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Another potential bailout in the works?

by Bill Osler / September 16, 2008 1:33 AM PDT

I hope this report is inaccurate:

Stocks rise on report of government aid for AIG - Yahoo! News

Worries about AIG's well-being intensified Monday and early Tuesday after several ratings agencies downgraded the company. Lower ratings can add to the amount of money the already cash-strapped company has to set aside. Investors fear that a failure by the world's largest insurer would touch off a wave of financial turmoil.

But CNBC's report said the government is at least considering extending a financial lifeline to the company. AIG fell 66 cents, or 14 percent, to $4.10 after being down nearly 75 percent in earlier trading.


I don't know much about AIG except what a friend told me a couple of years ago. Not long after he left an executive position at AIG he said that the question was not 'if' but 'when' the company's reckless investment decisions would get it into trouble. If the problems were that evident that long ago then I don't have much sympathy for them now.

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Another stry
by Angeline Booher / September 16, 2008 1:48 AM PDT

hard for me to tell which is more current.

http://money.cnn.com/2008/09/16/news/companies/AIG/index.htm?postversion=2008091610

Earlier this morning I heard AIG was trying to raise money on its own, seeing "the handwriting on the wall" that the govenment was out of the bail-out business.

I can't imagine AIG going under in the fae of the billions of dollars of claims from this year of claims from hirricanes and floods.

Angeline
Speakeasy Moderator

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Another bailout?
by critic411 / September 16, 2008 2:07 AM PDT

I hope not

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As you all no doubt know,
by drpruner / September 16, 2008 3:42 PM PDT

the gov't guarantee did come Tuesday. IMO it's a step backward from 'No help for Lehman and Merrill, because it's time to stop bailouts'. However, I do know the AIG guarantee is somewhat different from what was proposed by and for Lehman.
It all makes my head hurt.

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the govt also bailed out Lehman.
by James Denison / September 17, 2008 1:03 AM PDT

They did it through JP Morgan. See news. Talk tough one day in front of the cameras, weasel that night away from the cameras in the backrooms of financial empires.

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The doomsayer guy I mentioned is even now
by drpruner / September 17, 2008 1:54 PM PDT

shaking his head, no doubt- and cashing in on his market bets in favor of gov't foolishness.

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yes sir, bailout it is
by jonah jones / September 16, 2008 8:01 PM PDT
http://news.yahoo.com/s/nm/20080917/bs_nm/financial_dc

U.S. authorities engineered an $85 billion rescue of insurance giant American International Group Inc (AIG.N), staving off bankruptcy and bringing a measure of calm to shell-shocked global markets.
The bailout, made amid a cataclysmic week for the financial sector, marks a reversal of Washington's vow not to step in and calls for the U.S. Federal Reserve to lend up to $85 billion to AIG for two years in exchange for a 79.9 percent equity stake.

=-=-=-=-=-=-=-=

i hope 'someone' in power has a heavy sword
and that carelss hands will be lopped off!

.,
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This is scary, Jonah.
by Paul C / September 16, 2008 9:13 PM PDT
In reply to: yes sir, bailout it is
The bailout, made amid a cataclysmic week for the financial sector, marks a reversal of Washington's vow not to step in and calls for the U.S. Federal Reserve to lend up to $85 billion to AIG for two years in exchange for a 79.9 percent equity stake.

Now, the Federal Reserve - a private concern that is largely not subject to government oversight yet acts with the full force and power of the U.S. Government in financial markets - is taking a majority interest in a major American insurer?

Down the road to a government owned economy we go - and no one seems to care....
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RE: Down the road to a government owned economy we go
by JP Bill / September 16, 2008 9:27 PM PDT
In reply to: This is scary, Jonah.

You won't have to worry after the election

It will all change, no matter which party gets in.

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our forefathers warned us against a national bank.
by James Denison / September 17, 2008 1:09 AM PDT
In reply to: This is scary, Jonah.

We set it up and just called it something else. Soon the Federal Reserve will own it all, just as the forefathers claimed. Maybe they can change the Fed Chief name to Money Czar later on. Ron Paul will probably be all over the news soon talking about the Federal Reserve again.

I like watching this guy at times. Down home common sense about finances.
http://www.youtube.com/watch?v=eBqwtRubyJM

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Again, I understood that the AIG thing
by drpruner / September 17, 2008 1:56 PM PDT
In reply to: yes sir, bailout it is

wasn't technically a "bad" bailout ... but suddenly we in the US own 80% of it. Hmmmm ...

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Collapse of Credit Cycle
by James Denison / September 17, 2008 5:02 PM PDT

They have a new term for it. "Deleveraging". Doesn't matter, it's still the same old thing, no matter what you call it. New terms are given I guess in hopes it won't be recognized by the masses who learned all the older terms. Simply put, we have entered a deflationary cycle and the government may not be able to inflate the money supply enough to counter it, but maybe can cushion it. Even if they cushion it, once a new Credit Cycle emerges, the government will have to be careful to put some drag brakes on it so inflation doesn't start to take off. That's future though, the immediate problem is the spiral down that's started and how much cushion it will need. Hopefully they will cushion it enough we don't end up with a whole bunch of socialist type programs that take another 50 years to dismantle or curb.

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Isn't a gazillion-dollar-a-day war
by drpruner / September 17, 2008 5:06 PM PDT

part of the 'credit cycle', at the top level?

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depends
by James Denison / September 17, 2008 5:20 PM PDT

depends on where the money is being spent to supply the war, but historically, yes, wars cost more than they provide. That's even more true in today's world where we don't take "spoils" like more honest wars in the past. That's one reason I advocated making Iraqis sell us oil cheaper than others, to pay reparations but not break their ability to recover economically.

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I had in mind what's usually called
by drpruner / September 17, 2008 6:48 PM PDT
In reply to: depends

"guns and butter", but is more properly "guns or butter".
"cost more than they provide" is considered true even in the days of spoil, especially national wars. A Distant Mirror furnishes a very saddening view of the effect of The Hundred Years' War on the average citizen-farmer, especially in the French battleground. Nowadays, with civilians often the initial targets, the economic cost is worse. Who will grow the produce used in the MREs? Will the MREs have creamed corn, or will that have gone into fuel for the war machines?
In the US the wars are supported by "borrowing"- T-notes and such. What is the cost of those notes not being available to those who can't compete with the Government running the wars? Those like businesses, for example. How can a weakened economy pay back those "loans"?

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They are losing their shirt on insuring
by Dan McC / September 16, 2008 10:40 PM PDT

the super high risk subprime based investments that McCain's top adviser advanced when he slipped into law their deregulation.

It helps to keep these things in mind.

Without that ludicrous deregulation the economy would look very different.

Dan

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