What the Fed's Rescue of AIG Really Means

So do you expect me to bellieve that putting all this in the hands of "our" government is a good thing? What have they not screwed up after getting their hands on and eventually cost us BIG $$$$$$$$?

The Fed provides triage for the financially obese, those firms too big to fail. It's social healthcare for the fiscally unfit. Evidently, every taxpaying, er, tax dodging investment banking firm and insurance provider needs a treasury official on-site to provide emergency reassurance when bloated balance sheets threaten to succumb to that last, precious, "one thin mint" (thanks Monty Python). Our government, at business's pleading, has socialized our fiancial markets. There will be no going back. Capitalism is dead.

Now I understand why the communists always shoot all the lawyers. Do AIG execs get pay cuts? All should be working for nothing or minimum wage. God, the french-fry cook at McDonald's produces more wealth in this country than these boneheads!

I think we need a citizens core of retired bankers, attorneys, statisticians, and the likes, to investigate this scam in its entirety. We can not let congress do it. When we find the culprits who have been most culpable in raping the country, they should be tried for treason, and put before a firing squad, and shot. Only then will the world understand that we are serious country that stands behind the constitutional doctrines that granted us the freedom to exist. Until then we can yell and scream all we want, but nothing will change.

It is sad to see the end of capitalism. Without an election the New-left has succeeded into turning us into a socialism. I know things would be hard on investors who have their money in AIG. I know borrowing to go further into debt might get harder, just maybe it should be. Our government has not done well running insurance companies in the past - Soc Sec, Medicare. Why do we think this will be any better? It is sad...

According to your last paragraph, did Fed take risk in swapping $274.8b AAA rated fund for bad funds? What would happen, if AIG can not repay this loan in 2 yrs? My 2nd question or comment is: If government is so eager to bail out big corporations and always gives justification for its action that without doing so, the whole economy would suffer. The government in democracy is supposed to protect tax payers in all times. So why the fed is not monitoring big corporations' behaviour and their finances all the times? This to me is not democracyas this government is run by big interest groups, as we have seen in last 7-8 yrs. First the government let people buy houses whether they can afford or not. Then they say, well the economy is bad because subprime housing market collapsed. The media is supposed to be a watch dog and question government on every move. But these days, media is also repeating the same news that government produces. They never question why and never have discussions or analyses of these things. Whenever they have some discussions, they will have democrate and republican (in equal numbers) talking side by side - who never agree on anything. If media wants to stay in business of reporting, they have to reevaluate how thery report. I am looking forward to hearing from you or have greater discussions. Thanks.

What it really means, is nationalization. First the banking & financial sector, then major transportation industries like airlines and Detroit's auto giants. Serfdom brought by unfettered capitalism, whodathunkit? Welcome to modern socialism, courtesy of the Bush Administration and the Republican agenda. Might as well have a true socialist like Obama run the show... Kiss your tax cuts good by people, guess who's gonna have to pay for all this? If not you or your corpse, your kids and their kids.

Does anyone else think it's time to ask bigger questions? I've heard numbers like 1,200 banks failing over the next year. If each one has only 1,200 customers with insured deposits of $50,000 the FDIC will be on the hook for $120 billion. This is on top of all these bailouts. The Fed has already started their auctions and the tidal wave of potential bank failures hasn't even started. With foreign markets falling as well, who is going to keep buying for the Fed?

Nationalization the world’s biggest insurance company by an unelected government body! Some are saying we or I the taxpayer own it now. I have a simple test of ownership – “can I sell it?”

We can certainly blame the present administration, but what I want to know is where was the great Democratic Congress who was going to change everything. McCain warned two years ago about Freddie Mac and Fannie Mae, and no one wanted to take action. Obama and Dodd have taken the most in campaign funds from both entities. Also, tell me why the Clinton administration allowed the whole subprime loans. We were told when we lived in Florida that Hispanics could get home loans probably easier then us -- my husband had his own business and they would only count my income. Guess we need to watch what we wish for -- Obama is a great "talker" with very little experience. Whether people want to admit it or not Palin has more experience then him.

I need some help. Can the federal government help me and all the other people in this society?? Ay present they are trying to take away more then we got to take care of the millionares and corporate crooks.

We deserve the results of all of this. Best regards, renter, shorter, and metal hoarder.

Sad day(s). You want to know who to blame? Blame yourself. We sit by and let all this happen, returning useless legislators to DC again and again (certainly true here in Jersey) and not paying attention when the players in these financial markets made these instruments (of destruction?) so complicated no lay person can understand it. Like it now or not, we have gotten what we have asked for.

Once again, our government has failed us. Politicians are all in a club. All of them, Republicans and Democrats. We are not in the club. How much do they think we are willing to take? I'm sick of all of it. What legacy of this once great country is being left for my son? Greed and corruption.

Credit Default Swaps brought to you by former Senator Phil Gramm (R-TX), in the form of the 1999 Gramm-Leach-Bliley Act. This Act virtually eliminated all government oversight of what includes Swaps. It was voted for in the Senate largely along party lines, with exactly 1 Democrat voting for and 0 Republicans voting against. It was signed into law by former President Clinton in a fine example bi-partisan destruction of our financial system. This is what happens when the Private Market is permitted to grow without oversight. It grows rapidly and collapses destructively. Government oversight may restrict growth, but I think the lack of rapid collapse is a worthwhile trade-off. JPF - I love your last line, especially "your kids and their kids". The current Republican administration is not fiscally conservative; I refer to their irresponsible deficit spending as "tax your children and spend."

Good article except for this : quote "There remain a host of consequences taxpayers must consider in this rescue." We, as taxpayers, have nothing to consider. NO ONE ASKED US WHAT WE THOUGHT!! They take our hard earned money and then they bail these companies out. How much did the upper management receive in pay and benefits for AIG this year? Hope it was less than 1 cent because it looks like thats about what their work was worth. I wish I could get paid millions of dollars to run my company into the ground, and then have the hard working American taxpayers bail my ass out. God I can't take it anymore. I have never been so angry in my entire life. Our "elected" officials just sit by and say its for the good of the economy and the world. Meanwhile, they take that lobby money and buy another benz or another mansion on the beach. F all of 'em.

Tax cuts? There were never going to be tax cuts. Business profits are way down, unemployment is way up, and that means tax revenues are going to be way, way shy of budget in 2009. The Treasury and the Fed keep dolling out, and the candidates promise all, but clearly no one in the federal government has reconciled the check book lately and found out how seriously they are overdrawn. Like a bad CEO, the government is going to give itself a raise, and the taxpayers/stockholders are going to have no choice but to pony up. I agree that the financial press should have been more vocal, should have seen this coming. But let's face it, most of the financial press are former employees of Bear Stears, Lehman, AIG, et al. Where are the financial whiz kids who dreamed up derivatives of derivatives so that the same financial instruments could be sold over and over, repackaged until the underlying investment is virtually unrecognizable and its actual risk impossible to guage? I think a lot of them are working at Barrons, Forbes, and maybe even Fox Business. You don't really expect them to come out and tell us, do you? I think it's time for everyone on Wall St and in Washington to take a refresher in Economics 101. Clearly they've all confused the invisible hand of the market with their own sleight of hand. The invisible hand of the market will keep doing what it does, and this house of cards is going to fall. In the end we will have a Soviet style planned economy, and the invisible hand will do to us what it did to the USSR.

One of the tenets of socialism is Government participation in the ownership of businesses. Socialism is more on the left of the political continuum than Liberalism. In view of the recent bailouts of big businesses, conservatives should stop using Liberalism as a bad word.

What the Fed means is inflation and devaluation of the dollar. The Fed option was bankrupcy, instant loss of jobs and financial trust down the drain. Either way we are all screwed. Its the financial Katrina of 2008. At least we can say the Fed and the Treasury reacted better than FEMA. The damages of this storm are severe no matter what any adminstration does. Next storm Ike - credit cards, savings and loan, regional banks and some nationwide banks going out of business. In total the Fed has 112 banks on watch with some 50% looking like they are going...going...gone.

I was under the impression, at least that was what I taught in school that this was supposed to be the land of the free, right? Isn't this supposed to be FREE ENTERPRISE? Aren't we supposed to be living in a country where the government is ONLY supposed to be concerned with matters involving NATIONAL SECURITY, and NOT the financial market??? Since when is it constitutional for our present day communistic government to stick their rotten hands into something that isn't their business? Since this country has been taken off of the GOLD STANDARD, all of the problems have begun. I hope no one expects "Big Brother" to ever return the entities that he has siezed control of back to their proper owners! Remember, the government NEVER gives back anything!! They are gradually taking our freedoms away...day after day! Apparently they feel threatened by John McCain and want the system to fail so that they can enact Marshall Law before the elections. Think I am crazy? Let's just watch and see....Today AIG, Tomorrow it will probably be J.P. Morgan and than General Motors and than who know what else they will grab before their appetite is satisfied!

What is the real implication of "US taxpayers now own equity..." in such and such?

It’s the Morality Stupid Watching the financial news networks and reading most of the popular publications has brought me to the conclusion that most if not all of them are missing the point. The big government liberals want to blame our woes on “corporate greed” and the Bush administration for the onslaught of financial losses. It's not just "corporate greed" that is to blame. Immorality has permeated our entire country. Adams warned that "our form of government was intended for a moral people" and that it is entirely "inadequate for the government of any other." Self government doesn't work for a people incapable of governing themselves. The same is true for capitalism. Capitalism is a beautiful thing when the people “love their neighbors as themselves” and “do onto others” as they would have others do onto themselves. A country of hedonists and narcissists will destroy each other without hesitation. These are the fruits of Darwinism. It is survival of the fittest. Why shouldn’t I plunder you for everything you have? So what if YOU are going to be destitute; just think how happy my wife and kids will be while we enjoy your money. It equals out right? “If I didn’t take the suckers money, someone else would have.” If there is no system of eternal reward or punishment why should I care? Oh, it’s wrong because YOU say so? Well it “feels right” to me so what gives you the right to impose your morality on me? We are reaping the harvest that comes as a result of moral relativism. Today’s corporations are run by generations who have been taught by public schools and Ivy League universities that they are accidents which emanated from cosmic goo (Carl Sagan). They believe that man determines right from wrong and there is no higher authority. This is the same disastrous belief that failed the so-called “enlightenment” in France a concomitant of the French Revolution. Ivy League universities like Princeton think they are being savvy by adding courses on corporate ethics to their curriculum but when people are taught that they are accidents and there is no morality beyond what “reason” can bring us – it is all empty rhetoric. You cannot believe anyone anymore. How do you trust anyone's reported numbers? How do you know you can trust anyone's analysis? Stronger government oversight and regulation will safeguard us from corporate greed? Dream on folks. That has been tried for the last 100+ years. First of all, immoral people will always find away to get around the new laws and regulations. Secondly, the government and their regulators are no more than a sample taken from the same pool of immoral people that are ostensibly being regulated. Look how many of our representatives took sweet heart deals from Fannie Mae. They are just as corrupt as those running many corporations. These are the same spoiled brats who we saw smoking their dope, dropping their acid and protesting our country at Woodstock. You’re going to take solace in the notion that these reprobates are going to fix the problem? They ARE the problem. They reject the very foundation that made this country the most prosperous nation on earth. We are overly self righteous in that we all point the finger at corporate America for being corrupt and insatiably greedy as though we ourselves are immune. When I listen to the Obama campaign it makes me nauseous to hear them blame the banks and mortgage industry for making “bad loans”. There is culpability across the board from the mortgage lenders, realtors, developers, property appraisers to the actual borrowers themselves. It is time for America to grow up and start taking responsibility. The elected idiots are telling people what they want to hear. You never hear about “predatory BORROWERS” in their populist rhetoric. You don’t hear about the millions of prodigals who knowingly borrowed more than they KNEW they could afford for a house or houses they knew they couldn’t afford. As I warned these people myself that when the bottom drops out they will not be able to make their payments once their ARM adjusts. They just replied that they were going to “flip” the home before that ever happened. Well the music stopped and all of the sudden they are playing the victim and are calling for a “new deal” from their enablers the Democrats. We as a nation CAN become stronger from our suffering if we stop acting like insolent children, take responsibility for our own actions and once again become a people worthy of self government. Just as gold is refined by fire as the fire burns out all of the impurities, we can use this time to become a better people. If we as a nation do not return to our heritage, which first requires that we learn what those roots are (thanks to the juggernaut of public education), we will witness a tyrannical ending to our freedoms. The writing is on the wall. People find it cute these days in using the phrase about having a “come to Jesus moment”. I am not being flippant in saying that is exactly what we need. "Where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths, which are the instruments of investigation in Courts of Justice?" – George Washington/Alexander Hamilton (Farewell Address)

There are a lot of people that are worried about a 'total meltdown' of the financial markets. I am one of those people. I don't have much $ to invest but supposedly this whole meltdown thing is gonna affect everyone and everything. What does 'total meltdown' really look like!? Is it inevitable? And one more thing - Toyota is now more of an 'American' company than GM is. Why not subsidize Toyota for R&D so we get real electric vehicles!?

Elizabeth, have you stopped to realize that the bail out of A.I.G. means that the Federal Reserve (a private corporation) now owns 79.95 of another private corporation, by giving A.I.G. an 11% loan or 24 months using government dollars ?????

Come on, now. Why all the surprized looks? This all started more than 30 years ago and surprizing as it may seem is NOT the fault of GWB or the Rep. philosophy but is simply what we all asked for. Do you remember when PG&E was a $10 stock and paid a $1 annual dividend? Do you even remember what dividends are? Do you remember when members of Congress held public meetings in their districts when they were not in D.C.? If you remember those things and were old enough to participate, did you? Do you remember when a short-term business play was ONE YEAR? There was a shift in Wall Street emphasis on "real" capital, "real" profitability as seen by regular dividends (CASH dividends)and controlled debt to non-ownership (leasing, not buying, assets), Mergers and acquisitions fueled by uncontrolled debt, and expensing things that used to be "investments". It may have seemed like a good idea at the time but that is not sustainable forever and sooner or later the piper had to be paid. It used to be that executives worked their way up through the firm and knew how it worked by the time they "arrived" - now they come from outside, blow things up, sell them off, and escape with the profits. The worst part of that is that WE APPLAUD THEM for doing this!! If you want to change things, there is only one way to do it - the American way - PARTICIPATE!! If our "representatives" are not representing US, replace them with ones who will. When they asked us what we thought/wanted/needed we ignored them because we were doing well enough and didn't want to spend the time. Now we are paying the price. It took decades to get here, it will likely take decades to get out, but if we don't start NOW it will take FOREVER!!