Fed takes over AIG • Hacker News Board

Re: Fed takes over AIG

#11

Post by nickb » Wed, Sep 17, 2008, 12:16 AM UTC

sethg wrote: post #9

krschultz wrote: post #6

So if big companies can't fail what prevents them from taking a risk that ends up this way in the future? Small companies have the advantage of being able to risk it all, big companies have the advantage of large sums of capital. To upset that balance is to increase the barrier of entry for small players.

Well, the government is buying the company out (and, one hopes, firing the CEO and board) and diluting the existing shareholders' stake, so it's more like "big company sucks up insolvent small company for pennies on the dollar" than "government helps cronies by pouring money into badly-run business".

Pennies on a dollar? Do you mean negative dollars because for this "loan", the government has "bought" a two trillion dollar debt, at the very minimum.

Re: Fed takes over AIG

#12

Post by sethg » Wed, Sep 17, 2008, 12:17 AM UTC

yamil wrote: post #5

Welcome to socialist states of America

You obviously missed the LCTM bailout ten years ago. Also the S&L and the Continental Bank bailouts of the 80s. Also the Lockheed and Chrysler bailouts of the 70s.

Re: Fed takes over AIG

#13

Post by nickb » Wed, Sep 17, 2008, 12:18 AM UTC

yamil wrote: post #5

Welcome to socialist states of America

Partially correct. It's socialism for the rich. If it were socialism, you wouldn't have poor/middle-class people dying from treatable diseases.

Re: Fed takes over AIG

#14

Post by sethg » Wed, Sep 17, 2008, 12:18 AM UTC

Somewhere, the ghost of Karl Marx is saying "WTF? They're nationalizing an insurance company?"

Re: Fed takes over AIG

#15

Post by aston » Wed, Sep 17, 2008, 12:18 AM UTC

"The Federal Reserve plans to offer an $85 billion bridge loan to the American International Group in return for control of the ailing insurance giant..."

Nice redefinition of AIG.

Re: Fed takes over AIG

#16

Post by kqr2 » Wed, Sep 17, 2008, 12:40 AM UTC

krschultz wrote: post #6

So if big companies can't fail what prevents them from taking a risk that ends up this way in the future? Small companies have the advantage of being able to risk it all, big companies have the advantage of large sums of capital. To upset that balance is to increase the barrier of entry for small players.

Yes, all these bailouts create what is known as a "moral hazard"

http://en.wikipedia.org/wiki/Moral_hazard

Re: Fed takes over AIG

#17

Post by albertcardona » Wed, Sep 17, 2008, 12:41 AM UTC

yamil wrote: post #5

Welcome to socialist states of America

Hasn't the USA been engaged forever in heavy market protection, tariffs for imported goods, and heavy subsidies to internal industries like metal foundries, the car industry and particularly agriculture?

Hasn't the USA at the same time demanded open markets of all other economies in which it invested or participated in some way?

Hasn't the USA's tax dollars funded most private research, yet the economic benefits have been ripped by private industry?

The double standard is just showing a bit more than usual at the moment, but nothing has changed.

Re: Fed takes over AIG

#18

Post by netcan » Wed, Sep 17, 2008, 12:44 AM UTC

krschultz wrote: post #6

So if big companies can't fail what prevents them from taking a risk that ends up this way in the future? Small companies have the advantage of being able to risk it all, big companies have the advantage of large sums of capital. To upset that balance is to increase the barrier of entry for small players.

The same could be said of incorporation or bankruptcy laws.

Re: Fed takes over AIG

#19

Post by yummyfajitas » Wed, Sep 17, 2008, 12:48 AM UTC

nickb wrote: post #13

yamil wrote: post #5

Welcome to socialist states of America

Partially correct. It's socialism for the rich. If it were socialism, you wouldn't have poor/middle-class people dying from treatable diseases.

What treatable diseases are poor/middle-class people dying of, that could be prevented by socialism?

Re: Fed takes over AIG

#20

Post by netcan » Wed, Sep 17, 2008, 12:48 AM UTC

yamil wrote: post #5

Welcome to socialist states of America

Government owned companies does not mean a socialist country. It's something socialist countries do.

Eating grass doesn't make you a sheep.