Congrats: You Now Own AIG Insurance! Socialized Business Comes To America, Comrades
Author: Charles Feldman • URL: http://www.thefeldmanblog.comSeptember 17th, 2008 •
Who would have thought that a relatively small number of people who couldn’t pay their sub-prime mortages would bring about the end of the American economy as we knew it? The latest development is an extraordinary one. As CNNMoney.com put it: “In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group…” Translation: the government has just loaned AIG $85 billion of YOUR taxpayer dollars.
The feds will, in turn, get a 79.9% chunk of the company. It is apparently hoped that when the company is eventually liquidated, the bailout bucks will be repaid to taxpayers.
Wanna bet!!!
Of course, this now global economic mess was not really the result of some folks going belly up on their subprimes. The real cause is the absolute greed of the investment community which felt itself immune from reality after the virtual protection given it over the past seven years or so by the Bush administration.
And, let us finally put aside this myth that European and Asian nations are smarter about these sorts of things than we are. Turns out they were just as stupid, greedy and, yes, maybe even criminal!
No matter. The bottom line is, we are now the proud owners of a giant insurance company that probably will soon be no more, as well as the mortgage titans Freddi Mac and Fannie Mae.
Getting back to AIG,if you think you had a bad economic year ( and there is a pretty good chance you did) just look at “poor” AIG–it lost some $18 billion in nine months and saw the price of its stock drop more than 91%.
Where do we go from here?
Damned if I know!!! And, I think it is safe to say from the way the past few days have played out, no one else knows,either.
I keep reading how the only thing that will save the day will be the resurrection of the real estate market in this country. But I don’t buy that any more than I believe it was just the real estate debacle that caused this world-wide economic crisis.
A whole bunch of things need to be changed, big time, before the economy settles down and returns to something akin to normal. It is easy, glib even, to point the finger of blame on the subprime lender who was, after all, just trying to put a roof over his/her head and ignore the far bigger and more sinister forces at play here: lenders, speculators, regulators, to name but a few.
And, whether John McCain or Barack Obama captures the presidency, the global economy will not be nursed back to health without these other cancers being aggressively treated.
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Tags: AIG, American Insurance Group, Economy, socialism, taxpayer
Joshua Dorkin
Charles Feldman
Ted Karsch.
Troy Schuricht
Anwell Tsai
Richard Warren
Jim Watkins
“The Markets They Are A-Changin’”
(to the melody by Bob Dylan)
Come gather round ‘bankers’
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be told to go home
If your job to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like the DOW
For the markets they are a-changin’.
Come hedgefunds and bear traders
Who prophesize and sell short
And keep your eyes wide
The chance won’t come again
And don’t speak too soon
For the markets still in spin
And there’s no tellin’ who
That it’s namin’
For the markets they are a-changin’.
Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s financial meltdown outside
And it is ragin’
It’ll soon shake your windows
And rattle your walls
For the markets they are a-changin’.
Come Central Bankers
Throughout the land
And don’t criticize
What you can’t understand
Those derivative books
Are beyond your command
The old road is
Rapidly agin’
Please get out Bernanke and Paulsen
If you must bail them out out
For the markets they are a-changin’.
Social commerce? Market has no space for social things…
“Of course, this now global economic mess was not really the result of some folks going belly up on their subprimes. The real cause is the absolute greed of the investment community which felt itself immune from reality after the virtual protection given it over the past seven years or so by the Bush administration.”
It has become very fashionable to blame George Bush for everything. “I stubbed my toe, that #@$%^ George Bush!!” And while he certainly deserves a lot of blame, people forget one major point. Much of this mess has occurred due to the lifting of Depression-era barriers between banks and investment firms. Had those barriers been left in place much of the current mess would never have happened. Those barriers were lifted in the late 1990s by Bill Clinton. Let’s keep our perspective here, there is a lot of blame to go around.
Precisely rehab702,
Research the Glass-Steagall Act of 1935. This act was repealed on November 12th, 1999 by Pres. Clinton. However, a Republican congress was in control. It took only 9 yrs to undo our country’s finances. What a cluster handed to us by our elected officials. Yes, wall st is part of it, but without the government gaurantee of monies wall st would not have been so careless so fast.
While your reserching Glass-Steagall make you also check out the Community Reinvestment Act. This made is what created the “subprime mortgage”. Democrats pushed for banks to lend to low income familys so that everyone (even those that couldnt afford it) could reach the american dream of owning a house. So, banks and lending institutions, afraid of being called racist for not lending to a black man with no money, assets or job, lent to poor communities. And the only way to make it profitable was to create the subprime mortgage.
The government got us into this mess so I guess it is only fitting that they (try to)get us out.