|Bengal Migration| Posted September 17, 2008 Report Share Posted September 17, 2008 [quote]NEW YORK - In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy. It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said. "The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy." Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy." "I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement. The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG. Earlier, Fed chairman Bernanke and Paulson met with Sen. Christopher Dodd, D-Conn., Majority Leader Harry Reid, D-Nev., and House Republican leader John Boehner of Ohio, to brief them on the government's option. "At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters. "The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets." On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent — and another 45 percent after hours. Still, no deal emerged. The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers. The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold. "It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next." New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."[/quote] [url="http://www.msnbc.msn.com/id/26746909/"]http://www.msnbc.msn.com/id/26746909/[/url] Irony anyone? The gov't won't support subsidizing health insurance for the public, but they'll support subsidizing the insurance company itself... lovely. My question is, who now effectively owns AIG? Is it the taxpayers? Or the Fed? Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 That's a good question. At this point, all I know is that "the government" owns 80% of the company now. So I'm with you... what does this mean? Why does it matter who owns the owns the stock anyway? Why is it bad to let this company fail? Insurance isn't a commodity. You can find another insurer. I guess this is mainly about the investment type policies. Link to comment Share on other sites More sharing options...
|Bengal Migration| Posted September 17, 2008 Author Report Share Posted September 17, 2008 FWIW, The local headline for this same story reads: Fed's $107bn gift to globe [url="http://www.theage.com.au/"]http://www.theage.com.au/[/url] Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 17, 2008 Report Share Posted September 17, 2008 Been an interesting past few days. Hopefully, CHD will stop by at some point to give his perspective, but I imagine that he's probably very busy right now. This is a crucial phase in the collapse of the international financial system. Thus far, folks are trying to save the system from within the system. It won't work, it just prolongs and deepens the damage being done. Loans, conservatorships, behind the scene short-squeezes, special sessions to wind down deriviative trades this past Sunday, and a bank consortia of 70$ billion backstop funds to do the same, will not pound this square peg through that round hole. Here is the coldest, hardest fact: [i]Most of the debt claims on this planet can not--and will not--be repaid.[/i] This is not related to the little guy. It's the end-game of a process that began in 1971, which accelerated during the Reagan years, which was pushed along with little attempt at reform during the Clinton admin, and which has been thoroughly mismanaged in a ham-fisted way by the current bunch. And we're still much closer to the beginning than we are to the end. How to proceed, then? What can be done to prevent further damage to the real economy of tangible goods production and trade by the usurious financial sector? Regional economic blocs (e.g. G8, SCO, Mercosur) must get together and jointly agree to a fundamental restructuring of the international system. On the financial side, a stable exchange rate system must be re-enacted to enable long-term capital investment in plant, transportation and other elements in the real economy. No more floating currencies. Developed countries must once again embrace manufacturing and raw materials exporting countries must prevent further looting of their resources. Equitable trade and economic treaties must be created by and among these nations. Most of all, the FIRE economy must be dumped and such associated activity ought to resume its [i]properly subordinate[/i] place to/within the real economy. I'm sure no one in the power structure wanted this before the election. That the contagion could not be prevented ought to give folks an idea of just how serious this is. You are living in historical times. The question is: how long can you live if everything falls apart? Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 17, 2008 Report Share Posted September 17, 2008 AIG senior management board meeting in which credit default swaps are the focus? Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 Homer, why can debt not be repaid? Debt can always be repaid. The hard part is to make the decision to pay it. Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 17, 2008 Report Share Posted September 17, 2008 [quote name='sois' post='701987' date='Sep 17 2008, 09:37 AM']Homer, why can debt not be repaid? Debt can always be repaid. The hard part is to make the decision to pay it.[/quote] Because the money simply is not there. The fractional reserve banking system makes money out of nowhere. Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 Can we not just stop being at war until we are out of debt? How long will that take? Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 17, 2008 Report Share Posted September 17, 2008 We'll never be out of debt, ever. The only real question is what's going to happen when the people we owe show up at our door demanding it back. Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 We need to be in budget surplus from now on. Sell Alaska and Hawaii to Japan. This AIG bailout could have paid off so many countries. That's gay. Stop wasting 20% of revenue on defense. That's too much. Link to comment Share on other sites More sharing options...
bengalrick Posted September 17, 2008 Report Share Posted September 17, 2008 [quote name='sois' post='702120' date='Sep 17 2008, 01:51 PM']We need to be in budget surplus from now on. Sell Alaska and Hawaii to Japan. This AIG bailout could have paid off so many countries. That's gay. Stop wasting 20% of revenue on defense. That's too much.[/quote] easier said than done... I kinda like having Hawaii and Alaska personally... Especially Alaska considering the mass amounts of oil up there... I agree that we need to cut some spending on defense, but we still need to be very strong in that department, especially now that shit is hitting the fans... Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 [quote name='bengalrick' post='702137' date='Sep 17 2008, 02:47 PM'] easier said than done... I kinda like having Hawaii and Alaska personally... Especially Alaska considering the mass amounts of oil up there... I agree that we need to cut some spending on defense, but we still need to be very strong in that department, especially now that shit is hitting the fans...[/quote] Well, I like having cable, but if my electricity is about to be shut off, I think I can do without it for a while. Link to comment Share on other sites More sharing options...
bengalrick Posted September 17, 2008 Report Share Posted September 17, 2008 [quote name='sois' post='702146' date='Sep 17 2008, 03:19 PM']Well, I like having cable, but if my electricity is about to be shut off, I think I can do without it for a while.[/quote] That's an easy decision... We are more in the department now (as far as the budget is concerned) where we have to figure out if we need groceries for the family or if we should pay the rent on the house... Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 17, 2008 Report Share Posted September 17, 2008 My bad. I should have been more clear about what I meant by debt. What I mean is that there are too many claims on money tied up in all these fictitious deals that have absolutely nothing to do with the economy: e.g. derivatives instruments. If you're paying attention to the mechanics of this meltdown, what is essentially happening is a classic "game over" moment that comes with all bubbles. Folks finally wake up to see that the mania is just that--and the "gentleman's agreement" concerning what once had value, no longer does. Read up on the Tulip bubble to get an historical (and distanced) view of the matter. For decades now we have allowed our idea of "value" to become more slippery. The more sane among us have been saying that value is associated with the production of "stuff" and that many of the claims to value (tantamount to a lot of paper-shuffling) have no basis in reality. And as you are seeing, reality usually wins out. As for the debt to which I am referring, go to the BIS site and read through some of the reports, especially where derivatives are mentioned. On fractional banking: be aware that there is a trap in the thinking of Libertarians. Money is an instrument of value, not value itself. The Austrian school (von Menger, von Mises, von Hayek, et al...) and its monetarist cousin, the Chicago school, are largely responsible for much of this shift in the idea of value over the decades. Otherwise a good question: where does money come from? The problem is not so much the issuance of money into an economy in the form of debt--that's how a nation meets both current and future obligations--the main issue is the purpose for which that debt obligation is created. To the extent that such debt is issued specifically for the creation of real value in an economy, the payback to society is generally much more than any nominal value associated with that debt. On the other hand, if money is created willy-nilly, without any dirigistic purpose (as the French call it) then you tend to get what we are experiencing right now: a casino with a fire in the kitchen. On national security and its cost: All spending on national security is overhead for the purposes of accounting. One can debate the extent to which overhead costs are necessary. In my view, what tends to promote peace in the world is genuine prosperity. There's no doubt that the US has become one of the great war-making machines the world has ever seen. There's also no doubt that a large portion of that machine has come at the expense of investment in genuine prosperity. (Not to mention its role in policy-making, which is just as important, imo.) In any case, we are now confronted with reality. What do you think we ought to do to right the ship? Link to comment Share on other sites More sharing options...
sois Posted September 17, 2008 Report Share Posted September 17, 2008 This sucks, I didn't cause this mess. I am a regular guy who is doing his best. I pay 4000 a month on student loans. I am scraping by to live up to my word and pay off the money the government let me borrow. I am almost done, next December, I will be out of student loan debt and credit card debt. I will be 100% debt free. It isn't fair that others get to default on all of this credit. This sucks. Link to comment Share on other sites More sharing options...
steggyD Posted September 18, 2008 Report Share Posted September 18, 2008 I don't think it's about what we want to do anymore Homer. From what I've read, from many predictions and many different conspiracy theories, it's all over sometime around next February. So much doom and gloom, I don't think there's a damned thing we can do, except learn to live with the new changes. What are these changes? I don't know, WWIII, North American Union, New World Order, Marshall law in USA, where everyone is locked up in Haliburton prison camps, etc. The one thing I read in common is the US government crashing sometime next late winter, early spring. Of course, I'm going to wake up every day and live life the same way, but I will take a few extra precautions. I may take a few extra dollars, that I don't really have anymore, to buy an extra package of bottled water or maybe some non-perishable food items. Maybe buy a shotgun or two, and some ammo to go with it. Of course, with kids, I'll have to really lock them up until the time is needed. Oh, and draw up an escape plan to the family's farmlands, just in case the shit really hits the fan. My wife may find me nuts, but I want to be prepared for anything. And if we make it to late spring next year and nothing radical happens, then I will sigh a sigh of relief. Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 18, 2008 Report Share Posted September 18, 2008 As long as this is a Republic, it's always about what [i]we[/i] want to do. There's not a dime of difference between you or me or any of the other citizens of this nation. Some have more (or less) advantages, and while that can be significant in terms of determining events in this country, it is not necessarily a reason for being passive. I'm not disputing your right to make such a choice, but I am suggesting that you have more real power than you might think, should you choose to exercise it. I literally should have died on two occasions during my life. The aftermath of both events have shaped my thinking about life, my place in the universe, and what I want my life to represent. Of course, I'm imperfect and I often fail to meet the standards I aspire towards. I'm not going down without a fight. [b]This is[/b] the series of events which will most affect your life, the lives of your loved ones, and future generations. Your voice matters. I hope you'll use it. Link to comment Share on other sites More sharing options...
Jamie_B Posted September 18, 2008 Report Share Posted September 18, 2008 So what should we do to right the ship. Close the Enron Loopole and fix the other de-regulation isues. Bring the boys home, at least from Iraq and possibly the rest of the world if it gets that serious (which is a real possibility). Repeal the bush tax cuts. Invest in R&D for alternative fuel. Give bigger tax credits for using Hybrids. That would be a start, im sure there is more but its late and my brain is more in react than think mode. Link to comment Share on other sites More sharing options...
rudi32 Posted September 18, 2008 Report Share Posted September 18, 2008 make sure you have enough weapons and ammo a pistol, a shotgun and a long gun, all you need. no ninja Link to comment Share on other sites More sharing options...
Nati Ice Posted September 19, 2008 Report Share Posted September 19, 2008 [quote name='sois' post='702120' date='Sep 17 2008, 02:51 PM']Stop wasting 20% of revenue on defense. That's too much.[/quote] no its not, it may be slightly too high but no significant changes in the that department are currently feasible. if i were you i wouldnt worry about decreasing defense spending because its just not going to happen. id be more concerned with trying to make sure we quit invading pissant countries and approving military projects that do not work. military spending always needs to be held in check but the problem we have with it right now is that we have too few troops and too many exorbant and unnecessary costs. cuts will not happen there and should not be the priority, allocation and having a decent return on our investments are. [quote name='rudi32' post='702342' date='Sep 18 2008, 11:00 AM']make sure you have enough weapons and ammo a pistol, a shotgun and a long gun, all you need. no ninja[/quote] lol, ammo costs too damn much for all that noise why not an ar/ak/m1a/m14 while youre at it? or is that what you mean by "long gun" rather than a rem700 random musings: wow, the $340 billion in deficit expansion caused by gwb's tax cuts all of sudden seem like a bad idea! whoda thunk?1??!?!?! also: the us has nationalized more than hugo chavez without the profits to go along with it. does that now make gwb/america a bunch of communists, extreme socialists, or simply fascists? how the fuck can any of you still support this idiot in chief? i am seriously intrigued. Link to comment Share on other sites More sharing options...
sois Posted September 19, 2008 Report Share Posted September 19, 2008 [quote name='Nati Ice' post='702540' date='Sep 19 2008, 01:47 AM']random musings: wow, the $340 billion in deficit expansion caused by gwb's tax cuts all of sudden seem like a bad idea! whoda thunk?1??!?!?! also: the us has nationalized more than hugo chavez without the profits to go along with it. does that now make gwb/america a bunch of communists, extreme socialists, or simply fascists? how the fuck can any of you still support this idiot in chief? i am seriously intrigued.[/quote] Did GB really do this, or did congress pass those initiatives? Link to comment Share on other sites More sharing options...
rudi32 Posted September 19, 2008 Report Share Posted September 19, 2008 [quote name='Nati Ice' post='702540' date='Sep 19 2008, 01:47 AM']no its not, it may be slightly too high but no significant changes in the that department are currently feasible. if i were you i wouldnt worry about decreasing defense spending because its just not going to happen. id be more concerned with trying to make sure we quit invading pissant countries and approving military projects that do not work. military spending always needs to be held in check but the problem we have with it right now is that we have too few troops and too many exorbant and unnecessary costs. cuts will not happen there and should not be the priority, allocation and having a decent return on our investments are. lol, ammo costs too damn much for all that noise why not an ar/ak/m1a/m14 while youre at it? or is that what you mean by "long gun" rather than a rem700 random musings: wow, the $340 billion in deficit expansion caused by gwb's tax cuts all of sudden seem like a bad idea! whoda thunk?1??!?!?! also: the us has nationalized more than hugo chavez without the profits to go along with it. does that now make gwb/america a bunch of communists, extreme socialists, or simply fascists? how the fuck can any of you still support this idiot in chief? i am seriously intrigued.[/quote] long gun, like a rem 700 (great one). For long distance shots, and game, ie deer, etc med range, mini 14 or ak for personal protection pistol, last resort. if it gets doom and gloom then there will be 2 types of people. Those with guns and those without. But I don't think it will ever get that bad, I am not an armegedom guy. I think we are just going through a econimic crisis which in time will pass. Link to comment Share on other sites More sharing options...
Jamie_B Posted September 19, 2008 Report Share Posted September 19, 2008 [quote name='rudi32' post='702595' date='Sep 19 2008, 09:48 AM']long gun, like a rem 700 (great one). For long distance shots, and game, ie deer, etc med range, mini 14 or ak for personal protection pistol, last resort. if it gets doom and gloom then there will be 2 types of people. Those with guns and those without. But I don't think it will ever get that bad, I am not an armegedom guy. [color="#FF0000"] I think we are just going through a econimic crisis which in time will pass.[/color][/quote] Its not circular, its structural, unless we fix the issues its not going to get better any time soon. Link to comment Share on other sites More sharing options...
|Bunghole| Posted September 20, 2008 Report Share Posted September 20, 2008 Read this from 2007: [url="http://www.dailyreckoning.com.au/ron-paul-gold/2007/06/01/"]http://www.dailyreckoning.com.au/ron-paul-gold/2007/06/01/[/url] Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 20, 2008 Report Share Posted September 20, 2008 [quote name='Bunghole' post='702779' date='Sep 19 2008, 08:42 PM']Read this from 2007: [url="http://www.dailyreckoning.com.au/ron-paul-gold/2007/06/01/"]http://www.dailyreckoning.com.au/ron-paul-gold/2007/06/01/[/url][/quote] Makes a few good points, but as is typical in Libertarian thought, it fetishizes gold. Also, the idea that: [quote]... money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money. Sometimes governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn’t long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin - always hoping their subjects wouldn’t discover the fraud. But the people always did, and they strenuously objected.[/quote] is a simplification, and betrays the another cornerstone of the Libertarian fundament--a hatred of government. That said, I'm glad Libertarians are around providing a counterweight to the current crop of oligarchs, not only on the economic front, but also on the foreign policy front. Just wouldn't want to use any of their solutions, as they would create an entirely different set of serious problems. Link to comment Share on other sites More sharing options...
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