US bails out another major financial institution

[CMoon]

http://news.bbc.co.uk/2/hi/business/7620127.stm

Why do I have this feeling that after robbing every American for as much as possible, Bush is taking the rest and bailing out the rest of his rich friends?

I'm sure some economics major will come on here and show us why this is a good thing, but at the moment, I feel like Bush just decided to do whatever he wants with the taxpayers money.

[yojo!]

Better yet; One republican will come up and tell you about the" trickle down" theory.

[neorichieb1971]

Its simple. Americans never have to deal with the consequences of making wrong decisions. Just throw lots of money at it and smile for the camera.

[Super Laydock]

Sure, capitalism above everything!
Let the market regulate itself!

Things like these confirm that full blown capitalism is just as bad as full blown communism.

The west declared victory way too soon.

[benstylus]

why is it that the people who apparently know the least about politics always seem to talk about it the most?

I swear, people just want to blame Bush for absolutely everything that goes wrong... and while he certainly can be blamed for some things, this ain't one of 'em.

[GaijinPunch]

I swear, people just want to blame Bush for absolutely everything that goes wrong... and while he certainly can be blamed for some things, this ain't one of 'em.

To be fair, the Republicans lambasted Clinton from day one of his Presidency. I agree though, Bush isn't clever enough to bail his friends out.

[D]

I feel like Bush just decided to do whatever he wants with the taxpayers money.

All governments just decide like that what they want to do with taxpayers money. That's why it shouldn't end with the democracy of just voting between 2 idiots who will lead a country, it should go much further than that.

[ROBOTRON]

I feel like Bush just decided to do whatever he wants with the taxpayers money.

All governments just decide like that what they want to do with taxpayers money. That's why it shouldn't end with the democracy of just voting between 2 idiots who will lead a country, it should go much further than that.

INDEED.

I've had an AIG policy for years...but I still cringe at what Bush is doing. The f*ckers running these defunct firms parachute out with millions and leave the U.S. taxpayer holding the bag.

Its Bushinomics.

[SuperPang]

I'm about to complete on my new place on monday. Phoned the transfer through at the beginning of the week. Guess where the money was invested. They have such a backlog of people bailing out we might miss our completion date. Not to mention the money lost in just a few days. My timing is awesome.

PS Buy my Cave kits

[benstylus]

I've had an AIG policy for years...but I still cringe at what Bush is doing. The f*ckers running these defunct firms parachute out with millions and leave the U.S. taxpayer holding the bag.

Its Bushinomics.

sigh.

Bush doesn't run the Federal Reserve, which is doing the bailout. Heck the Federal Reserve technically isn't even a part of the government.

[SuperPang]

As I understand it the government just got an 80% share in a trillion dollar company for a few billion. Sounds like a good investment to me. As an example, AIG own or insure something like 70% of the worlds airliners. A company like that going bust is a slightly more worrying alternative.

[Never_Scurred]

I don't know whats going on or what these firms are all about but apparently this has got alot of white folks scared and I know that scared white folks=impending doom for everyone else.

Someone tell me why I, a broke, fulltime college student living at home with moms with only $2500 in the bank, should be worried.

[GaijinPunch]

white folks scared

Sells newspapers.

Does anyone really think this is worse than what happened earlier this year? It's just a continuation of it... a somewhat predicted one as well.

[BulletMagnet]

I swear, people just want to blame Bush for absolutely everything that goes wrong... and while he certainly can be blamed for some things, this ain't one of 'em.

Apparently deregulating to the breaking point doesn't count? Though it is true that this isn't something Bush came up with, it's just standard conservative economic doctrine at work (and the standard results of adhering to said doctrine). What cracks me up is that McCain and company are out there saying that the real problem is that there are too many regulators out there, and that's what the real problem is...at this point in history it simply flabbergasts me that some people will still claim that fewer restrictions always equal better results, no matter what evidence to the contrary is staring them in the face.

[neorichieb1971]

If they insure airlines that $80billion won't last long, most of the airlines are going bust because the oil companies are holding the world economy to ransom. Oh thats right, Bush is an oil man!!

As for knowing or not knowing politics. In my lifetime all I have figured out is that the political agenda is to puncture the economic pipeline with leak holes so that politicians can sit under it with their arms wide open. Thats why they smile for the camera.

[Never_Scurred]

So, I'll ask again..
Why is this bailout a bad thing and why should I care?
I've been trying to follow the news but its all a bunch of bullshit I can't relate to. Can someone please put this so called "crisis" in layman's terms, please?

[neorichieb1971]

AIG insure and invest, they got $80billion in the red. Due to their worldwide status creating 1000's of jobs, due to the economic climate and the fact that several hundred businesses globally would probably have gone down with them. Bush gave the go ahead to save them with taxpayers money. The reason they are in this mess is because of greed. Their CEO made some terrible decisions in the name of GREED!

On the one hand its a good thing. Since many jobs will be saved, the infrastructure will remain the same etc etc.

The bad thing is, any company falling victim to the same crisis will shout "foul play" if the government doesn't dig deep in its pockets to save them. This creates the feeling of "no lose gamble" when they make stupid decisions because big daddy will bail them out.

Why should you care? Do you plan on having a pension? If so, CARE!

Do you understand now?

[bay]

Why should you care? Do you plan on having a pension? If so, CARE!

if you have a pension, then i'm jealous.

[jp]

It remains to be seen what the Feds bailing out AIG will do to the economy. Obviously, today was nasty due to it. But over time we may see some solid recovery (which is probably a better situation than what would have happened if AIG, one of the biggest insurance companies in the world, went belly up).

Also don't see what this has to do with ole' Bush, since he doesn't have anything to do with this. *shrugs*

He's too busy creating even MORE hurricanes at the moment anyways. I mean, it is hurricane season, and if Katrina taught me anything its that Bush is single handedly responsible for hurricanes. Nice of him to balance things out by throwing one at his home state though.

[Ex-Cyber]

Also don't see what this has to do with ole' Bush, since he doesn't have anything to do with this.

Aside from appointing all the sitting members of the Federal Reserve Board...

[Icarus]

Of course Bush is the root cause of hurricanes, he is full of hot air after all.

As for the government bailing out big banks - while it is somewhat a good thing in that it can stabilise an already shaky industry in the short- to medium-term, what is needed in the long term is reform, and lots of it. The banks got into this situation by complacency and greed, and something has to be done to stop them from doing it again, because the consequences could be far more severe the next time.

[BulletMagnet]

The banks got into this situation by complacency and greed, and something has to be done to stop them from doing it again, because the consequences could be far more severe the next time.

The fact of the matter is that we should have (permanently) learned this lesson back during the Great Depression (if not before), but regardless of era people apparently like to be told that things will always get better as long as nobody ever tells anybody else what to do in any circumstance...everything else (competence, hard data, past experience, etc.) is gravy. Anything even remotely to the contrary, of course, is Communism.

[neorichieb1971]

Ask for $80 billion to feed or shelter the poor, teach, turn vast amounts of rubble land to bear fruit, tell the government to subsidise fuel or create a national health system that would support millions of people and you get "its not in our interests" or "its not in the budget".

Get a multi millionaire CEO to make catastrophic mistakes and he gets bailed out. Something is really fucked up there. I could work myself up into a frenzy just thinking about it. But we have shmups for relieving alot of anxiety and the Japanese make them. In Japan the CEO would have committed suicide and that would have been the end of it. Respect to that!

[Ed Oscuro]

I'm afraid the "this is to bail out their friends and screw everybody else" conspiracy theory is wrong, even though it might seem logical. The idea that the government wants to give golden parachutes to these crooks is ridiculous; if anything, there's the potential for prosecutions here, especially if things get worse.

There are a few theories as to how we got here; probably the truth is a blend of these and more.

One is that successive Administrations prodded lenders to make mortgages available to as many people as possible to increase home ownership - without putting in place effective oversight. Government, through no fault of its own, tends not to imagine the worst will happen, but Wall Street has proven that will. Look at the tumultuous share price history of AIG in the last few days - a panic set off aggressive short-selling of the stock (that didn't help those investors other than the immediate gains, however, as they lose the stock in the short sale and the government now owns AIG anyway).

The other is that, going back five years, Alan Greenspan kept the lending rate low for a year (1%), and while this was not a bad idea, what Americans did with the money (and lending institutions encouraged) was not so great - same as with the tax refunds actually.

The fact of the matter is that we should have (permanently) learned this lesson back during the Great Depression

There's always a gang on Wall Street looking to get ahead. They will always be there. Asking the Government to always be able to prevent shenanigans is like asking them to prevent people from stealing.

Of course, what's particularly tricky about this is that people thought that there was enough money to go around and that greed would be good and everybody would come out a winner (or, barring that, at least the lenders would be able to sell off their junk debt).

[BulletMagnet]

There's always a gang on Wall Street looking to get ahead. They will always be there. Asking the Government to always be able to prevent shenanigans is like asking them to prevent people from stealing.

This is true as far as it goes, but even though, as you say, stealing will never completely vanish, nobody (well, almost nobody) suggests dismantling police forces or criminal courts because of this fact, and instead just trusting that people will do the right thing on their own as long as there's no one constantly looking over their shoulder. For some reason, though, that sort of "logic" is commonplace when it comes to corporations as opposed to individuals, despite how many times the former has disproved any assumption of their innate tendency to "follow the rules" when said rules (and the means to enforce them) are largely abolished.

[TLDragoon]

One is that successive Administrations prodded lenders to make mortgages available to as many people as possible to increase home ownership

That is from what I've heard one of the major contributing factors--bad loans going out to many who shouldn't have even been considered for a loan with a push from the government a few years back to do so. Then you have developers pushing overpriced houses in a "sellers" market with people buying like it was the opposite.

Things should start turning around, and hopefully some common sense will return. Financial institutions will start using good lending practices and the government will do what it should be doing by using oversight to keep those that don't in check.

Yeah, I won't hold my breath on that one.

[Ed Oscuro]

There's always a gang on Wall Street looking to get ahead. They will always be there. Asking the Government to always be able to prevent shenanigans is like asking them to prevent people from stealing.

This is true as far as it goes, but even though, as you say, stealing will never completely vanish, nobody (well, almost nobody) suggests dismantling police forces or criminal courts because of this fact, and instead just trusting that people will do the right thing on their own as long as there's no one constantly looking over their shoulder. For some reason, though, that sort of "logic" is commonplace when it comes to corporations as opposed to individuals, despite how many times the former has disproved any assumption of their innate tendency to "follow the rules" when said rules (and the means to enforce them) are largely abolished.

Well, let me rephrase that: Expecting the government to be able to predict everything that could possibly happen is a recipe for regulation in the wrong places (along with, hopefully, some of the right ones). I'm for more regulation myself, but it needs to be limited in scope.

There needs to be more of a realization that any regulation to prevent this from happening again would mean that the sort of easy home loans we've had in the past won't be available again.

[Ex-Cyber]

Well, let me rephrase that: Expecting the government to be able to predict everything that could possibly happen is a recipe for regulation in the wrong places (along with, hopefully, some of the right ones).

This is why many of the most helpful regulations are imposed in response to real-world problems that have already been demonstrated. And then the next generation of free-market fundamentalists forgets that experience and whines that such regulations are holding back the economy. Then the regulations are repealed and a few years later we get a reminder of why they were there...

[Michaelm]

Things like these confirm that full blown capitalism is extremely more bad then full blown communism.

There, fixed

[Ed Oscuro]

Find a "full blown" communist system without horrible economic planning first...I doubt it's even feasible.

I would rather have a freeze or moratorium on creating new types of financial plans (which would also be terrible, because you wouldn't have new ideas like cap-and-trade plans or, much older, reverse mortgages) than have a completely communist system.

Either way, the rational person looks at the amount of change needed to take steps to regulation, or towards moving to communism, and they see it's too much bother. Factor in that communism hasn't ever been demonstrated to provide tangible benefits in practice and you don't have a winner, I'm afraid.

Maybe someday when we overcome the limitations Marx warned about...till then...you live in a world of crooks and liars, nevar 4get

p.s. we all know you're an obsessive, michaelm, so don't waste your time