AIG bailout, interesting alternative approach

[Flipx99 5,000+ posts]

Plus it's going to cost closer to 800b not 85b. I'm curious Flip, do you think the bailout is a good idea, I do not.
Edit

WTF I'm thinking freddie/fannie bailout with 800b.//content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif

Well, I have holdings in AIG so I won't comment on that particular loan.

To be truthful, loan modification would be the best way to solve the issue. It forces banks to take a loss, but turns non-performing loans into performing ones, so they can be accurately priced. However, I feel the homeowners who got in over there head should be punished.

Without a bailout, there is a possibility of a credit freeze, as many banks issue short term debt for working capital. Without this working capital, it causes operational problems and could cause some families to miss a paycheck.

 

[newusername 10+ year member]

1st, but I believe it is necessary.

Studying the great depression, one of the primary factors leading to it was the fed not acting as a lender of last resort, causing a liquidity squeeze.

Are you completely sure about that? I think the Austrian economics approach makes a lot more sense; heck, they predicted the Great Depression. In the 1920's, the Federal Reserve's increase in the money supply led to a credit-driven boom (just like we've experienced). The increase in the supply created a boom in asset prices and goods that was simply unsustainable; the exact same thing we have been experiencing. The depression was inevitable, and if we keep propping up the economy with credit from thin air, we are preparing ourselves for another enormous decades long depression.

This is the same thing Ron Paul has been saying for years, and I know that you disagree. I just watched a head of Economics at Harvard say that this bailout is going to lead us into another depression. Sorry to say that I trust their opinions more, and it seems more logical to me as well.

 

[Flipx99 5,000+ posts]

Are you completely sure about that? I think the Austrian economics approach makes a lot more sense; heck, they predicted the Great Depression. In the 1920's, the Federal Reserve's increase in the money supply led to a credit-driven boom (just like we've experienced). The increase in the supply created a boom in asset prices and goods that was simply unsustainable; the exact same thing we have been experiencing. The depression was inevitable, and if we keep propping up the economy with credit from thin air, we are preparing ourselves for another enormous decades long depression.
This is the same thing Ron Paul has been saying for years, and I know that you disagree. I just watched a head of Economics at Harvard say that this bailout is going to lead us into another depression. Sorry to say that I trust their opinions more, and it seems more logical to me as well.

While I agree, somewhat, I disagree that the Fed could have used its ability as a lender of last resort to "cushion" a market correction.

Do your theorists not mention the attack on gold immediately preceding the event?

 

[C5! 10+ year member]

Did anyone here do the math or just take it as it is right? Can some one besides me check it?
$85 billion into 200 million tell me what you get? $425

You sir win the prize.

it goes to show how ignorant we are as americans.

You get an A+

 

[Flipx99 5,000+ posts]

seems like it would increase inflation

It will

 

[jer_stud56 10+ year member]

Got this in an email. Good idea...

I'm against the $85,000,000,000.00 bailout of AIG.

 

Instead, I'm in favor of giving $85,000,000,000 to America in a We

Deserve It Dividend.

 

To make the math simple, let's assume there are 200,000,000 bonafide

U.S. Citizens 18+.

 

Our population is about 301,000,000 +/- counting every man, woman and

child. So 200,000,000 might be a fair stab at adults 18 and up..

 

So divide 200 million adults 18+ into $85 billion that equals

$425,000.00.

 

My plan is to give $425,000 to every person 18+ as a We Deserve It

Dividend.

 

Of course, it would NOT be tax free.

 

So let's assume a tax rate of 30%.

 

Every individual 18+ has to pay $127,500.00 in taxes.

 

That sends $25,500,000,000 right back to Uncle Sam.

 

But it means that every adult 18+ has $297,500.00 in their pocket.

 

A husband and wife has $595,000.00.

 

What would you do with $297,500.00 to $595,000.00 in your family?

 

Pay off your mortgage - housing crisis solved.

 

Repay college loans - what a great boost to new grads

 

Put away money for college - it'll be there

 

Save in a bank - create money to loan to entrepreneurs.

 

Buy a new car - create jobs

 

Invest in the market - capital drives growth

 

Pay for your parent's medical insurance - health care improves

 

Enable Deadbeat Dads to come clean - or else

 

Remember this is for every adult U S Citizen 18+ including the folks who

lost their jobs at Lehman Brothers and every other company that is

cutting back. And of course, for those serving in our Armed Forces.

 

If we're going to re-distribute wealth let's really do it...instead of

trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is

being proposed by one of our candidates for President.

 

If we're going to do an $85 billion bailout, let's bail out every adult

US Citizen 18+!

 

As for AIG - liquidate it.

 

Sell off its parts.

 

Let American General go back to being American General.

 

Sell off the real estate.

 

Let the private sector bargain hunters cut it up and clean it up.

 

Here's my rationale. We deserve it and AIG doesn't.

 

Sure it's a crazy idea that can "never work."

 

But can you imagine the Coast-To-Coast Block Party!

 

How do you spell Economic Boom?

 

I trust my fellow adult Americans to know how to use the $85 Billion

 

We Deserve It Dividend more than I do the geniuses at AIG or in

Washington DC

 

And remember, The Birk plan only really costs $59.5 Billion because

$25.5 Billion is returned instantly in taxes to Uncle Sam.

 

[BASS_WARRIOR 10+ year member]

jackass...

http://www.caraudio.com/forum/showthread.php?t=351083

 

[jco1385 5,000+ posts]

that was different

 

[mcsoul 10+ year member]

math>

 

[craigzter 10+ year member]

i as well have gotten this email. I vote for it.

 

[jco1385 5,000+ posts]

oh yeah...

repoast

 

[blazinb2000 10+ year member]

Posted up a little to late. But yes I would be happy with a check for 250k+

 

[squeak9798 5,000+ posts]

> > * Let American General go back to being American General.

//content.invisioncic.com/y282845/emoticons/confused.gif.e820e0216602db4765798ac39d28caa9.gif

The e-mail is relatively idiotic from the simple standpoint that, as Flip has pointed out....the Feds didn't just hand AIG $85,000,000,000 and send them on their happy way. This was a loan, albeit titled as a "bailout" because if it didn't happen AIG would not have been able to raise the necessary capital within the necessary period of time.

But the //content.invisioncic.com/y282845/emoticons/greedy.gif.5a53e6246569d7ab79867170f3b06629.gif has to be repaid by AIG to the Feds, with an interest rate of LIBOR+8.5% (from what I recall). The government could in fact make a decent profit on this whole deal. AIG has plenty of profitable assets they can (and will) sell in order to repay the Fed loan, it was just going to take more time to negotiate reasonable deals than what they had since they couldn't find a source of private-sector funding.

I was paying reasonably close attention to the AIG situation as, well....I guess I technically qualify as a government employee now //content.invisioncic.com/y282845/emoticons/confused.gif.e820e0216602db4765798ac39d28caa9.gif//content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif

 

[Flipx99 5,000+ posts]

//content.invisioncic.com/y282845/emoticons/confused.gif.e820e0216602db4765798ac39d28caa9.gif
The e-mail is relatively idiotic from the simple standpoint that, as Flip has pointed out....the Feds didn't just hand AIG $85,000,000,000 and send them on their happy way. This was a loan, albeit titled as a "bailout" because if it didn't happen AIG would not have been able to raise the necessary capital within the necessary period of time.

But the //content.invisioncic.com/y282845/emoticons/greedy.gif.5a53e6246569d7ab79867170f3b06629.gif has to be repaid by AIG to the Feds, with an interest rate of LIBOR+8.5% (from what I recall). The government could in fact make a decent profit on this whole deal. AIG has plenty of profitable assets they can (and will) sell in order to repay the Fed loan, it was just going to take more time to negotiate reasonable deals than what they had since they couldn't find a source of private-sector funding.

I was paying reasonably close attention to the AIG situation as, well....I guess I technically qualify as a government employee now //content.invisioncic.com/y282845/emoticons/confused.gif.e820e0216602db4765798ac39d28caa9.gif//content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif

Ironically that is very close to the same rate that Argentina had to pay after they were "bailed out".

So, based on your info....US does own 79.9% of the assets? Folks in the market are hoping that if/when loan is repaid, the govt would give up it's equity stake.

 

[jer_stud56 10+ year member]

whoops. Guess I never saw it. I need to quit posting threads. Everything I post is a repoast.