizens of the United States, not to mention, they say that our troops need better protection fighting and protecting our butts including YOU POLITICIANS. What are you honestly thinking bailing out a private business - they come and they go, could there be problems if you didn’t bail them out, of course, they are a big part of the economy, but it would eventually work itself out - I would rather you gave the people there money back to help them with their mortgage. The word politician, does it have any meaning what’s so ever anymore - other than crooked and useless sob's? This may sound harsh -well too bad - more people should speak up, cause you politicians are way over abusing the power your friends, family and united states citizens gave you. What I love, the best part unless i heard incorrectly, which could be - but the best part of the bill, fdic will now secure up to 250k, is this correct?, again i could be wrong. But if I heard it correctly, honestly - HONESTLY you stupid politicians WHO ARE YOU CATERING TOO - unless people are lying I don’t think the majority of citizens have 250k in a bank account - because if they did, we wouldn’t be worrying about a mortgage crisis. You are crooks, and you should be greatly ashamed of yourselves. Congratulations, you bailed out a private business, what about the next ‘ooooh ooooh private business that threatens to go away’ will you use the federal government dollars “oh wait I mean, the taxpayers dollars to bail them out” Wall street would’ve rebounded on it’s own – stop protecting the private businesses, cause the corporate conglomerates are no better than you politicians, they screw more people over (cough) Enron. You useless politicians should probably take a stroll through the hurricane areas from the past season, why don’t you explain to the citizens that your sorry the federal government is doing everything they can to help you out, it’s only been several months these poor people who lost EVERYTHING – they are waiting for government money – but a private business screams – help help – AND YOU MORONS SPEND COUNTLESS, HOURS WORKING ON CREATING A DEAL. Ok, I’m done talking for now, I can on and on. To every us citizen, find out whether your senators and congressman voted yes for the bail out, if they did, go ask them why – and then politely say ‘screw you’ come November. [email protected]

Ok...
AIG is a BUSINESS. America is a CAPITALIST government. WHY OH WHY ARE WE BAILING OUT A BUSINESS?????!!! Does that even make any SENSE?

"We have to do it because if we don't America will fall further into recession."

No. Stop buying what you cannot afford. Simple logic : If you don't have the money for it, DON'T BUY IT!

Gotta love how all the blame is being put on the businesses (Schweb looks like the only one who is sensibly blaming the people, blame they certainly deserve). People, this is the fault of the government. In 1977, our government passed the Community Reinvestment Act (Schweb, you can blame Carter, not Reagan). This essentially dictated that Fannie Mae and Freddie Mac had to make loans to poor people because before that they had been making loans to people who could afford to pay them back, and somehow this was seen as discriminatory (gotta love it when the government thinks it knows how to run businesses better than the businesses themselves). Here's the juicy part, Fannie Mae was told that all of its subprime loans would be government backed, and they could get bailed out if things went south. Now thankfully, it wasn't enforced as it didn't have very much teeth. It was modified under both Reagan and Bush I, but again, with very little effect on the market.

Fast forward to 1995 to our Republican friends in Congress and Democratic buddy Clinton in the White House. The CRA is seriously overhauled and given quite a vicious set of chompers. It now practically dictates to Fannie Mae to give out subprime loans to everything that can be considered human. So Fannie Mae goes ahead and secures loans for people who only have to show ID, no need to show proof of income or credit checks or anything else that might indicate that these people might be able to pay back these loans.

Since there are now a gamut of new subprime loans out there, Freddie Mac goes ahead and lumps them together into securities to sell to various brokerages, who then go ahead and throw them into portfolios of their clients, claiming that they're good investments. Fast forward a couple of years to 2003 and members of Congress start seeing a problem with these loans not being paid off. So several attempts were made to modify the rules so that the government was no longer forcing these companies to make bad loans. But the rule changes never make it out of committee. What's funny about this is that Barney Franks (D-MA) was one of the people who blocked these rule changes and was lambasting the House Republicans for not voting on the bailout package the first time. You gotta love the slimeball for his hypocrisy.

So in 2007 we have a situation where the housing market is failing. The brokerages look over their assets and all of these subprime securities come up with a zero balance. Billions of dollars are literally wiped out overnight. With fewer people taking out loans with the bad housing market, these companies have no new securities coming in to offset the bad ones. Panic sets in, and we have companies straining under the pressure of not having any liquid assets. So they either get bought out, merge with another company, or as we have seen recently, just straight up collapse. So they come to the government to follow through on the promise it made thirty years ago, and this is why we have a several hundred billion dollar bailout package.

So don't blame the companies for greed or any other thing. Sure, it certainly played a part, but ultimately the blame rests on the government and the people who went out and took advantage of the new rules. What we need is to find the people responsible for the 1995 change and essentially tar and feather them, after running them out of town of course.

Regardless if the government strongarmed businesses into doing things, it is not our responsibility to bail them out. I hate the government. Let me repeat: I HATE THE GOVERNMENT. I drive around with two bumper stickers that say:
"I love my country but hate my government" and
"Don't steal. The government hates competition."
I'm a Libertarian, and yes I'm sure to be chastized (Spelling...) about it but I respect everyone's opinion.
The government should've NEVER forced a business into ANYTHING. It is AGAINST FREE MARKET TRADE. In an ideal world, I'd make the people who forced Fannie Mae and Freddie Mac into making such a foolish decision pay them the debt and if they can't afford it, guess what? Jail time.

...So Kash I guess what I'm trying to say is I agree with you that we need to tar and feather them, and the people should NOT have to pay the reprecussions of an ILLEGAL ACT. RIDICULOUS. COMPLETE ----------------...You know where I'm going with that...

AIG was not into home loans. their failure not about stupid home mortgages.

i think they were backing bond purchases such as an insurance policy. they were over leveraged, a few bonds failed and AIG became toast.

wonder how much bad stuff is out there?

the bail out will only work till the election.

AIG, along with several other companies, were buying the securities created by Freddie Mac, which were based on the subprime loans. It's a common business practice, it just happened to go sour this time.

Kash I'll give you that the Community Reinvestment Act may have been bad policy, but I will still put most of the blame for the current fiscal crises on Reagan (and his disciples) and his fiscal policy and reckless speeding towards absolute deregulation.

Reagan's policies were the same as what existed before, and eventually led to, the Great Depression. And I'm sorry to say it, but the main cause of most of today's problems was the CRA but rather the deregulation and lax oversight of the financial industry as a whole.

Oh don't get me wrong, I totally agree that Reagan's economic policies were utter trash. I'm just trying to point out that both sides of the aisle are to blame for the current crisis and providing a reason for why the government is bailing out these companies.

How much blame does the individual bear though, the individual who is getting a loan that they clearly can not pay for?

Me thinks...a whole bunch.

Also, why should we give this money to fix the problem to the same people who broke things?

Seems silly to me.

Perhaps we will wake up and quit shipping IT and manufacturing jobs overseas as a result of this disaster? We won't, but it would be nice. I'm guessing unemployment will start to go up and people are going to suddenly realize their B.S. in C.S. or Engineering doesn't get them much anymore when the same can be gotten overseas at 1/2 the price. I'd be willing to bet that a good protracted "real" war of survival will probably be the inevitable long term recourse (see WW's I and II). It thins the herd and divides up resources again pretty decisively. It will be interesting to see how it all shakes out in 5 or 10 years. Based on what I've read, we are pretty much one step away from camping without our credit and energy. People are going to start to really freak after a few weeks of empty shelves in the stores. Intangibles like a 401k down 27% are not as scary as not being able to locate food, energy and medicine for a loved one - even if you have the money or the guns to get it. The problems we are seeing cannot be legislated or decreed away. Our fundamental expectations have exceeded our means and I honestly don't think this is going to change with an election, lowering credit rates, or building wind turbine farms. Just MHO - hopefully I'm wrong.