Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
AIG Bailout?
Old 09-16-2008, 10:31 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Purron's Avatar
 
Join Date: Nov 2007
Posts: 5,584
AIG Bailout?

Government Mulls AIG Bailout as Options Grow More Limited. - Financials * US * News * Story - CNBC.com
__________________

__________________
I purr therefore I am.
Purron is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-16-2008, 09:24 PM   #2
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,675
Its happened
http://www.nytimes.com/2008/09/17/bu...hp&oref=slogin

Wonder where this ends! Is WAMU next?
__________________

__________________
walkinwood is offline   Reply With Quote
Old 09-16-2008, 09:28 PM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Any company that wants to grow to the point of being "too big to fail" needs to be willing to accept a reasonable amount of regulation to make their chances of failing very close to zero, IMO.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-16-2008, 09:43 PM   #4
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
i agree and so does william greider: what are we getting in return?
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 09-16-2008, 10:01 PM   #5
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 2,065
$85 billion! So much for the promised end to the bailout culture.
__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is online now   Reply With Quote
Old 09-16-2008, 10:15 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
There is a big difference between WM and AIG, IMO. AIG did lots of stuff at the holding company level that caused them a liquidity crisis. WM did most everything out of bank entities, which have all the liquidity goodies that go with it: discount window access, Federal Home Loan Bank membership, etc. So unless something causes a massive run on the bank by actual depositors, its hard to see how WM will have a liquidity crisis that will cause them to suddenly fail. The $64k question for WM is whether they have so many bad loans on the book that they eventually run out of capital. I don't think anyone can guess as to whether they have enough capital with any degree of confidence, at least at this point in time.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 09-16-2008, 10:25 PM   #7
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 2,065
Quote:
Originally Posted by brewer12345 View Post
So unless something causes a massive run on the bank by actual depositors, its hard to see how WM will have a liquidity crisis that will cause them to suddenly fail.

I don't think anyone can guess as to whether they have enough capital with any degree of confidence, at least at this point in time.
There is a fair chance that the uncertainty described in the second paragraph will be the "something" mentioned in the first paragraph.

Let's hope not.
__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is online now   Reply With Quote
Old 09-16-2008, 10:26 PM   #8
Thinks s/he gets paid by the post
free4now's Avatar
 
Join Date: Dec 2005
Posts: 1,225
With Fannie, Freddie, Merrill, and AIG, the guv is spending hundreds of billions on these bailouts, just in the past week or so. That's more than the prez said the Iraq war would cost originally. Who is making these kinds of spending decisions anyway? I haven't seen any house or senate involvement at all. Can Bush just say "Yeah we'll cover it" as he runs for the exits?
__________________
free4now is offline   Reply With Quote
Old 09-16-2008, 10:37 PM   #9
Recycles dryer sheets
 
Join Date: Jan 2007
Posts: 222
Quote:
Originally Posted by free4now View Post
With Fannie, Freddie, Merrill, and AIG, the guv is spending hundreds of billions on these bailouts, just in the past week or so.
I didn't think they were involved with Merrill. BoA scooped them up.

As a follow up question, though, exactly how much money does the Fed have left to bail companies out?
__________________
CompoundInterestFan is offline   Reply With Quote
Old 09-16-2008, 10:45 PM   #10
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by CompoundInterestFan View Post
I didn't think they were involved with Merrill. BoA scooped them up.

As a follow up question, though, exactly how much money does the Fed have left to bail companies out?
They can print an infinite amount of fiat money. The question then becomes what happens to the economy, inflation and the dollar as a result.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-17-2008, 06:59 AM   #11
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 2,065
Exactly. An empire founded on debt can't be sustained indefinitely, and the printing presses will be operating faster and faster.
__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is online now   Reply With Quote
Old 09-17-2008, 07:27 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by ziggy29 View Post
They can print an infinite amount of fiat money. The question then becomes what happens to the economy, inflation and the dollar as a result.

these aren't bailouts, not even close to Chrysler in 1980. the interest on the AIG loan is 8.5% and Fannie is around 10% and the government is taking over management instead of letting the old management use the money for bonuses.

when it's over the government will just sell the stock
__________________
al_bundy is offline   Reply With Quote
Old 09-17-2008, 07:39 AM   #13
Recycles dryer sheets
Robert the Red's Avatar
 
Join Date: Aug 2005
Posts: 325
Quote:
Originally Posted by al_bundy View Post
... the interest on the AIG loan is 8.5% ...
Actually, it is 8.5% over LIBOR 3 month, so it is currently 11.3%, which is over $9 billion per year in interest. In other words, the new management at AIG is under pressure to sell off the assets (insurance companies, aircraft holding company, ...) at a rapid rate and repay the loan ASAP. That is, there will be an orderly unwinding of AIG, rather than a "disordered" unwinding.

I doubt that anyone on Earth has solid knowledge about whether the Fed will lose or make money on this deal. The US made money on the Chrysler bailout in the early 1980s, and made money on the mortgage bailouts of the Depression. And lost a lot of money in the S&L fiasco of the late 1980s.

What is interesting is that Paulson, from Wall Street, is determined to "haircut" the shareholders of these companies, even those that continue to operate (Fannie & Freddie & AIG & Bear Stearns). But he doesn't seem to want to hurt those who did business with them.
__________________
Robert the Red is offline   Reply With Quote
Old 09-17-2008, 08:05 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
i think bernanke said earlier this year that the goal over the next 2 years is an ordered liquidation of any company in trouble so that it doesn't torpedo the markets.

Yahoo is saying AIG had 73% institutional ownership, so this is probably a message to the investing community to start acting like owners and not just OK the election of any director that you golf with
__________________
al_bundy is offline   Reply With Quote
Old 09-17-2008, 08:05 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
EXTRA EXTRA...read all about it...

Morningstar - MarketWatch: AIG gets Fed rescue in form of $85 billion loan
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 09-17-2008, 02:09 PM   #16
Thinks s/he gets paid by the post
ladelfina's Avatar
 
Join Date: Oct 2005
Posts: 2,713
where is Paulson's authority to do this?
__________________
ladelfina is offline   Reply With Quote
Old 09-17-2008, 02:12 PM   #17
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by ladelfina View Post
where is Paulson's authority to do this?
We can't let pesky inconveniences like the U.S. Constitution get in the way of the federal government's business, can we?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-17-2008, 02:14 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,418
All I can say is make sure to vote in November. This kind of government intervention wouldn't be happening in a Republican administration.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 09-17-2008, 02:24 PM   #19
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Quote:
Originally Posted by ladelfina View Post
where is Paulson's authority to do this?
Sorry, I am talking off for a bit so I don't have a cite, but the fed has pretty broad powers to lend money in unusual and exigent circumstances.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 09-17-2008, 02:40 PM   #20
Full time employment: Posting here.
 
Join Date: Oct 2006
Posts: 898
Section 13 (3) of the Federal Reserve Act says:

In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal Reserve bank: Provided, That before discounting any such note, draft, or bill of exchange for an individual, partnership, or corporation the Federal reserve bank shall obtain evidence that such individual, partnership, or corporation is unable to secure adequate credit accommodations from other banking institutions. All such discounts for individuals, partnerships, or corporations shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe.
__________________

__________________
Someday this war's gonna end . . .
ChrisC is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
AIG lawman FIRE and Money 25 09-17-2008 08:52 PM
Subprime Mortgage Bailout armor99 Young Dreamers 129 09-19-2007 03:40 AM
More AIG Tomfoolery........... FinanceDude FIRE and Money 7 09-29-2006 09:49 AM
Gotta Love AIG................. FinanceDude FIRE and Money 3 09-27-2006 10:15 PM
Anyone buying AIG? Berkshire_Bull FIRE and Money 3 04-01-2005 04:50 AM

 

 
All times are GMT -6. The time now is 01:36 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.