Posted on 03/16/2009 10:02:27 AM PDT by BGHater
http://online.wsj.com/article/SB123638394500958141.html
AIG is an insurance company, but also a bank, and it used capital belonging to their insurance side (which by law is supposed to be held in escrow). AIG found a loophole and used that collateral, plus issued an insurance on deriviatives to other banks called credit default swaps (CDS) and that is what they have to pay off now to those banks, and that money is not coming back...it wasn’t a loan.
What I meant by AIG was arrogant earlier on this thread has to do with the fact they are INTERNATIONALLY INTERTWINED with about every bank on the planet. They hold pensions, market funds, insurance and all kinds of monies from all over the world, and especially here in US. They know that they are going to be propped up, as they are KEY to success of these bailouts...if they fail it all goes down! That’s why they are acting the way they are...Arrogant.
We are only half way through this mess. We have dealt with sub prime mortgages, but have yet to deal with the ARMS that start readjusting next year. If those people don’t restructure their loans to fixed rate, it will be worse. The recovery that’s coming is temporary, and if you want to sell something, close out some things you better do it during the next recovery period. Do you see any regulation changes? Greed always comes back.
Let’s be clear about this. The AIG bailout wasn’t a bailout of AIG, it was a bailout of Wall Street. It bailed out those who hedged with AIG insurance.
The AIG bonuses are piddling - less than one-one thousandth of the bailout money given to AIG. The politicians who bailed out AIG (Wall Street) and who are now pontificating about the bonuses WANT you to be outraged by this piddling. It distracts you from the big picture.
The big picture is that you were COMPLETELY RIPPED OFF for 170 billion dollars plus so that the politicians of both parties could bailout their Wall Street donors.
Don’t lose sight of what really happened here. Don’t be taken in by the distraction. Don’t play the fool.
The politicians and their Wall Street pals are the ones we need to focus our rage on. AIG should have gone bankrupt and Wall Street should have had to scavenge their dead carcass for what was left. Instead, YOU, Mr. and Mrs. taxpayer and dollar holder, YOU bailed out Wall Street.
I am aware that AIG was not making loans, they were doing business. They insured certain entities, and now they have to pay. They did not do enough due diligence on those instruments, or they would have never insured them in the first place. Now the government is insuring AIG, with even less scrutiny, and since that deal is done, there should be no complaints from anyone how they choose to spend they money. So far all AIG has done is honored their previous contracts.
As for sub prime and ARM’s, we have a few more waves coming our way.
Yep, once again Rush explained it succinctly. Leave it to FReepers to fall for the populist spin.
Go here:
http://www.iht.com/articles/2009/03/16/business/rescue.php
A big chunk of AIG's money went to foreign institutions.
It went to foreign institutions because they bought the CDS’s from AIG to cover their derivative bets, and AIG now has to pay the insurance to them for their losses. Here is quote from your website address that shows that:
“The institutions that received the Fed payments were owed money by A.I.G. because they had bought its credit derivatives — in essence, a type of insurance intended to protect buyers should their investments turn sour”
Obama's subsequent use of those dollars, however, is not to prevent any collapse, it's to "get the economy going again," which is quite a different thing and most certainly not why Bush started throwing money around. People intent on blurring the difference are doing so largely to excuse a massive increase in spending.
As far as the bonuses go, a contract is a contract, IMHO. But I don't have to be happy about it.
Every time Obama (and sometimes Bernanke) speak the stock market actually goes down, it would be better for everyone if they would just get out of the spotlight and shutup. and do their jobs....without fanfare. However a narcissist won’t do that.
As I recall, the original point we were discussing involved why Obama and the Dems were criticizing the AIG bonuses. I think we can agree they could not care less about the money, given the way they have authorized new spending The issue they want to detract the masses from is that a large chunk of bailout money was paid to foreign banks (at least $37 billion). This could be a major political issue.
fyi, I'm not saying the money s/n/h been paid to those banks, but am just addressing the political side.
Also, fyi, I just read something that indicates one reason why Obama is criticizing the bonuses is that he is trying to prevent criticism for all the money going to Wall Street and the banks. Bottom line: His criticism of the bonuses is political and has nothing to do with money.
“His criticism of the bonuses is political and has nothing to do with the money”
Yes, absolutely! Zero is using AIG as a distraction, to get americans off of his careless spending, and onto AIG.
There are a lot of links I posted on other threads that might interest you, and they are at #26 on this thread:
http://www.freerepublic.com/focus/f-news/2207234/posts
Goldman Sachs, the king of Wall Street bonus-givers, now will have to look into their own bonuses with this kind of publicity, won’t they?
Every time Obama (and sometimes Bernanke) speak the stock market actually goes down, it would be better for everyone if they would just get out of the spotlight and shutup
Yep, agree - the classic definition of a good government, stay out of the way.
Here in Texas the best Governor we ever had was Dolph Briscoe back in the 70’s. He did nothing, and Texas prospered.
None of this looks good for USA, and any recovery will be temporary at best, so if a recovery comes use it to get situated for the worst...it will come.
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