Fed takes over AIG • Hacker News Board

Re: Fed takes over AIG

#41

Post by dpapathanasiou » Wed, Sep 17, 2008, 1:47 AM UTC

jmatt wrote: post #21

What harm is there in letting a company that made bad decisions go bankrupt? I don't see how it's pragmatic to pass this burden on to tax payers and the general public. I admit that I am idealistic about such things. I don't see how government is going to solve any of these problems. The government will lessen the pain but that same behavior will also slow any rebound and future growth. It seems naive and narrow mind…

It seems naive and narrow minded to think another company won't step in if there is a continued need for the services that AIG provide{d|s}.

But it's unrealistic to think that the vacuum could be filled fast enough to prevent a wave of failures among AIG's clients (banks who bought credit insurance to get around regulatory limits).

There's more detail here: http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09...

Re: Fed takes over AIG

#42

Post by lacker » Wed, Sep 17, 2008, 1:48 AM UTC

ojbyrne wrote: post #28

sd wrote: post #25

Earlier quoted context omitted.

Obviously, it's impossible to determine the effect of any one action on the economy -- but if this $85b prevents the markets from crashing, I'd argue its money well "spent." U.S. market cap has already fallen $4t in the past year. Do you really want to risk losing considerably more?

That was the argument for Fanny and Freddie. Didn't seem to work, and I bet it won't this time. WAMU is next.

You don't think the Fanny bailout "worked"? We don't have the luxury of seeing what would have happened if we hadn't bailed them out.

To make the pro-bailout argument more clear, here is one reputable economist predicting that if we had let the FMs default, the dollar would drop about 30% and unemployment would double, in about a week.

http://www.marginalrevolution.com/marginalrevolution/2008/09...

Re: Fed takes over AIG

#43

Post by jrmurad » Wed, Sep 17, 2008, 1:50 AM UTC

sabat wrote: post #26

yummyfajitas wrote: post #19

Earlier quoted context omitted.

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

Cancer. Diabetes. Yadda yadda. Do you know how many people are not insured and cannot afford insurance? ("Go to the emergency room" is not a health plan.) Do you know how many people with serious illnesses are turned down by their own insurance companies every year? I'm not saying socialism is an automatic answer, but it'd better than this mess.

I'm not saying you're wrong that socialism is better than this mess but I will say that capitalism is better than this mess and better than socialism too.

Having health insurance provided by the State (i.e. you through your tax dollars after several layers of corruption and bureaucratic waste) does not guarantee quality of care. A competitive free market is more likely to develop better medicine.

Re: Fed takes over AIG

#44

Post by rrf » Wed, Sep 17, 2008, 1:50 AM UTC

Whilst excessive risk taking is probably the root cause of the recent financial collapses, I think it’s also worth noting the role hedge funds have played in stirring up investor panic by short selling highly geared or mortgage exposed companies around the world. Britain’s largest mortgage lender, HBOS, had 30% wiped off its value yesterday, attributed to short selling - http://www.marketoracle.co.uk/Article6277.html

Re: Fed takes over AIG

#45

Post by [deleted] » Wed, Sep 17, 2008, 1:53 AM UTC

[deleted]

Re: Fed takes over AIG

#46

Post by rsheridan6 » Wed, Sep 17, 2008, 1:56 AM UTC

If these companies are too big to fail, and we have to bail them out to avoid returning to the Stone Age or whatever, how about some for the people who created this situation? Maybe it's not ok to let the system collapse to punish a few people, but "heads I win, tails the taxpayer loses" is also unacceptable.

Re: Fed takes over AIG

#47

Post by jfoutz » Wed, Sep 17, 2008, 1:57 AM UTC

jrmurad wrote: post #43

sabat wrote: post #26

Earlier quoted context omitted.

Cancer. Diabetes. Yadda yadda. Do you know how many people are not insured and cannot afford insurance? ("Go to the emergency room" is not a health plan.) Do you know how many people with serious illnesses are turned down by their own insurance companies every year? I'm not saying socialism is an automatic answer, but it'd better than this mess.

I'm not saying you're wrong that socialism is better than this mess but I will say that capitalism is better than this mess and better than socialism too. Having health insurance provided by the State (i.e. you through your tax dollars after several layers of corruption and bureaucratic waste) does not guarantee quality of care. A competitive free market is more likely to develop better medicine.

I'm first to agree efficient markets are fantastic at allocating resources effectively.

I'm curios though, how do you guarantee people who are sick/hurt/dying behave as rational actors?

I might be mis-remembering but i thought rational actors were a requirement, otherwise they would be to quick to give away money.

Re: Fed takes over AIG

#48

Post by ashu » Wed, Sep 17, 2008, 2:10 AM UTC

fallentimes wrote: post #24

Serious question that is actually very related: if you had to move to a foreign country and work on your internet start up, where would you move? Why?

Your question should be an independent Ask YC thread. I want to know the answers too. (and I have none!)

Re: Fed takes over AIG

#49

Post by nazgulnarsil » Wed, Sep 17, 2008, 2:18 AM UTC

sabat wrote: post #26

yummyfajitas wrote: post #19

Earlier quoted context omitted.

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

Cancer. Diabetes. Yadda yadda. Do you know how many people are not insured and cannot afford insurance? ("Go to the emergency room" is not a health plan.) Do you know how many people with serious illnesses are turned down by their own insurance companies every year? I'm not saying socialism is an automatic answer, but it'd better than this mess.

do the 40% of americans who don't pay taxes deserve free entitlement programs?

Re: Fed takes over AIG

#50

Post by byrneseyeview » Wed, Sep 17, 2008, 2:19 AM UTC

lacker wrote: post #42

ojbyrne wrote: post #28

Earlier quoted context omitted.

That was the argument for Fanny and Freddie. Didn't seem to work, and I bet it won't this time. WAMU is next.

You don't think the Fanny bailout "worked"? We don't have the luxury of seeing what would have happened if we hadn't bailed them out. To make the pro-bailout argument more clear, here is one reputable economist predicting that if we had let the FMs default, the dollar would drop about 30% and unemployment would double, in about a week. http://www.marginalrevolution.com/marginalrevolution/2008/09...

So it would be like a 19th-century panic/recession, without hard money. He's omitting the part where, since we aren't subsidizing stupid decisions, stupid decisions don't get made and the economy recovers very quickly.