AIG bailout

[griftadan]

well

http://online.wsj.com/article/SB122165238916347677.html?mod=article-outset-box

so basically AIG like the rest of the financial world had been losing money and was faced with bankruptcy, and the fed has organized an 85 billion dollar buy out which will effectively give the government a controlling stake in the company. technically, if the loan helps them rebound they only have to pay the short term interest but if they keep failing, the government basically seizes the company. this is fairly unprecedented, and somewhat unexpected because the fed had just let investment bank lehman brothers fall into bankruptcy. the reason why the acted this time is because much of AIG's debt was owned by money market funds who are normally viewed as a sound investment, but if AIG failed it would cause many of these to start losing money and the financial crisis would spread.

initially the stock market went up in anticipation of this bailout, but fell out of the sky today as most people seem to be pessimistic about the success of this bailout. notably, interest rates for short term loans between banks have about doubled, indicating that everyone is very concerned about their money going anywhere. so basically, it's probably only going to get worse and the government will end up owning a private firm for the first time ever.

[Smokey D]

I figured AIG was saved because it ensures everyone elses debt so if it failed there'd be no safety net and a simultaneous push to pull out as quickly as possible, which would cause a huge collapse.

Which is to say, if a company ensured by AIG failed there'd be no way to stop the loss from spreading.

[Iscariot]

so much for this being a mental recession eh mcbush

[griftadan]

I figured AIG was saved because it ensures everyone elses debt so if it failed there'd be no safety net and a simultaneous push to pull out as quickly as possible, which would cause a huge collapse.

Which is to say, if a company ensured by AIG failed there'd be no way to stop the loss from spreading.

theres that, plus i don't think the government wants all the people with insurance policies with them to get all pissed

[Superfly]

Manchester United must be relieved they can keep that sponsor on their shirts

[griftadan]

pretty soon they're going to have to start wearing an american flag on it, that would be so ace

[Iscariot]

i would love them that much more if they did that

[HighandDriving]

I'm loving the bail out, keeps the insurance industry secure while sending alot more business our way (Zurich Insurance).

Phones have been ringing off the hook with brokers wanting to steer their biz our way (and other competitors).

[griftadan]

yeah that's why the bailout probably won't work, no one seems to have faith they will make it. i guess the government thinks the 85 bil will be enough for them to slowly starve on until the economy recovers and they can stop losing money

[HighandDriving]

Well they are selling off a insane amount of assets, by force.

AIG was just too greedy and kept on expanding and expanding without fulling understanding the consequences.

[Against Miik!]

The AIG bailout was the wrong move. Nationalizing a private company that failed miserably? Are you kidding me? The government is going to end up losing a lot more than 85 million off of the this deal.

I just don't get it. We are broke. As a nation, we are flat broke. Politicians say it all the time. But then what do we go ahead and do? Go out and buy up half the mortgages and bail out one of the largest insurance companies for a staggering amount of money (damn near a whole year in Iraq).

And then we have the fed, who is printing money like its going out of style. Wow, yeah, that will fix things. Damn, if only I had bought up some gold 2 days ago.

[Surtr]

Manchester United must be relieved they can keep that sponsor on their shirts

One of my Profs. told me about this the other day after seeing my Man. Utd. top. She was like "Ahh, at least United'll get to keep the sponsor!" :rolleyes:

[mph4ever]

they would rather lose aig. the deal was done when the glazers took over. the brands worth a lot more now

[Dave de Sylvia]

One of my Profs. told me about this the other day after seeing my Man. Utd. top. She was like "Ahh, at least United'll get to keep the sponsor!" :rolleyes:
I'm pretty sure everybody in the world has made that joke by now.

[Surtr]

I'm pretty sure everybody in the world has made that joke by now.

A couple of people probably twice.

[guitrguy]

what a great time to be a college student.

[Det_Nosnip]

On the plus side, at least the fundamentals of the economy are ok...;)

[hismajestythepope]

its a clear attempt by america to crush the irish economy

[McP3000]

damn irish and their lagers

[hismajestythepope]

AIG ball-out

[ringworm]

americas economy is only going to get worse, tbo

we are on the verge of something intensely worse than what is now

[Smokey D]

There was a comment in the Independent or the Times that went something like 'the global economy is changing, and we can hear the gears creaking', which I think is a better way to describe what's happening than 'the economy is going to get worse'. In the next few years, I suspect we'll see a lot of hardship as the US economy (and the world) adjusts to the changing economic climate. What I don't think we'll see is the long term erosion of the fundamentals to the economy nor a significant long term drop in Western standards of living.

Not on the back of a financial crisis anyway.

[ringworm]

i have a video for you to comment on very soon smokey

as soon as its posted, i'll link it :)

[Smokey D]

I can't watch videos on university computers.

[ringworm]

well, **** :)

[Aaron]

There's nothing wrong with bail-outs in the current economic climate, provided it has strings attached limiting future trade activities. Especially considering that it's the governments of the world and their regulatory bodies reponsibilities' to enact and enforce appropriate legislation that limits stupid behavior in business. If there are loopholes, it's human nature [collective or individual] to exploit them. What we're seeing is the result of poor legislation, in my opinion.

[Against Miik!]

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

Interesting article from Eliot Spitzer (yeah, remember him???) from back in February

[okay]

There was a comment in the Independent or the Times that went something like 'the global economy is changing, and we can hear the gears creaking', which I think is a better way to describe what's happening than 'the economy is going to get worse'. In the next few years, I suspect we'll see a lot of hardship as the US economy (and the world) adjusts to the changing economic climate. What I don't think we'll see is the long term erosion of the fundamentals to the economy nor a significant long term drop in Western standards of living.

Not on the back of a financial crisis anyway.

Totally agree with this. The weaning process off of oil for the world wont be a comfortable one but it needs to happen.