61–70 of 194 posts
Welcome to socialist states of America
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?
it won't. this loan doesn't unwind the terrible decisions aig (and others) made, nor the hedges they tied to those decisions, and the hedges they tied to those hedges, and the hedges they tied to those hedges.
the derivatives unwind cannot be stopped short of a repudiation of all global currencies. the amount of leveraged capital in hedge deals is still north of $100 trillion. no one has the money to pay that out. it would be easier just to erase the USD dollar than to circulate $100 trillion in new fiat wealth...the effect would be the same anyway...worthless dollar
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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.
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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?
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 pro…
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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.
When you say "socialism" what exactly do you mean? I think it is one of those words that has lost its meaning since there are so many different definitions of it and we're not always on the same page.
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What treatable diseases are poor/middle-class people dying of, that could be prevented by socialism?
People without access to medical treatment are more likely to die from any disease that can be treated.
"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.
where do the Reserve get the money? do they print it? gold reserves? next year's taxes? asia?