Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Fed takes over AIG

dealbook.blogs.nytimes.com

Post reply on HN
Print view View original

51–60 of 194 posts

Re: Fed takes over AIG

#51

Post by jmatt »

dpapathanasiou wrote: post #41
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…

Thanks, this is the first reason that I've heard that makes sense. It's part of the world financial infrastructure.

Re: Fed takes over AIG

#52

Post by akd »

olefoo wrote: post #30
yummyfajitas wrote: post #19

Earlier quoted context omitted.

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

The flu, diabetes, cancer. Now for the first one, there is a clear and self-interested argument for public health measures that even the most laissez faire libertarian could get behind. Namely, that the prevalence of flu amongst the lower classes means that you and your precious sprogeny are more likely to die of it. For the other two we have to rely on those outmoded and declassé ideals about compassion and betterin…

Why should I care about someone who doesn't care about me?

Re: Fed takes over AIG

#53

Post by tortilla »

rsheridan6 wrote: post #46

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.

They should allow these companies to fail. The world would not of ended. If there's a need (market), new companies would have sprouted up. Stronger, better, and more transparent companies to fill the void.

Sweden had a major banking disaster. Their government allowed them to fail. Their banking system is solid now.

Re: Fed takes over AIG

#55

Post by vitaminj »

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…

So far the blood on the streets is almost exclusively from the financial sector, ie. investment banks, hedge funds, etc. They may affect your pension funds but it's mainly institutional investors and others with big stakes in these companies that'll pick up the tab.

However AIG obviously isn't an investment bank. A failure of AIG would affect people outside of the financial sector who have purchased AIG insurance products (including me). The pragmatism of the fed bailout is to prevent the financial meltdown from spilling over into the real economy. Believe it or not, GDP growth in the US is surpassing projections (3.3% in 2Q 2008 ahead of a 1.9% estimate - see http://www.iht.com/articles/2008/08/28/business/usecon.4-326...). The real economy isn't doing that badly, and the pragmatic choice would be to protect that.

Re: Fed takes over AIG

#56

Post by helveticaman »

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 all comes down to the government intervention paradox: whenever something bad happens, people ask for intervention, which implies the only entity willing to do such things, the government. The sad part is, to my knowledge, this intervention never works out for the best. When is the last time you heard the phrase, "thank goodness the government intervened! It did such a good job, and now everyone's happy!" with regard to the economy?

Re: Fed takes over AIG

#57

Post by helveticaman »

sd wrote: post #36
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.

Just to clarify, I meant that the other course might result in much more massive decline than has already happened. Think 22 sigma level -- like the '87 crash. Bailing out distressed financial firms is almost expected now. Thus, if it doesn't happen, then a lot of market participants may reevaluate their choice to invest in firms with heavy debt. Obviously, these bail outs have their costs, such as the value of money…

The market collapse of a whole economy? How's Google going to get torched by this? Or Boeing? Or most exporters?

Re: Fed takes over AIG

#58

Post by natrius »

tortilla wrote: post #53
rsheridan6 wrote: post #46

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.

They should allow these companies to fail. The world would not of ended. If there's a need (market), new companies would have sprouted up. Stronger, better, and more transparent companies to fill the void. Sweden had a major banking disaster. Their government allowed them to fail. Their banking system is solid now.

"If there's a need (market), new companies would have sprouted up."

You aren't even addressing the given reasoning for the bailouts. Meaningless platitudes don't solve problems.

Re: Fed takes over AIG

#59

Post by helveticaman »

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?

Chile, because it is a capitalist country. Costs are similar to India, but the weather is Californian and taxes are really low. Still, though, SV is a better choice. Don't move to Chile to start up.

Re: Fed takes over AIG

#60

Post by helveticaman »

natrius wrote: post #58
tortilla wrote: post #53

Earlier quoted context omitted.

They should allow these companies to fail. The world would not of ended. If there's a need (market), new companies would have sprouted up. Stronger, better, and more transparent companies to fill the void. Sweden had a major banking disaster. Their government allowed them to fail. Their banking system is solid now.

"If there's a need (market), new companies would have sprouted up." You aren't even addressing the given reasoning for the bailouts. Meaningless platitudes don't solve problems.

I don't think he/she has to address the reasoning for the bailouts, or that he/she used meaningless platitudes. He/she even cited an example.

You don't have to address the other sides reasoning because it's hard to find every flaw in an opponent's argument.

Post reply on HN