Posted on 09/17/2008 3:45:40 PM PDT by NormsRevenge
WASHINGTON – The Federal Reserve's bailout of insurance giant American International Group reminded some of the most powerful members of Congress how little power they sometimes have. The lawmakers didn't like the decision being sprung on them with no notice, but they're also happy not having the responsibility for it.
“Republicans in the Congress feel like we could have had and should have had more information sooner,” Rep. Roy Blunt of Missouri, the party's second in command in the House, said Wednesday.
(Excerpt) Read more at signonsandiego.com ...
Way to go Dems.. now those same folk are on Obama's team.
Go figure.
gosh, congressman blunt, like dude
this happened so fast!
/s
p.s. i get the wall street journal for $80.00 per year.
‘“Republicans in the Congress feel like we could have had and should have had more information sooner,” Rep. Roy Blunt of Missouri’
What a clown. He and most of Congress allowed the Fed to go unchecked, and now he has a problem with them.
There is no constitutional basis for the Federal reserve, they answer to no one.
CNN Money has this over at yahoo
How We Got Here: It’s Housing, Stupid
http://finance.yahoo.com/banking-budgeting/article/105782/How-We-Got-Here-It-Is-Housing-Stupid
excerpt
The reason housing is wreaking havoc even on insurers like AIG and big investment banks, who do not make mortgage loans, is that during the boom, trillions of dollars of mortgages were packaged together into securities that promised to pay investors with the proceeds of those loan payments.
Those securities paid better rates than other types of assets during the boom years. So many investors from around the globe poured as much money as they could into those securities.
Faced with this demand, lenders starting making more loans to riskier borrowers, including people who might not be able to afford their mortgage payments in the future and even many with no proof of income.
Then they are useless and all need to go.
Of course, a sever bout of rectal-cranial inversion may have something to do with it, too.
oh yeah, they borrowed 100 to 1. that is why all the house of cards are falling.
Although, the aircraft leasing business alone is worth $60 billion, and there are negotiations to sell it to the original founder. I dont think that $80 billion from the government will disappear...in fact, I think they will make money on the deal.
oh yeah, they borrowed 100 to 1. that is why all the house of cards are falling.
Although, the aircraft leasing business alone is worth $60 billion, and there are negotiations to sell it to the original founder. I dont think that $80 billion from the government will disappear...in fact, I think they will make money on the deal.
Oh man! I so need a FreeRepublic fix!
My husband and I ate supper in a restaurant tonight and the man behind him was a democrat organizer from Florida who had arrived in southwest Virginia to teach the locals how to run their campaign for Obama. He spend a good deal of time explaining how John McCain had helped cause this mess and how Obama would fix it. GAG! I have indigestion.
The legislators have a modestly legitimate beef with this “bailout”, but on the other hand, the seriousness of the situation demands the attention of actual adults with functioning brains and who can get something rather complex done under a tight deadline = days, hours. This automatically rules out Congress.
Let me restate what I’ve said on a few other threads: This is no “bailout”. This is an EXTREMELY harsh, near-mafia grade bridge loan to AIG. IMO, today’s DJ -450 market reaction was in response to AIG. There is NO PREDICTING whether this “bailout” can be pulled off, most simply because it’s not going to be easy for AIG to pay 11.3% interest in a 3-4% environment. Simple as that. IF they can not pull it off, then the abyss that the Fed wants to avoid by making this loan will recur. And it ain’t pretty, folks, it WILL be quite serious. Multiply today’s market action by 10. Yeah, 3000-5000 DJ points.
The terms of the so-called “bailout” are pretty vicious:
1: AIG pays 11.3% interest LIBOR + 8.5% on the loan for 2 years.
2: The Federal Reserve becomes 79.9% owner of AIG’s total business by inserting their magic “warrants” into the chain of ownership. This collateralizes the loan. AIG was as high as 70 last year, with 2.7 billion shs outstanding, and has been a $60 stock for about 5 years. Let’s call a nominal value 40, times 2.7 billion = $108 billion x .80 = about 86 billion, roughly the amount of the loan.
3: AIG has to trim itself down considerably. AIG is a massive, massive company and has lots of good businesses under its umbrella. It’s obviously going to have sell a good slug of them, and it has to sell for cash, not debt, because only cash will extinguish the loan from the Fed. This isn’t exactly the optimum environment to sell businesses, with credit so constricted.
4: As AIG sells good businesses, the toxic crap they took on their books becomes a bigger and bigger portion of their “book”, and the market for that stuff is much worse than it is for actual functioning businesses.
I am not advocating sympathy for AIG, they brought this on themselves and sold credit default insurance with wild abandon. But, this is no cakewalk they have going, there’s no certainty they’ll be able to pull it off.
The reason the market sold off so violently is this move by the Fed is ANYTHING BUT a bailout, it is more accrately paraphrased as “You got yourself in, you get yourself out. You want our help, it will cost you almost as much as your company is worth. If you can do it, maybe you get a company when you’re done. If not, tough. WE’RE OUT OF BAILOUT MONEY”
Totally disagree....
In fact, dont be surprised there are more financial bailouts (yes AIG is a BAILOUT)
The sad part, and little discussed, is that this is American taxpayers bailing out a mostly non-American company...so many of its assets are in foreign countries...esp COMMUNIST China
In fact, AIG, ironically, was started in China (pre-Commie China).
Not only it was bad to use US taxpayers $$ to bail out AIG...it was absolutely Nutty Globalist to have US Taxpayers bail out foreign interests.
Thanks for a thorough analysis.
“Totally disagree....
In fact, dont be surprised there are more financial bailouts (yes AIG is a BAILOUT)”
Then by all means, make sure you don’t bail out Chevron or your local gasoline dealer next time you buy gas.
It’s not nutty, its , well I want to use the word treason, but apparently American citizens are cool with being taxed into destitution in order to fund globalization.
The globalists always said we citizens were too wealthy, and they are fixing that in a big big way.
I wonder why it is so easy for them to get elected to office in this country, and loyal Americans get treated like dirt?
Wow...what a silly response...I dont bail out Chevron if I buy gas there...I am an idvidual, not a government
(Of course, there are no Chevron stations in my area)
AIG is a BAILOUT...and what if AIG cant pay off the debt? We Americans are stuck with a major business failure...
Judging by a lot of the posts on here...there are a lot of people who do not understand that globalization is nothing more than an extreme wealth-redistribution scam.
If the money leaves the country, it isnt being invested here. If our money is in Communist China, it isnt being used here
Thank God, Hedge, you and some of the others here “get it” regarding globalization. I think we are seeing the beginnings of its huge failure...and its a wake up call to all Americans
Take away the good paying jobs, then give the “old displaced” worker a job at Junk-Mart as a Greeter that pays squat, and then on top of that give’em unlimited credit visa via credit cards and “no-doc” loans and say party on Dude!
...And see what happens!
The f&^%$*#@ talking heads on CNBC said we had no idea this was coming?
ARE YOU NUTS?! WE ALL HAVE SEEN IT COMING FOR THE LAST FOUR FLIPPING YEARS!
Go through my postings on FR if you don't believe me Cavuto!
I DON'T HAVE A COLLEGE DEGREE AND I SAW WHAT WAS GOING TO HAPPEN!
AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."
On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings will with terror and slaughter return!
Thank God, Hedge, you and some of the others here “get it” regarding globalization. I think we are seeing the beginnings of its huge failure...and its a wake up call to all Americans
For the life of me, I could never understand those "little" people that supported this pending globalization disaster. I could only assume they had had some kind of small self interest in it, and thought it wonderful...lasting forever. And as you know, the U.S. Government pushed this 100 percent .
I have always known, those making the *real* money, billions on this globalist scam in the last decade or so, were the extreme few, that were already super wealthy, and very well connected to D.C.
Between the corrupt leadership in D.C., and their wealthy insider friends, they've screwed everyone.
This thing has now cracked our entire financial foundation.
This is so bad, I would almost believe this was set up for some *new* plan.
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