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Fed takes over AIG

dealbook.blogs.nytimes.com

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Re: Fed takes over AIG

#131

Post by sethg »

nickb wrote: post #11
sethg wrote: post #9

Earlier quoted context omitted.

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.

IIUC, one reason we're in this mess is that nobody has any idea what the securities at the bottom of this house of cards are really worth; the risk models that were constructed during the inflation of the bubble have been discredited but nobody knows what to replace them with. So private banks weren't willing to hang $85B of their own capital out on the hope that they didn't get any more surprises.

The Fed doesn't know what those securities are worth, either, but they can calculate what preventing a collapse of the financial system is worth, and compared to that, $85B is chump change.

Re: Fed takes over AIG

#132

Post by netcan »

steveplace wrote: post #128
davidw wrote: post #100

Earlier quoted context omitted.

This is exactly the kind of comment that I feared we would see when articles like this start gaining traction. It's a cheese puff comment: it's got some taste, but it's empty. It has nothing to back it up, no content, no reasoning, no well crafted argument. It's just an empty "rah rah" type of slogan of the type that politicians regularly regurgitate. There is nothing new or clever about the comment, it's the sort of…

Freedom.

!!!

Re: Fed takes over AIG

#133

Post by fharper1961 »

mixmax wrote: post #102
jrmurad wrote: post #43

Earlier quoted context omitted.

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 think that empirical evidence is against you on this one. The US has one of the highest spendings on healthcare per capita in the world, while average life expectancy (one of the measures of a good health care system) is on par with Cuba. US yearly expenditure on healthcare per person is $4.500. In Cuba it's $100. The American freemarket system clearly doesn't work very well. Source: http://ucatlas.ucsc.edu/spend.p…

Thanks for the great link. The correct link is actually http://ucatlas.ucsc.edu/spend.php

The graphs alone should open the eyes of any who defends the current US system.

Of course Cuba and the US are both outliers. But realistically the US should be able to get results that are much closer to other first world countries.

Re: Fed takes over AIG

#134

Post by netcan »

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.

A competitive free market is more likely to develop better medicine.

Well, yes & no. A free market does develop good medicine in much the same way as it develops good everything else. But what you are usually measuring something essentially different when evaluating medicine.

You could say that a free market system should produce more medicine. But (as free markets do) this is distributed unevenly among the population. that's OK when you are talking about shoes. Your free market will produce more shoes then a nationalised shoe industry. But a lot of those will end up in the closets with 20+ pairs or in the form of $500 shoes. Same with medicine.

The US is a good place to go if you want $10m surgery. But if you are measuring public health: life expectancy, infant mortality, death from preventable diseases, & such a $1 at the bottom goes a lot further then $1 at the top. The gains made from flattening the system, generally outweigh the lost effeciency.

Re: Fed takes over AIG

#135

Post by netcan »

jfoutz wrote: post #47
jrmurad wrote: post #43

Earlier quoted context omitted.

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.

Rational actors are more of an assumption then a requirement. Used in conjunction with carefully defining terms, this a powerful way that economists hermetically seal their theories.

rational = utility maximising utility defined by consumer choice

Basically, they pay anything because it's worth anything.

Re: Fed takes over AIG

#136

Post by 0x44 »

gills wrote: post #83
mtw wrote: post #70

Earlier quoted context omitted.

$85billion!!! where do the Reserve get the money? do they print it? gold reserves? next year's taxes? asia?

they get it FROM YOU.

They get it from their vast supplies of T-Bills and Bonds which cover their reserve.

Re: Fed takes over AIG

#137

Post by Angostura »

ckinnan wrote: post #10

I want a bridge loan for my startup. Instead, I get to pay taxes to pay for this nonsense.

If AIG went down, do you in some way think you would find it easier to get a loan. On the contrary, I think it would be unlikely that anyone would be lending anyone anything.

Re: Fed takes over AIG

#138

Post by yummyfajitas »

MaysonL wrote: post #98
yummyfajitas wrote: post #19

Earlier quoted context omitted.

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

Infant mortality in the US correlates highly [negatively] with income. In France it doesn't.

Smoking, obesity, drug use, and general poor lifestyle also correlate highly negatively with income, and can increase infant mortality. Being a Black American correlates negatively with income, and positively with low birth weight and infant mortality (note that Black Americans have an infant mortality rate of 16/1000, vs about 7/1000 among White Americans).

With such large confounding factors, how can you draw the conclusion you seem to be implying?

Re: Fed takes over AIG

#139

Post by bsaunder »

Angostura wrote: post #137
ckinnan wrote: post #10

I want a bridge loan for my startup. Instead, I get to pay taxes to pay for this nonsense.

If AIG went down, do you in some way think you would find it easier to get a loan. On the contrary, I think it would be unlikely that anyone would be lending anyone anything.

I'd prefer to see the government take even half the amount of money and offer lots of smaller grants/loans to innovative entrepreneurs to launch our country into the next wave of growth. That's where the new jobs and economic growth will be. Give it to people creating value.

Re: Fed takes over AIG

#140

Post by khafra »

sown wrote: post #90
sown wrote: post #67

Earlier quoted context omitted.

I think people are talking past each other at this point. 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.

I'm being down modded for this? It's an honest question. edit: :( what did i do?!

Last line in the guidelines: http://ycombinator.com/newsguidelines.html

If you're upset about being downmodded, I'd suggest

1) Carefully re-read your comment, looking for ambiguities or excessive partisanship.

2) Look for patterns in the rest of the comments--I'd expect downmods on a "government actually handles [common scenario] pretty well" post in a thread full of mises.org and lew rockwell references; and just resolve to live with it.

3) Just wait. Sometimes there's two or three quick, reflexive downmods that can dent your self-esteem, but often your comment's opinion-o-meter will rise hours later, and leave you feeling rather silly if you added another comment just to complain about downmods.

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