The Fed Bails Out AIG

In the words of a noted tennis commentator: "You cannot be serious"! So now the Feds are into private company bailouts. Who is next? Let's see......

Auto Industry-Already have their knee pads on begging.

Airlines-Business models based on $60/barrell oil?

Housing-Already in the middle of an extinction level event.

The Fed is in panic mode. They are going to need more printing presses for the money they will need.

Jim Roger's was right, the Federal Reserve should be abolished. They have exceeded their mandate over and over, after bailing out private investment banks they have now entered the insurance industry and soon to follow will be the loss-making Auto industry. Will they bail out Washington Mutual too? Is the United States of America turning into a socialist state? Future generations are going to pay a heavy price thanks to the poor governmental regulations and the excesses of a few greedy bankers.

The season of bailouts is here....banks and others are falling like faded leaves... the fall season on wall st....you know...and the Fed is walking around,picking those faded torn leaves for their new "fun' ornament....a little "project"...a costly collection of toxic trash,we must admit.The new questions is:
Is America "too big to fail", too?

Bear Sterns $29 billion, FNM and FRE $100 billion each, countless dollars through discount window. That's how much the FED and Treasury poured our money into the black hole of the greedy Wall Street. Here comes AIG! Who's next? WM, GS, GM, and/or Ford?

Insane Paulson just said the other day taxpayer money would not be used to bail out financial companies and here we go FED bailout AIG. This Bush government should be banished never to be voted to power again. We are slowly going to make USD into pesos where people will be poorer and poorer. In the last eight years all the Bush government has done is the pooring of hard working Americans. What a national disgrace...

As distasteful as a bail out is, it is unfortunately required to save AIG and probably most of the financial system in the US. If AIG fails the ripples will cause a tsunami through out the markets. The rub of this is that it encourages future generations of bankers to double down on their bets. If you don't put your business in a place where it can annihilate the industry the Fed will NOT bail you out. Lehman's should have kept doubling down till it forces the Fed to save them. Where is the equality for all the smaller banks who have been caught up in this mess. They are going to go under as well. They may have had exposure but nowhere near as large as these big guys in pure figures and also as percentages. They are being punished for a tighter risk control policies. I am a born capitalist but we cannot continue on these unregulated binges, they occur every ten years or so. Senior exec pays are out the window for delivering this type of a result. Two things need to occur, firstly a tight regulation against risk similar to retail banks retaining an approiate capital base implemented for the whole financial services industry and new compensation packages. Higher base salaries but much longer options vesting for performance hrudles. Some of the mining businesses tie up exec options for 5-7 years after the CEO leaves. This drives them to ensure the businesses are run effectively and set up for long term success. It also removes the "luck" of a cyclical market for big option payouts, where they CEO's are earning $50 million for simply having their job in a false boom time.

Your UncleSam has used your taxes and future savings to bail out the following:
1) AIG
2) BearnStearn
3) FannieMae/FreddieMac
4) Large commercial banks that received loans budgeted at $500bil at Fed Reserves' "Teller Window"
5) LehmanBros (earlier dip into Fed Reserves' "Teller Window" for several billions)
6) WaMu got $50bil from Fed Reserves' Teller Windows
7) With special permission from Fed Reserves, Merrillynch got several billions form Teller Windows before its sale.
8) All the major airlines received bailout money after 9-11.
9) On the horizon, GM and Ford are each asking for $25bil loan.
However, your UncleSam claims there's no money for a national health program to help poor families, children, and the elderly. Many of the elderly have been placed in poverty by rampant inflation caused by government printing excessive green-backs that destroyed their savings. If these elderly were extremely frugal or lucky and managed to save $1 million at 5% interest 10 years ago, the current $50,000/year interest would barely sustain their standard of living. Without restrait Uncle Sam is printing trillions of dollars to bail out these corporations whose CEO were getting paid $20mil/year while your savings are being destroyed or your working at minimum wages without health insurance or unemployed. Welcome not to capitalism or socialism, but Enslavement. The obvious truth in America is that the rich has enslaved the poor and middle class who must work feverishly just to place food on the table, gas in car, roof over their head, and maybe buy some health insurance. At a different time, this truth was concealed by hubris talk about global economy, NAFTA, and free enterprise. When the chips are down, the wealthy will exercise their power and force the underclass to pay--thru the nose if that's what it takes. If you don't believe this, just look at the recent bailouts and freebies for the wealthy. Karl Marx and Adam Smith would both curse and laugh at the hubris been spun in the name of capitalism or free enterprise. Perhaps the other extremist said it best with regard to workers: Arbeit Macht Frei.

Maybe if the government hires the right folks, this could be a revenue generating opportunity. Probably not, but maybe.
Dont blame the current federal reserve, blame the previous one that set interest rates so high. What were they protecting us against, that it's worth $200B and climing? They better have perceived a clear and present danger, but they are not sharing it with us.

This is what the FED was created to do, following the Great Depression.

You know, some people tried to warn the free market ideologues that their zealotry would ultimately lead to more socialism, not less.

And here we are.

Now imagine where we'd be if Shrub really had privatized the Social Security system -- and we had every retiree in the country screaming for Uncle Sam to make good the losses on their "personal accounts."

It's a shame.. American taxpayers picking up the tab for greedy bankers. Shame on the politicians who endorse this! Two-thirds of American corporations pay no tax, however, so this burden will fall squarely on working people. And yes, of course there is still no money for education or health care - but if you're a banker who's been making $100,000++ for the past 10 years you should be fine.

And the mantra was, "get government out of our lives." Did you ever think you'd live to see the day neoliberal free traders would nationalize private business. And to think America used to go to war over such things. How times have changed!

This madness could all be stopped if we turn overt the idiotic mark to market accounting rule and reinstate the up-tick rule. Not acting on either of those fronts suggests they want all but a few to fail. We are looking more and more like China.

This was a very shrewd deal by the Fed. if AIG failed, then the collateral damage would have been enormous. The bond markets are all but shut down and there is no ability to borrow. Even AAA rated GE Capital is under siege. The terms are well thought out to protect the tax payer. The common equity holders will be bailed out. The terms - collateralized at libor plus 850 with an 80% warrant - make this a good deal for the government. I prefer a mild recession to a global depression - and this could have really added gasoline to the flames if AIG declared bankrutcy.

It is said these bailouts will be pay for by the taxpayers. This is untrue. Money will be printed and the bailout amount will be credited to our National Debt. It would not be as bad if the taxpayers were to pay for this. Action such as these bailouts (to companies who do not deserve saving)will be met by re-action sometime in the future. Our in-debt government (sad to say) is being supported by monies from around the world. Because of our ever-increasing national debt, one day, faith will be lost in our country. Then, this flow of foreign money will slow and disappear. Our great country will then be second rate. We will have our leaders of today to thank for this sad happening. And it will happen! We are ruining the greatest economy ever on earth. And, we are all so damn dumb we can see it. What a shame!

It is said these bailouts will be pay for by the taxpayers. This is untrue. Money will be printed and the bailout amount will be credited to our National Debt. It would not be as bad if the taxpayers were to pay for this. Action such as these bailouts (to companies who do not deserve saving)will be met by re-action sometime in the future. Our in-debt government (sad to say) is being supported by monies from around the world. Because of our ever-increasing national debt, one day, faith will be lost in our country. Then, this flow of foreign money will slow and disappear. Our great country will then be second rate. We will have our leaders of today to thank for this sad happening. And it will happen! We are ruining the greatest economy ever on earth. And, we are all so damn dumb we can see it. What a shame!

Maybe I am mistaken but why don't any of these profession business writer understand WHO actually owns the US Federal Reserve bank. NEWS FLASH (google who owns the Federal Reserve) its NOT the US Government (or "we the people".

NO its a bunch of Privately owned banks like J P Morgan

The US Federal Reserve is a privately owned institution and for some CRAZY reason they can invent money out of thin air, and loan it out and charge interest on it. They don't need to have to it on hand to begin with they JUST invent it by making a new entry in a leger and the borrow signs and IOU

Now when we are talking about $ 85 Billion that's a BIG IOU.

The US Federal Reserve is NOT the government, its NOT owned by the US government, its private and NO one in the news knows about cares about this relationship.

Have fun, google "Who owns the Federal Reserve"

So we are giving AIG a loan on 85% of stated assets? Doesn't anyone realize the reason these corporations keep taking multi billion dollar write downs every quarter is because the valuation of their assets is inflated, and the write downs reflect a gradual correction toward reality, and away from wishful thinking? It is bad enough to make such an investment on behalf of the taxpayers, but then to lie to us, and say the loan is collateralized by overvalued, illiquid assets is just insulting. I am not a spiteful person, but Henry Paulson is going to cause this nation to go bankrupt, and for that, he must be held accountable.

O.K.,all the corporations are getting in line at the government free money store,so I would like free money also. I want only one billion so I can loose it, and then I will ask for one billion more.That's all I want.I think this sounds like a fair amount to me.

My house is now worth half what I paid for it. I purchased a modest house and have a fixed rate mortgage. I pay on time but what they hell am I supposed to do? Am I stupid for not dumping the house and going bankrupt to cut my losses?

Where is the justice in this for the innocent homeowner that has been victimized by wall street greed and incompetent/corrupt regulators?

Without the federal reserve there would not be an expanding money supply. Without an expanding money supply you have money supply deflation which effectively rewards not investing and not spending which in turn would ruin the economy of the world. The problem that caused this was not the fed, but the short term pay structure of executives. Executives are paid only for short term goals, and not for the long term success and viability of the companies they lead. The boards of companies are not comprised of people that own shares, but rather paid representatives of institutions that own shares and buy and sell as they please. There is a fundamental disconnect between shareholders and management because the common man now owns stock and is represented by fund managers that are paid on short term performance. There is no long term direction for companies any longer. Stocks should only be bought by people that can influence company decisions (activist investors). Berkshire Hathaway is a prime example of a company that does not go after short term gains and who's CEO gets paid off long term growth of the company's shares no short term stock price gains or bonuses. Regulation is not answer, getting the common folk out of the stock market is.

The Fed was created in 1913, and per Alan Greenspan's Gold and Economic Freedom, the excessive flow of credit FROM the Fed was what CAUSED the Great Depression. We didn't have whole sale, decades long collapses prior to the Fed initiated one with bailout credit in just 27 short years.

Prior to that we had sharp--but short--recessions called 'panics.'

Systemic Bailouts like this is like pumping someone full of stimulants so he is forced to go without sleep for weeks, until finally the body gives out and the person falls into a long and possibly lethal coma.

Republicanism = Help the rich

Hard to rebut that one

Communism! Special favors for those with connections. Pure robbery of the people of America. Welcome to the USSA. Actually its more like fascism them communism, same thing really. AIG currently has a market cap of 10 billion. Thats all they are worth, folks! They were only worth a 1/3 of that earlier but people bought in to gamble off a government bailout. Suppose they are worth 10 billion, if the government needs to loan them 85 billion it should own them outright, at least a majority. For 85 billion no way should a company worth 10 billion be bailed out; they are obviously in way over their heads. This may only be the beginning, they may need 200 billion next quarter. Many smart investors with capital like Buffet looked at the situation. Nobody wanted anything to do with it. So the government puts it on the backs of the people. Don't worry honey, we're with AIG, if they fail the government will bail them out, we're safe.

The FED was created to put itself between the banks so that a bad bank failing does not bring down a "good" bank. What the banks have done is undo this with derivatives. But making "real" loans to each other was not enough, they had to put a 10x multiplier on the effect.

And who, exactly, is going to bail out the Fed?

The mess Republicans created which changed the 5 Trillion dollars surplus changed into 8 Trillion dollars deficit based on lies on Iraq and Afghanistan. Do we believe John McSame can clean the mess on Wall Street?
He doesn't know what the term Economy is. Soon we will all be bought by China.

WHERES BUSHIE??!

I want to hear the little two bit twit say 'we dont need socialized banking or trading!'

But then again our orthodox democratic system that says all votes are equal enabled his and others sub-prime leadership in this country. Perhaps the destruction on Wall Street will clue people into the need to qualify not only credit customers but voters as well.

One person one vote needs revision, to end the sub-prime leadership crisis we are also in.

Perhaps outright financial Armageddon is what this country needs to loosen the masses from the yokes of day-to-day work and regain a taste for revolution. As it is, people seem to prefer the alternative of a slow, downsized, outsourced death while at the same time bailing the responsible parties out with tax dollars.

Private sector always lobbies govt for more convenient regulations. When some of their own are in trouble, they look the other way. Shame on Goldman Sachs, Morgan Stanley etc. Bunch of bloody vultures, they are!

I wish Fed had let AIG fall. People use a weak excuse that AIG's fall would have caused hardship to its innocent customers and public in general. I say - that's part of growing process in free market. The spectacular fall would have forced much deeper introspection among the businesses. It would prompted tougher questions from the customers/public. It would have led to more transparent and resilient systems and companies.

This bailout shuts the door on this growing process and keeps the status-quo. Shame on the fed, private sector and all other apologists. In my view at least, the free market in US is dead and buried.

Right on Snoz: 85 billion for AIG, but NOT ONE PENNY for national health care! And will someone, any one in the bought and paid for "mainstream press" please point out that it was Phil Gramm who pushed through legislation that made credit default swaps non-regulated and voila, look where we are today. Thanks Phil, you miserable little toady of big finance corporations - and note that Gramm is still hanging around 'reformer' John McCain's campaign, even after he was supposedly kicked out for saying that Americans are a bunch of whiners, why our economy is strong if we'd just think it is...But why does Obama sound more like John Kerry every day. God help the common man and woman.

And they said there is no money for national health care.

Bye the way, I want to stand in line for free money too.

hey American, to critic some one alway easy.before say about the failure of FED and Bush's govement, please think about who had voted for Mr President 8 years ago ? Who were they if not you ?
The main problem now is the crisis in belief.

This is not socialism. Socialism would be like public ownership of water companies and schools and forests and stuff like that. This is fascism, plain and simple.

The government goes in partnership with corporations and uses the power of taxation to finance it. Interesting to see who gets bailed and who gets left behind.

Of course there won't be any taxes. Both candidates promise to lower taxes. So it's all financed with debt (like most big corporate deals) and sold to the silly foreigners.

Wonder what will happen when the foreigners realize the US isn't going to redeem the paper.

in response to Tim Wilson
I did the search per your suggestion. It said here
"The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects."
By that definition it is definitely not a privately owned institution like you've state. Maybe you should follow your own advise before making yourself look stupid.

Unfettered capitalism, the kind espoused by the captains of Wall Street, for ages leads to disater. The Fed was invented to try to keep the common occurrance of financial panics from spiraling into something like the great depression. Becasue of the relatively tight regulation of commercial banks, we no longer have bank panics. But because Investment banks have been allowed to "run free" from the restraining shackles of government, they are the source of modern bank panics. The Fed and the Treasury are trying their best to put a finger in the dike to prevent a global depression, but there is no operations manual for something like this. It seems to me the people opposed to the Fed's intervention think it best to let the market work itself out of this, at the cost of a '30's like global depression, if need be. Do you really think the cost and misery to the tax payers would be less in that case?

Unfortunately Congressman Ron Paul predicted this months ago and no one was listening. He has been the only voice of reason in Congress each time the Fed comes begging for taxpayers dollars. We should have all been paying attention. The worst is yet to come.....

If the Government breaks AIG into smaller pieces that can be managed effectively and also then does the same with other large businesses which are too big - then they will have learnt their lesson, and put in place something pro-active. As for AIG, for taxpayers bailing out management incompetence, how about the maximum remuneration package being reduced to that of a Congressman, and the minimum being raised by $1 an hour? Lee Iacocca only asked for $1 a year salary, when he got a loan guarantee from the government, for Chrysler.

The People's Republic of China offer its condolences to the American people who suffered the collapse of AIG, LehmanBros, Merrillynch, BearnStearn, Freddi/Fannie, and others who have been victimized under the paws of capitalist dogs. We Chinamen have experience similar revolutionary events in our economy and now we welcome Americans to join the People Republic of China in our common struggle against oppression. Since you Americans now understand and practice the advantages of nationalization and state ownership of everything, let us all be shirt-less and struggle against our common enemy, the bourgeoisie and the privileged class. Our two countries have already developed close economic and cultural ties. For examples, we share Walmart, GM, Ford, McDonalds, Kentucky Fried Chicken, Pizza Hut and trillions of worthless green-backs. In China for a modest price we too bail out everyone including gambling insurance companies, looted banks, and corrupt businesses. But our modest price is the firing squad instead of American style golden parachutes because America is the land of opportunity whereas China is still part of the developing 3rd world. Just in case Brother Bernanke may be seeking enlightenment the following wisdom was written in the bathroom stalls of the Federal Reserves: When Confucious was once left with worthless stocks, he was overheard saying that one swift bullet is worth a thousand bailouts. Our common remedy to monetary policy does not end there. Whereas our People's Party controls the amount of Chinese dollars in circulation your Federal Reserves, owned and operated by the wealthy elites, prints green-backs according to their need, ability, and political expedience. In the name of one giant leap forward for the proletariat of the world, let's combine in brotherhood and sisterhood your Federal Reserve with our People's Party Currency Administration since we share much common ambition. As our two nations merge, imagine the possibility of over 1.3 billion peasants toiling away for the good of our glorious Party! Long live Chairman Mao! Long live George Washington! Our new slogans will be: One Big Mac with a supersized Gung Pao Chicken to go with that Federal bailout.

Vote OUT those SOCIALIST/COMMUNIST REPUBLICANS!!
'George' S. McCain III will give us 4 MORE YEARS of the same MISMANGEMENT-WAR-HARD TIMES!!!

good investment,i must be the only one.Freddie/fannie/aig.GREATEST ROBBERY IN HISTORY.These investments will pay off big time and with all the money they lost they don't have to pay tax.

This is a desaster of bad administrator in so many companys. But if AIG can not continue doing businesses it could be worst for the economy in USA.Now they have to have a lot of tranparency in managing that money that "we" lended to this insurance company.

Please keep in mind that the government you are so critical of in your comments is rescuing investment bankers and businessmen who have abjectly failed, and should be in jail. Who is dumber, people who borrow with no hope of repaying, those who lend to them or a government that has to deal with the mess borrowers and lenders have made?

"The Federal Reserve doesn't directly lend currency to banks. When a bank gets an "advance" from the Fed, the Fed just makes an entry into its computer and credits the bank's deposit account. So rather than paying less than one cent per dollar for the money they lend to banks, the Fed actually pays nothing."

I think this is where the problem lies (everybody thinks its ok if the Fed constantly increases the money supply,, I don't think its OK at all)

Who owns the Federal Reserve?

http://libertyunbound.com/archive/2004_10/woolsey-fed.html

"Of course, banks can withdraw currency from their deposit accounts at the Federal Reserve banks whenever they want. And they do so regularly, to cover currency withdrawals by their depositors and to stock ATM machines. The Federal Reserve banks have currency printed up as needed to cover withdrawals by the banks. And while the total stock of currency is usually expanding, a substantial portion of the Fed's printing cost is for new currency to replace worn currency that has been withdrawn from circulation and shredded. In 2003, the Fed increased the stock of Federal Reserve notes by $42 billion and replaced $101 billion of worn currency.34

The conspiracy theorists' claim that private owners of the Fed are making bundles of money is false.
Suppose the Fed lent money to a bank, charging 2.25% annual interest (the primary credit rate in August 2004).35 The bank might withdraw the funds and the Fed would be obligated to issue it currency which would cost .3 cents per dollar (or 6 cents per note). When the bank repaid the loan (probably the next day), the Fed would earn a tiny fraction of a cent per dollar. The returned Federal Reserve note, however, wouldn't be revenue. And the Fed could issue it out (perhaps by lending) again and again until it wears out.

Total outstanding loans by the Fed to the banks was $245 million in July 2004.36 At 2.25% interest, that would earn the Fed an income of about $5.5 million per year. But since the total amount of Federal Reserve notes is approximately $700 billion,37 it is apparent that Fed lending to banks does not play a significant role in the creation of currency.

Conspiracy theorists, like Thomas Schauf38 and Eustace Mullins,39 complain that the private owners of the Federal Reserve are profiting from the national debt. Since the Federal Reserve creates money out of thin air through open market operations — purchasing government bonds — they are at least looking in the right direction."

I'm an Indian student of Business Management, and I don't know much about a country's economy (not even India, let alone the USA). However, by what I observe, it looks like the Fed is picking up (as someone above said, in the name of 'little "projects"') strong players, players who've been there and done that.

This may or may not be the best thing to do, because I don't know what implications, both short-term and long-term it could have on the people of the USA. But, things don't really look as bad as they appear to be. I'm just talking about the Fed funding the ageing warriors, by the way.

Snoz, you are either insane, simple, or just plain ignorant - and frankly, your statements don't make any sense. Quoting signs from Auschwitz? "Work makes you free", what does that have to do with anything?

Typical nonsensical rhetoric from the country that repeatedly poisons their own children and the rest of the world in the name of profit (milk, gluten, toxic toys, etc...). Interesting how Communism has turned out to have no more of a soul than American capitalism.

...and incidentally, you misspelled "Confucius" (who was not alive for either the invention of the gun, or the bailout).

Long live the Dali-Lama, independence for Tibet and Taiwan.

This isn't socialism, it's a kleptocracy. So how much does senior management at AIG get when they bail? There's a bunch of corrupt CEO's who need to spend time in Guantanamo for their unmitigated greed. USA, well on its way to becoming a banana republic.

Thank you Tim Wilson!!!! You are so correct.

This is to create more dependencies to the Fed. It is absolutely absurd to have a consortium of private banks control the entire financial life line of the US. The Federal Reserve Act was the biggest fraud ever committed against the American people, it is an outrage. But no media coverage....of course because we would have a run on the banks and the entire fractional reserve banking concept would be exposed as what it is... a ponzi fraud of epic proportions. Why are the Fed meetings always secret, after all we all pay their interest rates. Don't insult the intelligence of the American people because we do understand a fraud when we see one. Obama, McCain what are our plans to hand over the control of the money suppley to the American people, like it used to be?

Attention AIG Shareholders: Now's the time to SUE the CEO, the board, and the directors for getting you into this mess! If your equity's going to get wiped out, take the fat cats down with you! Criminal charges would be nice, too.

None of this would ever be possible if we had real money. Fiat money has allowed this to happen. That is why Fiat money systems have all failed in the past. Once someone realizes they can make as much money as they want.... gues what.... they make too much. The FED has an insatiable appetite that cannot be controlled. IMO this is all a last ditch effort to save the collapse of the American economy. It will not work..... They can only bail out so many banks before the beast of inflation swallows us all. I love the talking heads (congress men and wemon), trying to blame CEO's et cetera. Lets be honest.... The Federal Reserve has allowed all of this to go on. The FED is the root of the problem, and the problem needs to be uprooted.

Even though, Treasury Secretery said,"No more(bailouts)," I knew they were not going to let AIG go down. AIG happens to be the biggest insurance company in the world. Most of the banks felt secured because of AIG. Now what? How do the banks feel?

Its hard and sad to say who is next, Ford, GM, or both.

Money is created in three ways. 1. The Federal Reserve prints it. 2. U.S. banks make loans. 3. Others make loans. The greenback glut was caused as much by the easy credit of HSBC as it was by the Federal Reserve. How many department store charge cards are still out there?

Ray, The FED creates money (US Dollars). So it can not run out of money, what it can do is fuel inflation.

It appears there is now a surefooted business model for corporate America to emulate - create a suffcient critical mass of failure, scratch your belly and go belly up and have the FED govt. bail you out. If the 1930's are depression days, the 1990's - todate are bust days - first the dotbusts of the 90's followed by bank busts of the 2000's.Only similarity is in the boutique looks of both the Time Sqaure/Wall St shops and the jazzy websites of the dot busts in the 1990's.WHile the socialist nations (CHina/Russia) are turning more capitalistic with micro management, the capitalistic US is slowly turining socilaistic atleast in the bailout phase. Capitalism is not a one way street to make money but a two-way street that inherently icnludes loosing money.If governments bailout businesses due to their critical mass, then the natural life-cyle of economic purging and cleansing of the decay will not occur leading to a rigormortiss business models for companies to emulate and economies to stagnate on with only "lull" periods setting in before another seminal retrograde event occurs.Simple steps to not enforce audits and checks on customer credit worthiness before lending for the subprime borrowers and the absence of a business model to substitute the loss of revenue of the fee/transaction of the brokerasge houses are the root causes for the current debacles.

We "old Europeans" should in theory be laughing to tears to see how far down your abject Bush administration has brought the US...but we don't since it is too sad to see Americans dumb enough to reconduct the Republicans in power to further kill the US with their failed theories...wrong on international policies, wrong on religion, wrong on "Evolution", wrong on health care, wrong on Economics and Finance, wrong on Iraq, North Korea, Russia, Georgia. Do us a favor and fix yourselves before you ever utter a word of advice to Old Europe.

Like it or not, the fed must rescue AIG to prevent financial collapse across the global economies. The fault lies with the lawmakers who allowed the institutions to become too big to fail. If it was inevitable, there should have been enough regulation to prevent this from happening. The lawmakers are reactive, rather than pro-active.

http://holycowmoos.blogspot.com/2008/09/socialism-for-super-rich-moral-hazards.html

Remember reading about the '29 crash. Roaring 20's. Optimism. Free-wheeling, unrestricted, unscupulous, unregulated dealing and boom. Pain and suffering. Regulation and chinese walls. Fast forward. Roaring 90's. Optimism. Free-wheeling, unrestricted, unscupulous, unregulated loan originations, derivatives, laissez faire hands-off lack of or defective oversight. The pendulum will swing back to regulation and oversight. Ignorance of history dooms you to repeat it. Since greed and self-serving optimism are part of humankind since time immemorial, the over-reaction against overcentralized government (remember the reason for the collapse of Russian communism and the economic liberalization of China) plus the Ayn Rand- influenced belief in the wisdom of unfettered action and thus of markets led the regulators and Congress to let freedom roar. If these entities allow issuance of unlimited and unregulated derivative insurance policies everything will be fine until the voracious head of the irresponsible mortgage loan originations bites its own tail of unregulated over-leveraged derivative insurance policies issued to guarantee the irresponsible mortgage loan originations. The Lessons of history: Do not let the pendulum swing to its extremes. Greed and ignorance must be always checked against and not just wished away.

I had heard the reason the Fed changed their mind and bailed out AIG is because money US borrowed from China was insured by AIG so if China called notes and US
had no insurance - the entire economy of
US would fall? Wonder if this is true?

THIS WILL BE ONE OF THE BEST INVESTMENTS THE GOVERNMENT HAS EVER MADE. BORROW AT 4%, LEND AT 11% to AIG, GET $1 Trillion ASSETS COLLATERAL TO ENSURE REPAYMENT AND GET ANY UPSIDE ON THE STOCK!

GO UNCLE SAM! GREAT INVESTMENT!!!!

Tell me why I my family of four needs to pay $10K (our share of the $700B) to bail out companies that have nothing to do with me. If I can get 20% credit card interest rates for the money I loan to them until they pay it back maybe. Where is my upside? I consider money spent on public traded companies as investments not handouts.