Either that, or we are going to keep dumping money into a hole until somebody says stop.
Posted on 03/06/2009 12:58:38 PM PST by BGHater
Interesting theory. My own suspicions revolve around AIG’s significant control of assets belonging to American union pension funds.
A more straightforward reason is this - if the major beneficiaries and amounts are made transparent, the companies being rescued will go under anyway, because no one will want to deal with those companies. There are a lot of companies who have put their game faces on, even though they would be sunk without government help. Note that Fannie Mae, Freddie Mac, Bear Stearns and Lehman all got government help, yet had their stocks go to almost nothing.
Dare I say
????????M.A.F.I.A.?????????
YES, THEY ARE....
This was discussed during the original TARP follies in the Financial Times. And the biggest benefactors were supposed to be Deutche Bank, Bank Of China,and UBS, since they had invested VERY HEAVILY in US Mortgage backed securities.
AIG holds the Teacher’s Unions pension fund. All these bail outs help those who voter for the empty suit.
Let's look at Citi-Bank
The govt (public) being the largest ‘shareholders’
who is 2nd......... A Saudi Arabian prince
The government in effect is stimulating Saudi royalty.
Will be a while for that to trickle down to ‘mainstreet’ !
Always
In
Gov’t
There are many reasons that AIG is being propped up but a big one is this: too businesses would shut down if AIG was allowed to collapse. As the biggest insurance companies in the world, AIG took on risks (and charged a hefty premium for those risks) that few others would or could. Think about it...who insures the following types of things/activities?:
- the freighter full of Catapilar equipment being shipped to Chile, Australia, and China.
- the grain ship carrying wheat from a U.S. port overseas.
- the ship carrying Powder River Basin coal to foreign markets.
- the liability insurance to a chain of 500 hotels, or 50 shopping malls, or giant theme parks.
- the airline with 500 Boeing and Airbus jets in the sky at all times
- the factories making cars, furniture, glass, paint, steel, etc.
More than any other company, AIG provides that insurance.
None of these enterprises could open their doors or sail from port or leave the runway without the type of insurance that AIG underwrote. AIG provided more of this type of insurance than anyone else. Shut AIG down and some companies would literally shut their doors overnight. They would have no choice. Eventually they could get new coverage, but the disruptive havoc would be armageddon-like.
There are certainly other reasons — the counter-party risk with other financial institutions and the risk to portfolios of pension plans and otheer insurance companies — but just the basic operation of the economy would have been severly disrupted.
We’re essentially paying for an orderly wind-down of AIG operations as some customers move to other insurers. And yes, they do have foreign operations which benefit from this support, and that’s part of the price for avoiding severe pain.
bump
AIG has around 300-400 billion outstanding in guarantees for mortgage backed securities.(credit default swaps) Many of these securities are backed by sub-prime loans. Because of the AIG guarantees, the banks holding the securities didn’t have to retain capital for them. If AIG goes under, then many of the banks holding AIG Default swaps will go under. It appears that there are enough banks that would go under to bring down the entire western banking system.
I believe that most of the other divisions of AIG are still profitable. It is the Credit default swaps that are bringing down the entire company, because they are the only things that didn’t require capital reserves to back up the commitment.
Either that, or we are going to keep dumping money into a hole until somebody says stop.
Yo: you gotta problem wit dat?
Mortgage-backed securities and credit default swaps are different things. A credit default swap is essentially an insurance policy for bonds from a private company in case it goes bankrupt.
No support of pension funds? No buying of U.S. debt.
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