Fed blinks, bails out AIG with $85Billion loan.

[boomerang]

Buffett saw it all coming. As did others I imagine.

http://seekingalpha.com/articl...ivatives-a-fool-s-game

How do you legislate greed?

 

[wirelessenabled]

Bush at end of this year will hold the records for the 3 largest deficits in US history.

He is looking to conquer new vistas in his last few months.

His ideological mentor Ronald Reagan holds the record for the biggest government bail out of a US industry at about $125 billion subsidized by the taxpayers.

Gotta beat that, let's see

AIG $85 billion "loan" for a 79.9% stake in a $10 billion market cap company

Fannie Mae & Freddie Mac $200 billion commitment for companies that have $5 trillion in securities and debt portion of $1.6 trillion

Federal Reserve opens the short term TAF window now set at $100 billion per month.

And on and on and on. Nothing like good 'ole capitalism. Sure glad we aren't Socialists where the Government subsidizes firms

I would say Shrub has a good shot at the record.

 

[Generator]

Please tell me this economic disaster hasn't been a complete waste? Please tell me there is at least one fucking republican that has made some money. Whoever that person is I want to shake their hand. A king of thieves indeed!

 

[BansheeX]

Originally posted by: halik

Originally posted by: senseamp

Originally posted by: LegendKiller

Originally posted by: senseamp
Short the dollar long term, is all one can do about this. This Fed has demonstrated that money is worthless to it, it will give it out hand over fist. If it's worthless to the Fed, it's certainly worth less to me.

Wrong answer. The dollar was only falling the way it was because nobody thought the rest of the world was in trouble.

Oopps...

That is why I said long term. If there are countries in the rest of the world who are socializing their losses by printing money and handing it out, I would be short their currency too.

Interesting how the dollar has been getting stronger (notice crude oil coming down?) despite the fact that "FED is making worthless".

Oh, you're a smart one. Not only has the dollar fallen dramatically in the long-term despite this correction, the correction is mostly the result of margin calls on all these blown up hedge funds in paper markets. Our friends in Asia are currently loaning their savings to broke Americans who can only pay them back in inflation to buy their exports. That makes no sense whatsoever and it is hurting rather than enhancing their purchasing power. We are dragging the whole damn world markets down with us right now, and they will eventually delink. Almost everything that is happening to creditor nations right now is a self-inflicted mistake.

 

[manowar821]

Originally posted by: senseamp

Originally posted by: Skoorb

Originally posted by: senseamp
Do you know what kind of crap they insured? Insurance companies get wiped out by bad bets. Why should they be allowed to make bets with taxpayer money?

Because they're too big to fail, letting them die worse than helping, etc. you know the talking points

Yep, welcome to the United Socialist States of America.

Actually, isn't it more akin to what the nazis did? I'm actually asking, not being snide, I was told this by a few people in the past.

 

[manowar821]

Originally posted by: jpeyton
WHAT THE EFF

There is a robbery taking place and nobody is calling the cops.

Best. Response. EVER.

 

[HeXploiT]

Fellow comrades come and join the party!

 

[DealMonkey]

Originally posted by: PC Surgeon

Originally posted by: nergee
Phrase of 2008:

"Too big to fail."

No shit.

As a taxpayer, I would like to pound home the phrase, "Too Small To Pay®"

 

[miketheidiot]

Originally posted by: Dari
With the government nationalizing all these companies, where is it going to find the brains to run them? Who are they going to hire? I hope it isn't government officials or people from academia. That would be scary and ruin the companies.

how do you ruin a ruined company?

 

[miketheidiot]

Originally posted by: senseamp

Originally posted by: halik

Originally posted by: senseamp

Originally posted by: LegendKiller

Originally posted by: senseamp
Short the dollar long term, is all one can do about this. This Fed has demonstrated that money is worthless to it, it will give it out hand over fist. If it's worthless to the Fed, it's certainly worth less to me.

Wrong answer. The dollar was only falling the way it was because nobody thought the rest of the world was in trouble.

Oopps...

That is why I said long term. If there are countries in the rest of the world who are socializing their losses by printing money and handing it out, I would be short their currency too.

Interesting how the dollar has been getting stronger (notice crude oil coming down?) despite the fact that "FED is making worthless".

Bear market rally in the dollar. Fundamentals are catastrophic for the dollar. Enormous twin deficits, out of control Federal Reserve printing press. You name it, the dollar is playing Russian Roulette with a loaded gun.

every time you post, the content gets dumber.

 

[senseamp]

Too big to fail is a bunch of B.S. If the problem with these companies is they are too big to fail, why isn't Fed forcing the remaining big banks to break up?
Instead we are seeing GS buying Bear and BAC buying MER, making each even bigger. So we are to believe that being big is both the problem and the solution. Who is believing this tripe?

 

[halik]

Originally posted by: BansheeX

Originally posted by: halik

Originally posted by: senseamp

Originally posted by: LegendKiller

Originally posted by: senseamp
Short the dollar long term, is all one can do about this. This Fed has demonstrated that money is worthless to it, it will give it out hand over fist. If it's worthless to the Fed, it's certainly worth less to me.

Wrong answer. The dollar was only falling the way it was because nobody thought the rest of the world was in trouble.

Oopps...

That is why I said long term. If there are countries in the rest of the world who are socializing their losses by printing money and handing it out, I would be short their currency too.

Interesting how the dollar has been getting stronger (notice crude oil coming down?) despite the fact that "FED is making worthless".

Oh, you're a smart one. Not only has the dollar fallen dramatically in the long-term despite this correction, the correction is mostly the result of margin calls on all these blown up hedge funds in paper markets. Our friends in Asia are currently loaning their savings to broke Americans who can only pay them back in inflation to buy their exports. That makes no sense whatsoever and it is hurting rather than enhancing their purchasing power. We are dragging the whole damn world markets down with us right now, and they will eventually delink. Almost everything that is happening to creditor nations right now is a self-inflicted mistake.

Weren't you one of the people that wanted to abolish the fed and go with gold standard?

No doubt that idiotic wars and spending is devaluation the dollar, but the recent correction has more to do with other countries doing worse than though than any hedge fund out there. Having AIG blow would be push the dollar down a lot more than any fed operation.

 

[NoStateofMind]

Originally posted by: DealMonkey

Originally posted by: PC Surgeon

Originally posted by: nergee
Phrase of 2008:

"Too big to fail."

No shit.

As a taxpayer, I would like to pound home the phrase, "Too Small To Pay®"

HAHAHA!! You rule!

 

[mshan]

"The U.S. negotiators drove a hard bargain. Under terms hammered out Tuesday night, the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points. (Libor, the London interbank offered rate, is a common short-term lending benchmark.)
The loan is secured by AIG's assets, including its profitable insurance businesses, giving the Fed some protection even if markets continue to sink. And if AIG rebounds, taxpayers could reap a big profit through the government's equity stake."

"Indeed, on Tuesday the $62 billion Primary Fund from the Reserve, a New York money-market firm, said it "broke the buck" -- that is, its net asset value fell below the $1-a-share level that funds like this must maintain. Breaking the buck is an extremely rare occurrence. The fund was pinched by investments in bonds issued by now collapsing Lehman Brothers.
Money-market funds are supposed to be among the safest investments available. No fund in the $3.6 trillion money-market industry has lost money since 1994, when Orange County, Calif., went bankrupt. A number of money-market funds own securities issued by AIG. The firm is also a big insurer of some money-market instruments.
In bailing out AIG, the Federal Reserve appeared to be motivated in part by worries that Wall Street's financial crisis could begin to spill over into seemingly safe investments held by small investors, such as money-market funds that invest in AIG debt." *

http://online.wsj.com/article/SB122156561931242905.html



* Here, I do have to wonder whether certain money market managers did take excess risk they shouldn't have, in search of higher yield to make them competitive with other money market mutual fund managers who don't charge the extremely high expense ratio they do. But I guess having a literal run on banks all over the country because people assumed every money market or savings account was bad was a moral hazard they may have had to accept. During previous turmoil, last fall I think, some other money market manager broke the buck, but ate the losses and made their investors whole.

 

[sandorski]

It'll be years before we get the whole picture of what's going on, but I'll take a stab at it now. The Housing Bubble, plus the Post-9/11 "Go Shopping" mantra, plus Home Equity Loans, and plus the lack of anyone taking Personal/Public mounting Debt seriously is what brought us to this point. Things like the Economic Stimulus Cheques and the Bailouts we are currently seeing may soften the blow, but above all paying down Personal Debt and eliminating Public Deficits are the biggest solutions to the problem.

If you all had been just Fiscally Conservative in the first place and continued the Balanced/Surplus situation setup by Clinton, even if it meant higher Taxes(as they were when Clinton left Office), this could have been avoided much easier.

 

[shira]

Originally posted by: senseamp
$85Billion loan to a near worthless company that insured toxic mortgage securities against default.

But, but, but isn't this the Dubya way? Gotta lower their taxes and de-regulate to give 'em an incentive to innovate. And when their greedy, out-of-control schemes bankrupt the company, then its time to put the hit on taxpayers to bail 'em out.

 

[RichardE]

Originally posted by: manowar821

Originally posted by: senseamp

Originally posted by: Skoorb

Originally posted by: senseamp
Do you know what kind of crap they insured? Insurance companies get wiped out by bad bets. Why should they be allowed to make bets with taxpayer money?

Because they're too big to fail, letting them die worse than helping, etc. you know the talking points

Yep, welcome to the United Socialist States of America.

Actually, isn't it more akin to what the nazis did? I'm actually asking, not being snide, I was told this by a few people in the past.

Pretty much. This would be step one on the German road to facism, where they took over the financial power of Germany.

 

[dmcowen674]

Originally posted by: RichardE

Originally posted by: manowar821

Originally posted by: senseamp

Originally posted by: Skoorb

Originally posted by: senseamp
Do you know what kind of crap they insured? Insurance companies get wiped out by bad bets. Why should they be allowed to make bets with taxpayer money?

Because they're too big to fail, letting them die worse than helping, etc. you know the talking points

Yep, welcome to the United Socialist States of America.

Actually, isn't it more akin to what the nazis did?

I'm actually asking, not being snide, I was told this by a few people in the past.

Pretty much. This would be step one on the German road to facism, where they took over the financial power of Germany.

Just a couple more pieces to fill in and it will be complete.

We'll see if it is in there with the October surprise.

 

[jackace]

According to the "experts" on the charlie rose show last night the numbers these distressed firms are telling the market are not being believed by anyone. Some people are saying Lehman Bros was outright lying about their assets when they got into trouble. Would not be surprised if the same thing was happening with all these other distressed financial institutions. Including AIG

 

[BansheeX]

Originally posted by: halik
No doubt that idiotic wars and spending is devaluation the dollar, but the recent correction has more to do with other countries doing worse than though than any hedge fund out there. Having AIG blow would be push the dollar down a lot more than any fed operation.

The Fed price fixes interest rates and builds up massive malinvestment scenarios that require losses either by the parties who malinvested through deflation or losses to everyone but those people by inflation. Illusory home values can only be propped up nominally at the expense of everything else going up, because the Fed cannot create wealth with a printing press, it can only redistribute it. When debt monetization occurs, they are creating new money and giving it to select parties they deem eligible, it is effectively redistributing purchasing power. Our economy is fundamentally different from the one we had in the 80s which survived a 15% hike in interest rates. There's no question that raising rates this time would cause a massive and multi-year allocation of resources from services and real estate into manufacturing, from which we would eventually emerge with a weak but still functioning currency. Credit would dry up in favor of savings, prudent lending would return, the standard of living would not be what it was under the credit expansion, but at least it would be sustainable. That's how large this phony expansion got, there's no way around that. But for as bad as that is, hyperinflation is worse. It utterly annihilates a people's wealth and pride and reduces them to barter, spawning movements like Hitler's. Our first depression didn't happen to a welfare state, so this one may not be as orderly if the SHTF. This, I fear, is the unfortunate oversight by many people on this forum. They still think there's some quick fix to get back to the way things were, so they refuse to pull up their boots and accept a deflationary scenario, unwittingly taking us into something far worse.

 

[GeezerMan]

Originally posted by: Dari
With the government nationalizing all these companies, where is it going to find the brains to run them? Who are they going to hire? I hope it isn't government officials or people from academia. That would be scary and ruin the companies.

I heard they are hiring former executives from Enron to handle it.

Originally posted by: Yoxxy
Feds could only take on 79.9%. One of the investment companies I invest in owns swap contracts written by AIG, anything over 80% ownership by a single counterparty is considered technical default of the company. This would make all of the contracts exercisable, thus eliminating all of the good the Fed has done to calm world financial markets.

The Feds would have loved to bankrupt the capital base, could they have. Make no mistake this is not a bailout, nor was BSC or FNM, FRE, these are nice funerals. If you are an equity holder (owner) your investment is worthless.

The worldwide financial liquidity picture is in massive jeopardy, do not blame only our fed. Without our fed injecting money worldwide the ECB has printed 400,000,000,000E in the last 2 quarters and is taking on even lower quality paper than our fed.

The worlds financial system is in taters, it is not just the USA.

Would that be french fries? or mashed?
Sorry, couldn't resist...

 

[GroundMeat]

http://www.forbes.com/afxnewsl.../09/17/afx5434595.html

For some perspective.