Loc: Alexandria, VA
Link<br><br>The Fed is considering providing $85B in emergency loans in exchange for 79.9% of AIG stock -- "A source said Paulson and Bernanke explained that AIG would be put into conservatorship, which would allow the federal government to operate the company on a caretaker basis."<br><br>hmmmmm ...<br><br>Turn up the signal, wipe out the noise ...
The deal is done. $80 billion of your money spent rescuing a bunch of investors that made bad investments. As someone said...this is more communist than China. <br><br>AIG should have been allowed to fail. <br><br>Bear Sterns should have been allowed to fail. <br><br>Freddie Mac should have been completely privatized and allowed to fail. <br><br>Fannie Mae should have been completely privatized and allowed to fail. <br><br>People that handed out billions to people to buy houses they had no business buying should be punished for their bad financial decisions. That's capitalism. <br><br>These bailouts are an outrage. George W. Bush is engaging in economic planning here that would make Joseph Stalin proud. <br><br>And where do the bailouts end?<br><br>
Loc: Finland, on the Arctic Circle
Oh my, I'm kinda agreeing with Bryan here. Except for the communist reference. <br><br>But say, here's a thought:<br><br>The banking and financing industry is treated quite differently by the government than the rest of the private businesses and this is very common practice throughout the world, actually. I think the reasoning is, they keep the wheels of economy rolling so they shouldn't be allowed to go belly up.<br><br>Same risk factors apply to them (in theory) as in any other business, yet when their risks realize (meaning, they funk up) they then expect to be bailed out most of the time by taxpayer money so the economy wouldn't collapse. OTOH Britons never saved Barings.<br><br>Then, wouldn't one think that if the same risk factors applied in financing in practice, as do in other private industries, it would actually encourage more sound business decisions with risks calculated so that if they realize, they can afford to take the hit without taxpayer bailout, meaning it would be the asses of those fumbling bad-decision-makers on the line and it would indeed make the bank/insurer/finance conglomerate go down in case of a huge funk-up when they couldn't take the hit anymore?<br><br>Naturally, governmental/institutional oversight would still be needed on top -- which, I think there used to be before Bush and co decided to rid of it in the US.<br><br>Of course, this was just idealistic utopian thinking here, no way that would happen as the bankers probably own a good part of the politicians anyhow.<br><br>
Except these are investment houses and insurance companies. There is deposit insurance backed by the Fed, etc. for banks. <br><br>But bailing out Wall Street with taxpayer money? Ludicrous. Let them go to bankruptcy and reorganize. If you hear a whirring sound coming from California, it's Ronald Reagan spinning in his grave. <br><br>
Loc: Finland, on the Arctic Circle
Well, basically the same thing these days, banks/investment houses/insurance companies, they all operate in the finance industry.<br><br>"...it's Ronald Reagan spinning in his grave."<br><br>As if ol' Ronnie wasn't on a leash with big money on the other end and wouldn't have done the same thing...yeah, right.<br><br>
Ronnie is spinning because this weekend his main mantra of small government and deregulation were completely refuted in the most spectacular way. Let's step back and ask why are these companies imploding and putting the entire world economy at risk? The implosions are caused by deregulation. No one is minding the bank. No government regulations and this is what you get.<br><br>Conservatives from Reagan to McCain are all about deregulation. What you are arguing about is what Bush is doing which is refuting Reagan and McCain by bailing out the company. I cannot argue with that. If you are going to have an economy with half a chance you have to be consistent. Now we are in even worse of a pickle. Companies which are totally deregulated and can do whatever they want and if they get into serious trouble Bush will bail them out with our money.<br><br>I agree they should have been allowed to fail. But the core problem, deregulation causing companies to do extremely stupid things like making mortgages with no oversight at all is the crux of the problem.<br><br>Small government Mister Deregulation is now dead. McCain should be on life support after this as nothing he has done now has been correct. The warmongering has been completely wrong. Now his core government policy has been refuted and we are paying for it.<br><br><br><br><br><br><br>
And yet the final building block for this mausoleum was provided by Bill Clinton in 1999. It began with the wish to increase home ownership, and required the removal of some of the barriers to providing mortgages to subprime borrowers (deregulation). All the politicians of the 90's are complicit in this debarcle.<br><br>Money lending is a risk based business - regulation is there to limit the risks people can legally make. As you remove these regulations people take higher risks, for the hope of higher returns. It is greed on the part of lenders and it is greed on the part of the borrowers. It was the greed of the lenders bribes to government to open the doors, supported by the likes of Jesse Jackson pushing for the opportunities of the poor to own their own homes (which while an altruistic goal is wrought with higher risk). It really doesn't take half an ounce of intelligence to figure that a woman on $12/hr cannot hope to afford to pay the mortgage on a home worth $1mil - yet these mortgages were made! Heck, I earn $40/hr and I know my limit is about $300k home, before the family budget will not balance.<br><br>Ah well, the government is running the country at a deficit, so why should we expect greedy (dumb) people to behave any differently. The sad thing is even responsible people with 720+ credit scores cannot get a mortgage for a modest habitation today.<br><br>I used to think it was terrible that life was unfair. Then I thought what if life were fair and all of the terrible things that happen came because we really deserved them? Now I take comfort in the general unfairness and hostility of the universe.
_________________________ I used to think it was terrible that life was unfair. Then I thought what if life were fair and all of the terrible things that happen came because we really deserved them? Now I take comfort in the general unfairness and hostility of the universe.
While I'd love to NOT bail these SOBs out... not doing so allows the domino effect to continue... and if too many fail... FDIC isn't big enough to cover all of them !!<br><br>So what happened when the Govt goes bankrupt...<br><br>oh you can say print more $$... then we have 50-100% inflation on top of everything failing !<br><br>I don't pretend to know what the answer is... so I'm not criticizing anyone... it's just damm complicated... like walking in a mine field.<br><br>David (OFI)
<blockquote>The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.</blockquote><br><br>Quote Source click<br><br>Sure, my funds are protected by FDIC -- but for how long? Scary isn't it?<br><br>
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