Too big to fail: AIG gets another $30 billion
posted at 12:55 pm on March 2, 2009 by Ed Morrissey
Barack Obama says some jobs only government can do. That apparently includes throwing money away on bad investments, even with the Dow Jones showing each day that plenty of people can do that all by themselves. After a $40 billion buyout and a potential $150 billion line of credit failed to rescue insurance giant AIG, Treasury Secretary Tim Geithner added another $30 billion to the kitty:
American International Group will gain access to $30 billion more in taxpayer money as part of another restructuring of its federal bailout, the company announced this morning. It marks the fourth time the government has stepped in to help the ailing insurance giant since September.
The reworked plan is aimed in part at helping AIG avert a potential disaster as the company on Monday announced the biggest quarterly corporate loss in U.S. history — a staggering $61.7 billion for the fourth quarter of 2008, due largely to the continued deterioration of credit markets and charges related to AIG’s restructuring. The figure brought the company’s total net loss for 2008 to nearly $100 billion. The government’s latest reworking of the rescue package is rooted in the idea that a collapse of AIG, which has ties to nearly every major financial institution in the world, would endanger the entire economy. Credit-rating agencies would have likely downgraded AIG in the face of such staggering losses, burying the company in a wave of new debt and possibly sending it into bankruptcy protection.
“The steps announced today provide tangible evidence of the U.S. government’s commitment to the orderly restructuring of AIG over time in the face of continuing market dislocations and economic deterioration,” the Federal Reserve said in a statement.
But the commitment of new funds from the Treasury Department’s Troubled Assets Relief Program is meant to demonstrate that AIG can make good on its public and private debts and return to viability.
Why did they need a second infusion? AIG lost another $61.7 billion in the last quarter, and without it, their credit would have gotten downgraded. That would have increased the cost of lending to AIG, which would have pushed them over into bankruptcy. Thanks to their insuring of assets created by government intervention, Geithner and Obama felt they had to intervene more to alleviate the effects of the earlier interference.
The structure of the deal takes a lot of pressure off of AIG in relation to the government. It had to surrender equity stakes in two of its most stable businesses and pledge to provide divident payments from their operations, but in return, they got rid of some onerous dividend requirements from the original bailout. They can take some of their operations public to generate more cash, and the Washington Post reports that they may recombine some operations and relaunch under a new name — probably with new leadership.
Did the move work? For today, yes. Fitch kept AIG’s ratings high, as it became clear that the Obama administration considers AIG Too Big To Fail. Unfortunately, the increased government stake also means increased real risk for taxpayers, although at this point, that’s almost irrelevant. Geithner’s actions has all but guaranteed AIG, so practically speaking, we’re on the hook for the whole company regardless of how much money we pour into it or keep out of it.
Can we expect increased transparency in return for all of this bailout cash to AIG, which now amounts to ten percent of the original TARP allocation? Michelle says don’t count on it. So far, bailouts look like a failed policy, but like any bad gambler, the statists see little choice but to gamble bigger just to hope to get back to break-even. Like most gamblers, they will almost certainly fail.
Blowback
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Let me put it this way, whenever any of the Precedent’s idiotic policies gets beaten (if his suicidal budget couldn’t pass, say) the market goes to the races. IF the moron in the White House changed his view on spending, the market would rally 1,000 points. If he announced that he wasn’t going to implement cap&trade it would go up even more. And so on for all of his economically and monetarily suicidal ideas. If he resigned, the market would rally like crazy.
progressoverpeace on March 2, 2009 at 2:49 PM
The money on the sideline has been waiting to buy into the market since the coronation. Any solid plan, any confident policy would spur a rebound. Instead we get words like “catastrophe” and statements that the era of profit-making on Wall Street is over. The market just wants a plan…to know what the rules are. So far nothing has been offered.
genso on March 2, 2009 at 2:50 PM
txaggie on March 2, 2009 at 2:37 PM
Like the President said, he inherited this mess. I doubt he wants to do the bailouts but the alternative to let them fail will cost more and take longer to fix.
It’s a global mess and wanting him to fail is not an option for our country.
getalife on March 2, 2009 at 2:50 PM
It would be very nice to have at least one competent representative of the B.O. Administration, preferably B.O.himself, get up and explain to the American people why it would be such a disaster if AIG was allowed to go belly up, instead of just keep shoveling tons of money at them each time they so much as sneeze.
pilamaye on March 2, 2009 at 2:51 PM
genso on March 2, 2009 at 2:50 PM
BS, they want the next bubble to be green energy.
getalife on March 2, 2009 at 2:52 PM
You’d have to go back and read my previous post on Buffett to know that I agree with you. The conspiracy comment was based on having enough evidence to warrant accusations of treason. I don’t want to even think about the inflation that’s coming.
genso on March 2, 2009 at 2:53 PM
Wanting his policy to fail is the only option for this country!
Be_Aware on March 2, 2009 at 2:53 PM
Be_Aware on March 2, 2009 at 2:53 PM
So you want a global economic collapse.
Good for you.
Geez.
getalife on March 2, 2009 at 2:54 PM
Not only does that comment not address what I said, I have no idea what you’re talking about. Who is “they” and, other than your Precedent and Immelt and some idiot running a solar panel company in CO, who really cares about green?
genso on March 2, 2009 at 2:56 PM
Idiot. The Precedent’s plan and a global economic recovery are not one and the same. Of course, you know that.
genso on March 2, 2009 at 2:57 PM
genso on March 2, 2009 at 2:56 PM
I guess you never listened to the President speeches in the last cycle.
You should try to pay attention because he will tell you where the money will go.
It is green energy.
getalife on March 2, 2009 at 2:58 PM
He didn’t “inherit” it. Dems have controlled Congress for the past 2 years, when this all started going out of control, and the idiot messiah was one those moronic Dems in Congress. What did he do about it during his tenure in the US Senate?
Right … The Precedent doesn’t knwo what he wants to do, because he’s got the IQ of a small pebble. ALl he knows is that he wants to extract serious economic and social “justice” and he is using this situation (and worsening it) just in pursuit of those goals of revenge. That’s why the moron is pursuing economy killing measures at every turn.
The only hope for our country is if he fails, since he is pursuing the destruction of the US. I like the way you anti-American morons have adopted this line as your attack. It’s laughable. The same way that RUssia would have been far better off if Lenin or Stalin had failed, our only hope is that the idiot messiah fails and is thrown out of office before he can do irreparable damage.
progressoverpeace on March 2, 2009 at 2:58 PM
It is a combination of bad news and bad policy. The bad news is fairly obvious. Our economy is based on stuff and credit. The more stuff and credit that is available the better our economy does. The problem we are having is that just about every company is cutting back, which in turn causes less stuff to be made. The companies that do want to buy stuff can’t because they can’t get credit to buy said stuff. The people who have credit can’t give it because the people who normally buy stuff aren’t doing it anymore, so that causes them to lose money when companies go bankrupt and don’t pay them for their stuff. The cycle keeps repeating until stuff gets so cheap that people and businesses will start buying again. Until that happens it is pointless for the government to try and change it.
The second problem is bad policy. Obama’s new budget lists out what he wants to do over the next few years. In the budget he states he wants to increase taxes on rich people and businesses. This sounds nice for us poor people, but you have to understand that the rich people are the ones who spend the most money and they create more stuff. They also run the banks who give credit. Now you have to pretend you are rich. If you know that in a few years you are going to be taxed severely are you going to expand your business or contract to save money? Will you save your money or invest it when you know that you will not receive very much in return and your risk goes up? The most important question though is will you idly stand by while the government takes your money or will you take your money elsewhere and spend it in another country that will give you more of a return?
txaggie on March 2, 2009 at 2:59 PM
The only thing the left is pursuing is gangrene energy. You people are such self-destructive morons.
progressoverpeace on March 2, 2009 at 3:00 PM
I am no finance whiz – so here’s my question to all you finance geniuses out there : how come AIG, a company which was created in 1919, find itself in such a position where it is almost courting bankruptcy? It went through the Great Depression, right? Same goes for Lehman which was there since 1859. This is *not* the first real estate bust in the century, so why are people folding up this fast? Is it all because of technology fueled globalization?
peter_griffin on March 2, 2009 at 3:00 PM
He can tax the crap out of everyone and throw it there, but it won’t create the bubble. Traders will play it short term, but the big investors will take their money elsewhere.
genso on March 2, 2009 at 3:00 PM
NO, that is not what i said. I want Obama’s Policy to FAIL! If his plan suceeds, then our Constitution will be ripped up and the greatness of this country wil be no more.
Be_Aware on March 2, 2009 at 3:01 PM
Boston Fed President Rosengren:
“Rosengren suggested that governments are not the best managers of bad assets. Rather, he urged removing the assets and selling banks to new owners.
“When a bank is closed with FDIC support, this is relatively straightforward. The bad assets are removed from the bank and quickly disposed of by the FDIC, and the good assets are sold to an acquirer,” he said.
“The new acquirer does not spend time focused on the problems of the past, but rather, focuses on maximizing future profitability,” Rosengren added. “This is a reason for moving to resolve, as quickly as possible, banks that are clearly insolvent.” ”
DUH.
Here is what the stock market thinks of you NOT doing this and allowing your stooge Moe, er, Taxcheatin’Timmy, to instead continue to pour taxpayer money into a black hole to save his FRIENDS in the banking business.
SEVENTEEN PERCENT has come off the S&P since your inauguration, and we’re nowhere near done for today.
It’ll likely be 20% by the close at the current rate of deterioration with the largest falls being on your inauguration date and then from the date where it became clear that YOUR TREASURY SECRETARY was going offer “more of the same” that has FAILED.
You are certifiably insane; only an insane person does the same thing over and over, which has repeatedly failed, and expects a different result.
I hope you enjoy this Barack, because it’s all yours, and every man, woman and child in America needs to understand that it is your refusal to do the right thing that has continued the bleeding in their 401ks (now 201ks and soon 101ks or even 51ks), IRAs, and soon their pension plans will all blow up, bankrupting over 100 of our largest firms and putting 10 million more people out of work.
Congratulations Barack; we are now in a full-on economic and market meltdown over the last week and it is getting MUCH WORSE as a direct and proximate cause of your policies.
http://market-ticker.org/archives/844-OBAMA-Are-you-LISTENING.html
This belongs to one person and one person only – Barack Obama. Man, he had the opportunity to fix this simply by allowing bad banks to fail. That’s all he had to do. We would have had a deep 1-2 year recession but we would have come out stronger. Instead, in his zeal for power he passes the stimulus/spending bill that was really a power grab and an attempt to undo the capitalist foundation.
Socialism here we come. Obama is the new Chavez.
True_King on March 2, 2009 at 3:01 PM
Thanks: Now follow up question. Does He know this and have He and the Market gotten in to some kind of purposeful undeclared war? A kind of game of ‘chicken’? (Hate sound ing this paranoid, but can’t seem to help it) If this were true, how far would he be willing to take it? How far would the market?
jeanie on March 2, 2009 at 3:01 PM
Yeah, the dems made the policies and had the veto pen. Seriously or just intellectual dishonesty?
The rest of your comment is not worth reponding but try a tiny bit of intellectual honesty or I will ignore your drivel.
getalife on March 2, 2009 at 3:03 PM
The left’s mantra has been that socialism/communism has not worked, because the right people have not tried it. One question; who are the right people.
Johan Klaus on March 2, 2009 at 3:03 PM
No natural gas, no coal plants, no nuclear plants…now where are we going to get all the electricity to run those electric cars? Imported oil? Wind? Solar? Geo?…do the math, it can’t be done without…domestic oil, natural gas, nuclear plants, coal.
Obama is repeating what he learned in the sixth grade.
right2bright on March 2, 2009 at 3:03 PM
The dems controlled the purse.
Johan Klaus on March 2, 2009 at 3:04 PM
Agreed…it is like saying you don’t want a terrorist to succeed…he is terrorizing the economy, he must fail for others to succeed.
right2bright on March 2, 2009 at 3:05 PM
That was the vehicle but creative accounting, derivatives, and high-risk leveraging are the main reasons. Throw in some government corruption and a bit of greed and you have the recipe for disaster. Of course, while it was building to that point, the smartest person in the world, Tim Geithner, was asleep at the wheel as head of the NY Fed.
genso on March 2, 2009 at 3:05 PM
The sad thing is the republicans gave in ;(
Be_Aware on March 2, 2009 at 3:05 PM
It only takes one bad bet to sink anyone, no matter the history. Poorly priced credit default swaps and lax risk analysis did it. Then OPEC lit the fuse as oil prices went to $140 (which I consider to have been an act of war against the US, as I do regarding their production cuts as the price slides back reality).
progressoverpeace on March 2, 2009 at 3:06 PM
Now they do with a dem President.
Congrats on getting something right.
A first for you.
getalife on March 2, 2009 at 3:07 PM
That’s as good a description of our present situation as I’ve heard. Ask yourself this, would you put money into the market today? If you wouldn’t, why would anyone else? Most of the market action is selling from long positions or day-trading.
genso on March 2, 2009 at 3:07 PM
Like that. Would you invest in the market today? There’s no reason to. Most of the market activity these days is the selling of long positions and day-trading. Nearly a third of the stocks in the S&P are below book value today. There doesn’t have to be a bottom.
genso on March 2, 2009 at 3:11 PM
That is the $10,000 question. I don’t know either way. I know Obama is an intelligent guy. You can’t be a retard and make it through the schools he went to. The only thing I can think of is that he believes he views this as an opportunity to reshape America into a better nation, and he will do whatever it takes to make that dream come to fruition. He has stated in the past that he wants income redistribution, socialized medicine, and a green energy policy. I think he views this crisis as an opportunity to reshape America into his vision, and I honestly believe he will take it as far as he needs to.
txaggie on March 2, 2009 at 3:11 PM
Congress controls the purse. Period. They also have oversight responsibilities which they not only abdicated but actively worked against. They forced Fannie and Freddie into super-charged status, refused any regulation of them, and passed idiotic measure after idiotic measure. Bush has the responsibility for not vetoing idiotic Dem legislation, but there is a lot of work that Congress does that is not legislation. Go read a Constitution and learn something.
I’ll rephrase it for you – you on the left are a bunch of self-hating, lying, suicidal scum who are looking to kill the US. You are getting your wish now and moving at great pace to assure that it gets done. You people are absolutely despicable.
progressoverpeace on March 2, 2009 at 3:11 PM
Hey, we didn’t have a choice. We have to live in the real world, and letting AIG fail would just be too awful.
So let us take another handful of billions (and a trillion in market confidence) again, and we’ll be back for more in a few weeks.
But we couldn’t possibly have let these guys fail and just suffered this loss once. That would be awful. Instead we have to suffer this loss over and over again… that is the course of wisdom.
Or so I was told the first time this was done. Anyone care to revise that opinion? How are the bailouts looking as far as clever actions to stabilize the market rather than actually let the bubble pop and let failing businesses fail?
Don’t sweat it if you don’t have an answer now. When AIG comes back for more cash in 4-6 weeks I’ll ask again; you can answer then… or the time after that. Maybe when they start the spending for TARP-3… like TARP-2 was the end of that. Or perhaps when Chevy and GM need another 25 billion.
Oh, and how do you like that stock market. Hope nobody had anything they wanted in there…
gekkobear on March 2, 2009 at 3:12 PM
I’ve been considering making a little stash too. Can you recommend a seller who does business online?
petefrt on March 2, 2009 at 3:14 PM
Trust me, the guy is a moron, and it is very easy to be a retard and make it through those schools, if you have the right physical characteristics.
progressoverpeace on March 2, 2009 at 3:14 PM
Do you like to pull the bandages off quickly and get it over with or do you like the slow, drawn out pain? Same amount of pain, different time frame. The longer it drags out, the more it hurts.
genso on March 2, 2009 at 3:14 PM
getalife, can you show me the revised Constitution? I’ve still got the old one from my school years that shows that all spending bills must originate in the House…
When did the President take that power? I must have missed that Amendment.
gekkobear on March 2, 2009 at 3:14 PM
Bush tried to “veto” Fannie Mae & Freddie Mac by reining them in but guess who wouldn’t let that happen?
Buy Danish on March 2, 2009 at 3:16 PM
It was evil Republicans!!! They always oppose regulation. Thank you Chris Dodd for standing up for little people.WashJeff on March 2, 2009 at 3:18 PM
ammoman who else :)
Be_Aware on March 2, 2009 at 3:19 PM
Thanks for the response, genso and progress. I still find it hard to understand how the financial system accepted this systemic risk. Of course greed played a role, but then again, greed is always there in business, and in fact, it is one of the driving forces behind business. What prevents a situation like the current one is the awareness that certain actions resulting in temporary uplift can have long term negative impacts : in short, it is a failure in the risk-analysis test. How come no-one did the analysis?
I am convinced the Wall Street top-level management knew that a blow-up of this magnitude will result in massive legislative backlash which will cripple their profits for a long time to come. Something just doesn’t add up.
peter_griffin on March 2, 2009 at 3:22 PM
New market lows. Capitulation? There’s mutual and hedge fund redemptions coming at the end of the month. We all should hope for a rally before then or there may truly be no bottom to this market.
genso on March 2, 2009 at 3:22 PM
No, it doesn’t.
genso on March 2, 2009 at 3:25 PM
BD,
Didn’t he have a majority when he tried to do that?
Did the gop vote against it?
I don’t remember but do not think the dems had that much power back then.
getalife on March 2, 2009 at 3:25 PM
zero
Be_Aware on March 2, 2009 at 3:25 PM
As another commenter said, being a crappy prez isn’t an impeachable offense. You’d need to show some kind of malevolent intent, or possibly a level of recklessness.
But how about being an intentionally neglectful prez, in order to crash the market. Or how about “presiding over” the market crash, declining to take reasonable measures to stop it, with reckless disregard for the duties of his office and the welfare of the nation.
petefrt on March 2, 2009 at 3:25 PM
peter_griffin on March 2, 2009 at 3:22 PM
Wall Street got drunk and knew the government would bail them out.
getalife on March 2, 2009 at 3:27 PM
And there would be much cheering in the streets from the liberals, until the cannibalism started. Of course, they would be the first to go.
genso on March 2, 2009 at 3:27 PM
txaggie on March 2, 2009 at 3:11 PM(and the rest of you who so kindly responded)
“as far as he needs to” Then you think he will not seek another term as this policy, as you describe it, will anger most if not all of the middle class(his proposed tax cuts cannot possibly off set it, a fact he must know and they have yet to realize)? So, that lumps him with those ‘leaders’ in history who have put ideology ahead of the common good. Summary: He will unabashedly destroy enormous portions of our population and our financial stability to institute his own image of how he thinks things ought to be. If true, we have to ask what kind of fanatic we have at the helm. Last question (though I can’t promise that) How about those forces, monetary and political, that have historically destroyed those with plans such as mentioned above?
jeanie on March 2, 2009 at 3:27 PM
Not the whole truth, but for the uninformed, ignorant Obama voter, it suits their ego to know that they helped destroy their own lifestyle.
genso on March 2, 2009 at 3:29 PM
I hate to tell you this, but even if he is gone after 4 years it will take decades to undo the damage he will do. Your life has changed now. You are fighting for your children and grandchildren from now on.
genso on March 2, 2009 at 3:31 PM
genso on March 2, 2009 at 3:29 PM
w said it.
They made huge profits before it hit the fan.
getalife on March 2, 2009 at 3:32 PM
So when the dems controlled the congress for the last two years, they did not control the purse?
Johan Klaus on March 2, 2009 at 3:32 PM
What’s your point? Its still not the whole truth…only that point that suits you.
genso on March 2, 2009 at 3:33 PM
Your tea parties should be held on Wall Street.
Topple that bull like the Saddam statue.
getalife on March 2, 2009 at 3:35 PM
You really are an idiot, aren’t you. Tell me how destroying the economy will make your life better? If you destroy Wall Street, you destroy the economy.
genso on March 2, 2009 at 3:37 PM
genso on March 2, 2009 at 3:37 PM
Dude, it is a protest like the rest of the world.
Better than your tea parties and the name calling is not necessary.
Childish.
getalife on March 2, 2009 at 3:41 PM
I think it would take a lot more than that to make a difference at this point, not least because nobody would believe it. Any minute gain from top earners who decide that this will be the Obama promise that doesn’t come with an expiration date, would be more than offset by increased jitters from a market already shivering in the shadow of titanic deficits. A guy who just ran up a couple of trillion dollars on his credit cards is in no position to discard an income stream, particularly since liberals always think tax increases will bring in more revenue than they actually do. The top tax bracket is not terribly worried about personal income taxes, because they have means of avoiding the bulk of them. If they become convinced those taxes will become confiscatory and unavoidable, they will simply move their money overseas and disappear from the tax system altogether, an option not available to the middle class.
The larger problem is that activist government is a clumsy elephant in ballerina shoes, trying to tiptoe around on a delicately balanced economy. Every move the elephant makes causes damage and produces uncertainty. Panicked investors hanging on for dear life can only hope the damned elephant would just stand still for a while.
In a real sense, it’s like borrowing money from the mafia to run your business. The mob can do anything it wants, and there’s nothing you can do to influence their behavior – even if you pay every cent of the loan back, the don might walk into your office at any time, and announce that he’s decided to become your new partner. Or, he might decide to cripple your business to help a competitor that paid him off. Markets thrive on predictability and stability, and a powerful, destructive, unpredictable force that can change the very rules of the economic game is guaranteed to produce uncertainty and market loss.
People often compare stock traders and investors to gamblers, but there is an essential difference: the stock speculator believes he is taking a calculated risk. Investors don’t just throw wads of money at every budding enterprise that comes along, or buy stock in random companies. They weigh risk and return, and try to find companies that are likely to turn a profit and produce increased value. When that ballerina-dancing elephant is blundering around and picking market winners and loses according to the whims of opinion polls and the agendas of corrupt politicians, investing becomes a bit too much like playing blackjack in Vegas… and at least in Vegas, they give you free drinks.
Doctor Zero on March 2, 2009 at 3:45 PM
But what do you expect to gain from such protest? What is your end game? And, BTW, I wasn’t calling you a name, I was describing your thought process. Explain yourself, or do you just like to stick it to the man? If the companies are decapitalized, who is going to build your X-Box and iPhone?
genso on March 2, 2009 at 3:45 PM
Yeah, what the President wanted or he would veto.
getalife on March 2, 2009 at 3:45 PM
Not quite.
The government forced them to drink (that was the task of the CRA and then the super-charging of Freddie and Fannie to boost their portfolios of cr#p, constantly liquidating lenders of the paper and sending them out to make more mispriced loans) and the government assured them it would bail them out (the “implicit” Fannie/Freddie guarantees).
Liberal policy forced mispriced debt onto the market, by legislation, by COngressional “oversight and investigation”, by threat of lawsuits, by threat of leftist groups screaming racism …. Once this mispriced debt was there, it wasn’t enough, so the government got Freddie and Fannie ramped up to start skimming huge amounts off the books of lenders to free them up to create more mispriced debt and force much larger amounts onto the market. Then, once business was forced to accept these rules, along with the big commissions and little risk for becoming, essentially, mortgage brokers for Uncle Left Sam, they jumped in with two feet, and normal arb operations spread it throughout the debt market and put everyone, and everything, at risk.
progressoverpeace on March 2, 2009 at 3:50 PM
The rest of the world protested to express anger for the greed and governments lack of regulations to stop it.
The end game is world banking regulations so it will never happen again.
getalife on March 2, 2009 at 3:52 PM
And my assumption that you are sympathitic toward socialism/communism; is that correct? Would that be another first?
Johan Klaus on March 2, 2009 at 3:53 PM
LOL.
Get a brain.
progressoverpeace on March 2, 2009 at 3:54 PM
So, the dems did what they wanted to do and the president did not stop them?
Johan Klaus on March 2, 2009 at 3:55 PM
That would be tough to prove, unless one could show that he purposefully coordinated this with other actors.
Do you not remember this?:
April 7, 2005
And the rest, as they say, is history. No jail time, no hearings, no nothing, but hey, let’s go after the CIA interrogating Khalid Sheik Mohammed.
Buy Danish on March 2, 2009 at 3:56 PM
No, you went back to being wrong as usual.
Are you related to McCarthy?
getalife on March 2, 2009 at 3:56 PM
Pot & kettle.
Johan Klaus on March 2, 2009 at 3:56 PM
You’re pathetic. Can you not make your own decisions in life or are you afraid that you will make a mistake? You and your kind are not worth saving. You obviously can’t think for yourself so you join the many others who desire a leader to guide your life for you. You should be more careful what you wish for.
genso on March 2, 2009 at 3:57 PM
Run by the u.n.?
Johan Klaus on March 2, 2009 at 3:58 PM
Antichrist?
Be_Aware on March 2, 2009 at 4:00 PM
Took you that long BD to find that?
At least the CIA were smart enough to destroy the tapes unlike Nixon.
getalife on March 2, 2009 at 4:03 PM
Let me clue you in on something: Even the best, strongest, most conservatively run banking system is always open to a run on it,w hich will topple it. You can NEVER get away from this basic risk, as it is inherent in the banking that is required for any economy that has more than just stone tools.
This idea of finding some moronic global fix to stop something from ever happening (something that is part of the very system, itself) shows how very, very little you understand about finance. Typical leftist. You know nothing.
progressoverpeace on March 2, 2009 at 4:04 PM
So—-as long as o is in the WH, the economy cannot recover since it’s recovery is dependent on Wall Street in large part and o’s policies are anti Wall Street. And here I’ve always thought that One Flew Over the Cuckoos Nest was just fiction. (guess where the Cuckoo’s Nest is?)Y’all keep saying he’s smart and I’ve got to ask what’s smart about him? He is, apparently, a raging fanatic not much different than Hugo Chavez!!! This whole scenario is too insane to be real. Now, unlike Hugo we are supposed to have checks and balances–the Legislative Branch? Certainly they must be getting worried since many of them,GOP and Dem alike, will stand or fall on this economy next election.
jeanie on March 2, 2009 at 4:05 PM
You forget about ACORN and Soros backed PACs, Also, and I have pointed this out before, the bulk of the social pay-off spending in the stimulus is designed to be released during the election cycle of 2010. The deck, it is stacked against us in many ways.
genso on March 2, 2009 at 4:08 PM
It’s not that his policies are anti-Wall Street. The problem is that his policies are anti-individualistic, anti-growth, anti-American and without rhyme or reason on a local scale (unless one realizes that his only desire is economic and social “justice” – i.e. revenge).
progressoverpeace on March 2, 2009 at 4:08 PM
BD,
I see where you get my party is never wrong and why you dwell here.
Anyhoo, you should drop in and say hello to your other friends.
getalife on March 2, 2009 at 4:09 PM
My son just came home from school you freaking jackass, but nevertheless, don’t you think that what happened at Fannie Mae is worse than anything Jack Abramoff did? Where’s the outrage? He was corrupt but he didn’t take the entire world economy down with him.
As for the CIA tapes, if they kept them their lives would be in danger because of irresponsible, traitorous Democrats, so it was a wise move on their part.
Buy Danish on March 2, 2009 at 4:10 PM
progressoverpeace on March 2, 2009 at 4:08 PM
Revenge against whom or what?
jeanie on March 2, 2009 at 4:11 PM
Your party used to be my party. As for the rest of your sentence, is that an attempt to be Orwellian because it makes no sense.
Buy Danish on March 2, 2009 at 4:14 PM
Saw this at Ace’s site and followed the link to WSJ:
http://online.wsj.com/article/SB123595759968105885.html
Apparently, U.S. gov. gives them money, they sue U.S. govt. over taxes.
This ought to stoke a little outrage!
cs89 on March 2, 2009 at 4:16 PM
freaking jackass?
Well, these folks are a bad influence on you.
I do believe they will need regulations after they try to save the economy.
getalife on March 2, 2009 at 4:17 PM
double do diddly down!
dragonlord on March 2, 2009 at 4:18 PM
Whites (non-blacks, really, but whites are at the very top of his list) and the wealthy, productive, and smart, mostly. He wants to exact this revenge on people in America, but then he wants to take revenge on AMerica, itself, draining us and distributing our wealth to the world.
He’s been very clear about his Marxist tendencies, such as the time he explained that he wouldn’t lower capital gains taxes even if he knew it would increase government revenues since he said that he thought it was a matter of “fairness” (i.e. revenge).
The Precedent is a classic angry, black marxist.
progressoverpeace on March 2, 2009 at 4:18 PM
progressoverpeace on March 2, 2009 at 4:18 PM
Dude.
getalife on March 2, 2009 at 4:20 PM
He is what he is, and all of his policies to date have supported my assessment.
progressoverpeace on March 2, 2009 at 4:25 PM
The Precedent is a classic angry, black marxist
Even someone with as much of his body in the clouds(double metaphor here, I hope y’all appreciate it!)as o, even he must have thought this through to it’s inevitable conclusion–which is: THERE WILL BE NO ONE LEFT TO PAY FOR ALL THESE PROGRAMS SOONER OR LATER. The rich and companies will leave and the middle class is/will be broke. So, no one will be left, not even the government, to support the poor and down trodden.
jeanie on March 2, 2009 at 4:29 PM
He knows and he doesn’t care. If it comes to that, he’ll happily call martial law and try to force what he wants, and if it all just fails then he will have suceeded in destroying the US. For the idiot messiah, this is a win-win situation, which is why he is pushing all this insane legislation so quickly, without any concern for its effects. He just wants to light the fuse and see what happens. He doesn’t really care one way or another, though. If he gets to turn the US into a Socialist super-state, then he wins. If the US crumbles under the stress of his stupidity, then he wins. If he has to call martial law and successfully becomes dictator, then he wins triple.
progressoverpeace on March 2, 2009 at 4:36 PM
What was McCarthy wrong about?
Johan Klaus on March 2, 2009 at 4:37 PM
Woooo hooooo! Partaaaaaaaay!
Dr. ZhivBlago on March 2, 2009 at 4:41 PM
BD,
So, you think that your party is always right?
Johan Klaus on March 2, 2009 at 4:43 PM
Was FDR right on his stimulus?
Johan Klaus on March 2, 2009 at 4:45 PM
Surfer?
Johan Klaus on March 2, 2009 at 4:45 PM
For someone who does not like this place, you sure do spend a lot of time here.
Johan Klaus on March 2, 2009 at 4:48 PM
Tell me more about these world banking regulations. Would one of them include a prohibition against making enormous loans to people who don’t meet minimum standards of creditworthiness, or provide appropriate down payments?
Would the World Banking Commission have the power to prevent national governments from interfering in the banking system of their countries – say, by providing massive infusions of government cash to prevent favored financial institutions from going bankrupt? What will the enforcement mechanisms be? Would the World Banking Commission have the authority to arrest someone like Barney Frank?
Which currency will be used as the global standard? Will market manipulations designed to devalue currencies be against the law? You should probably ask Markos to run that one by his patron, George Soros, before you try coming out in support of it.
How many nations do you think will be eager to surrender control of their banking systems to that global authority? What are your plans to convince China and Russia to sign on? If they don’t, won’t greedy rich white guys just take their money to Chinese and Russian banks? Are you prepared to endorse the use of military force to compel banks in places like the Grand Caymans to comply?
How much of our personal banking information will be supplied to the World Banking Commission? Will it also have access to transaction records from credit cards issued by these banks?
Looking forward to having some of these details filled in before I jump on board!
Doctor Zero on March 2, 2009 at 4:50 PM
Blaming the Democrats for the economic debacle based on their ‘controlling congress’ for the last two years is priceless. The products wiping out balance sheets across the globe have been on sale for some time and reached their peak in 2004.
Clearly, you haven’t a clue what you are talking about if you think that this crisis is caused by party politics. Both sides deserve blame. Reagan made a deal with Democrats to keep subsidizing mortgages through tax relief way back when. Both sides are party to what is going on. I doubt anyone on either side could have stopped the property bubble even if they wanted to and who would want to? It represented nearly half of Americas phony growth in the last 8yrs. Banks wanted to lend so they could sell the debt at a mark up. There ARE banks who verified income before lending and their failure rate is minimal despite taking on larger sub-prime slices than banks which are in the toilet now. So we are going to raise taxes on the 2% who benefited most from the phony growth… raise their taxes… not gouge them as in the 70′s. OK to you that is marxism… most Americans are smart enough to know that isn’t marxism. Also, most people can tell that Obama isn’t nearly as angry as Rush is. take a business or economics class. When house prices become totally detached from median income there is going to be a correction. When the economy is too dependent on housing and the credit behind it the economy is going to get a correction. This will happen no matter who is in charge of Congress or the UN.
lexhamfox on March 2, 2009 at 4:51 PM
Wow…that sounded almost intelligent. Certainly much better than getalife. You can defend the tax increase in nice reasonable terms but you didn’t get into the other, more dangerous aspect of the Precedent, which is the greatly increased social spending. It isn’t stimulus and it isn’t justified from an economic standpoint. The only justification is to make more people dependent on the government, this government in particular. Address that in your reasonable terms.
But, as I said, at least you tried.
genso on March 2, 2009 at 4:57 PM
I said nothing of the sort. I only pointed out that they have been in control for the last two years, when things really started spinning out of control. But their social engineering started long before, as I explained in my posts, if would bother to read them.
No sh!t, Sherlock. Go read my other posts about the forced mispricing of risk by the dems.
It was mostly caused by the politics of one party – the social engineering of the left.
Tax decudtions for mortgage interest didn’t cause the problem. These deductions are applied uniformly and have little effect on the balance of the market. Social engineering which picks out small areas to change the risk pricing (by force of law, threat of lawsuit, …) is something quite different. It is the stupidity of the left that they think such alterations can be quarantined in their own little areas. Such is the folly of leftist thinking.
To some extent, yes. But the manipulation of the debt market was the left’s baby, all the way. The right didn’t fight it, for fear of being called racists and worse.
Actually, the banks initially did their required CRA loans, but it didn’t amount to much, since those loans just sat on their books (with worse default rates, as could be expected). It was Freddie and Fannie that started scooping those loans off the lenders’ books to send the lenders out to make more bad loans – as was forced on them. Eventually, the lenders came to grips with what they were forced to do and jumped right in. Meanwhile, the poor CRA loans ended up affecting all other loans, as arbing assures.
You’re talking about tow different things, here.
Get with the times. The idiot messiah is targeting the top 5%, now. Not 2%. Wait a little bit and it will be 10% …
Costs are being raised for everyone. Pick a person and I’ll find you a Precedential policy that will end up raising their costs.
This is full-on, class warfare. Economic and social “justice” are just euphemisms for marxism. Most intelligent people know this.
LOL.
You haven’t understood a word I wrote earlier and probably won’t understand what I’ve written in this response.
We are not just riding down some correction in the market. We have a Congress and a Precedent that are actively driving us down with all sorts of idiotic anti-growth, anti-individualistic policies that are designed to exact “economic and social justice”.
progressoverpeace on March 2, 2009 at 5:08 PM
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