AIG

[Conan71]

quote:Originally posted by Hoss

quote:Originally posted by Conan71

Wipe that smirk off your face, Hoss. [] Last I checked, there's a Democrat majority in the HOR and Senate who don't seem to be complaining too loud.  

This most definitely is not fiscal conservatism.  This crop of Republicans in DC haven't been fiscal conservatives in any way, shape, or form.  

I have not researched AIG real close to see who their customer base is and who would be affected by their collapse.  I tend to be more of the persuasion that the laws of nature should prevail in business.  Let the weak and dumb ones succumb and the stronger ones thrive.

Here is something which might be telling, Dodd leads the list of beneficiaries again:

Name                 Office         Total Contributions

Dodd, Christopher J (D-CT)  Senate  $104,300

Obama, Barack (D-IL) Senate $45,111

McCain, John (R-AZ) Senate $41,200

Clinton, Hillary (D-NY) Senate  $36,831

Baucus, Max (D-MT) Senate $24,750

Biden, Joseph R Jr (D-DE) Senate $19,975

Romney, Mitt (R) Pres  $19,950

Sununu, John E (R-NH) Senate $15,950

Sounds like we need some SERIOUS campaign and lobbying reform in D.C. not just more lip service (or lipstick...[] )

I really don't see how Chris Dodd can't acknowledge the appearance of a conflict of interest in his contributions.  I posted that he was at the top of the Fannie and Freddie slug trail as well.

Would anyone care to dispute that the chair of the Senate banking committee doesn't have a potential corruption issue on his hands?  I don't really give two ****s whether or not Dodd is a Dem or Rep, that's irrelevant, he's a public servant and it's looking more and more like he has helped stave off stiffer regs for some of these companies.

More thoughts from NYT:

http://www.nytimes.com/2008/07/06/business/06view.html

AIG used subsidiaries to grease the campaigns of Pataki and Spitzer as well as other NY politicians, read on:

"The donations in recent years include totals of $50,000 to the gubernatorial campaign of Attorney General Eliot Spitzer; $335,000 to those of Gov. George E. Pataki; $34,300 to the campaign of Lt. Gov. Mary O. Donohue; and $25,000 to the 2006 campaign of Comptroller Alan G. Hevesi.

Often, the subsidiaries' identities give no hint of their affiliation with A.I.G., making it difficult to determine the extent of A.I.G.'s giving. For example, 10 companies — with names like Green Hills Corporation and Yosemite Insurance — gave $5,000 checks to Mr. Spitzer's campaign on a single day in December 2003. The only clues that the checks came from a common source were that they all had sequential numbers and bore an address of 70 Pine Street in Manhattan, A.I.G.'s headquarters.

Those contributions were made before Mr. Spitzer's office began investigating insurance industry practices, including those of A.I.G., in mid-2004. A.I.G. has made no further contributions to the Spitzer campaign since then."

http://www.nytimes.com/2006/09/19/nyregion/19donate.html?ref=nyregion

You might be surprised a little Conan.  Although I might be left leaning on most everythning, when it comes to two things: fiscal responsibility and immigration, I am most decidely conservative and am not afraid to admit it.

This is just plain stoopid.  We're now at the point that instead of 'sorta robbin' Peter to pay Paul' were stripping Peter bare.

Why can't the government stay out of it?  In certain cases (shoring up airlines following 9/11) it makes sense.  But not now.

I mentioned it on another thread that AIG had some other essential purposes in our economy other than being an insurer.  Large institutional investor, being one of those.  BOK worker had an interesting response.  I haven't researched enough yet to say this was definitely good or definitely bad intervention, just that I want to know more about this.

Hey, are you coming to lunch w/ the rest of us today down at the collective?  Gives us all a chance to take the gloves off for an hour and a half, sing Kumbaya, and get to know each other.  I'm actually quite good friends with some of my sparring partners on here.

[Hoss]

quote:Originally posted by Conan71

quote:Originally posted by Hoss

quote:Originally posted by Conan71

Wipe that smirk off your face, Hoss. [] Last I checked, there's a Democrat majority in the HOR and Senate who don't seem to be complaining too loud.  

This most definitely is not fiscal conservatism.  This crop of Republicans in DC haven't been fiscal conservatives in any way, shape, or form.  

I have not researched AIG real close to see who their customer base is and who would be affected by their collapse.  I tend to be more of the persuasion that the laws of nature should prevail in business.  Let the weak and dumb ones succumb and the stronger ones thrive.

Here is something which might be telling, Dodd leads the list of beneficiaries again:

Name                 Office         Total Contributions

Dodd, Christopher J (D-CT)  Senate  $104,300

Obama, Barack (D-IL) Senate $45,111

McCain, John (R-AZ) Senate $41,200

Clinton, Hillary (D-NY) Senate  $36,831

Baucus, Max (D-MT) Senate $24,750

Biden, Joseph R Jr (D-DE) Senate $19,975

Romney, Mitt (R) Pres  $19,950

Sununu, John E (R-NH) Senate $15,950

Sounds like we need some SERIOUS campaign and lobbying reform in D.C. not just more lip service (or lipstick...[] )

I really don't see how Chris Dodd can't acknowledge the appearance of a conflict of interest in his contributions.  I posted that he was at the top of the Fannie and Freddie slug trail as well.

Would anyone care to dispute that the chair of the Senate banking committee doesn't have a potential corruption issue on his hands?  I don't really give two ****s whether or not Dodd is a Dem or Rep, that's irrelevant, he's a public servant and it's looking more and more like he has helped stave off stiffer regs for some of these companies.

More thoughts from NYT:

http://www.nytimes.com/2008/07/06/business/06view.html

AIG used subsidiaries to grease the campaigns of Pataki and Spitzer as well as other NY politicians, read on:

"The donations in recent years include totals of $50,000 to the gubernatorial campaign of Attorney General Eliot Spitzer; $335,000 to those of Gov. George E. Pataki; $34,300 to the campaign of Lt. Gov. Mary O. Donohue; and $25,000 to the 2006 campaign of Comptroller Alan G. Hevesi.

Often, the subsidiaries' identities give no hint of their affiliation with A.I.G., making it difficult to determine the extent of A.I.G.'s giving. For example, 10 companies — with names like Green Hills Corporation and Yosemite Insurance — gave $5,000 checks to Mr. Spitzer's campaign on a single day in December 2003. The only clues that the checks came from a common source were that they all had sequential numbers and bore an address of 70 Pine Street in Manhattan, A.I.G.'s headquarters.

Those contributions were made before Mr. Spitzer's office began investigating insurance industry practices, including those of A.I.G., in mid-2004. A.I.G. has made no further contributions to the Spitzer campaign since then."

http://www.nytimes.com/2006/09/19/nyregion/19donate.html?ref=nyregion

You might be surprised a little Conan.  Although I might be left leaning on most everythning, when it comes to two things: fiscal responsibility and immigration, I am most decidely conservative and am not afraid to admit it.

This is just plain stoopid.  We're now at the point that instead of 'sorta robbin' Peter to pay Paul' were stripping Peter bare.

Why can't the government stay out of it?  In certain cases (shoring up airlines following 9/11) it makes sense.  But not now.

I mentioned it on another thread that AIG had some other essential purposes in our economy other than being an insurer.  Large institutional investor, being one of those.  BOK worker had an interesting response.  I haven't researched enough yet to say this was definitely good or definitely bad intervention, just that I want to know more about this.

Hey, are you coming to lunch w/ the rest of us today down at the collective?  Gives us all a chance to take the gloves off for an hour and a half, sing Kumbaya, and get to know each other.  I'm actually quite good friends with some of my sparring partners on here.

If I didn't work through lunch half the time I would; that's why I never spoke up.  Looks like I can't make it for this one either, but hopefully sometime soon.

[swake]

quote:Originally posted by Conan71

quote:Originally posted by swake

Wow,

Just plain wow. This is about the worst economic news yet. The Federal Reserve is having a liquidity crunch and is borrowing money to shore up banks and AIG.

http://www.tulsaworld.com/news/article.aspx?articleID=20080917_13_WASH373124

Wow, just wow.  Read the entire article.  Are you hoping your employer buys into the "whole economy is ****ed" thing?  I'm sure not.  Good way to wind up out of a job.

"Treasury officials said the action did not mean that the Fed was running short of resources but simply was a way for the government to better manage its financing needs."

What the **** do you expect them to say? We're hosed?  The street is more skittish right now than baby kittens.

And I didn't say "out of money", I said "liquidity crunch", they are NOT the same thing.

[rwarn17588]

quote:Originally posted by bokworker

quote:Originally posted by rwarn17588

quote:Originally posted by iplaw

quote:Originally posted by rwarn17588

I haven't heard any politicians on either side of the asile say that these bailouts are a good thing.  I think they see them as inevitable at the moment.

But *why* is it inevitable?

BTW, I'm not arguing with you, iplaw. But it seems like the folks in power who are making the decision are not trying very hard in explaining why they should do so.

bokworker? Anyone?

We have had a number of internal discussions regarding the recent spate of action by the Fed and Treasury. "To big to fail" is hard to define.... I guess it is similar to the definition of porn... we know it when we see it but it can't be describe it in advance.

As to AIG in particular (which I think falls under the definition of to big to fail)... the credit facility set up for them appears to be structured in a way that we, read taxpayers, could actually make money. First, the rate on the loan is priced at LIBOR +850 basis points. I think all of us would like to invest at such a rate. Second, we now have a 79.9% stake in the company so we not only have first call on the revenues generated by the sale of assets to repay the loans, we also have a majority call on the profits generated by said sales. And last, but not least, AIG is a solvent company where asset values exceed liabilities. Given time I believe AIG will be able to profitably deal with their current issues and repay the Fed in full.

Stepping back from AIG and looking at the larger picture it doesn't take long for the delineation of "to big" and "not to big" to get murky. I think BSC (Bear Stearns) happened so suddenly that the Fed acted properly.... when it came to Lehman the decision was there had been enough time for counterparties to assess and reduce their risk. If a company or person still had Lehman as a counter-party after what has happened in the last 6 months then there was no one to blame besides that company or person. Hence, they let Lehman fail. Merrill probably saw the handwriting on the wall and quickly agreed to be bought by Bank of America... good deal? Maybe, probably... but not a sure thing for BAC holders.

I do not extrapolate recent events ad infinitem into the future to where this all ends in a "canned goods and ammunition" end game... and there is enough DNA on this to lay blame on either political party..... we have been through times like this before and survived. And we will survive this as I believe there is still no greater country and economic system in the world..... far from perfect but where else would you want to live? Changes may need to be made but as any business owner will tell you, trying to write policies and procedures to protect you from every conceivable event is like herding cats... it cannot be done. We'll still try but we will never remove all risk from our economic system.... and besides, if we did then it is not a system we want.

Thank you.

Your take on this helps, although your caveats lead me to believe you're somewhat questioning this deal yourself, as I am.

[bokworker]

rwarn, I don't question the AIG deal so much as I think we are playing a dangerous game from a systemic perspective. We have now had the SEC step in to take action to alleviate some of the pressure from being able to short securities as easily as can now be done. I happen to believe that the ability to short securities (sell a security you don't own with the goal of being able to buy it back at a lower price) is not evil and in fact improves the long term efficiencies of the market but, there do need to be limitations as we know that markets can behave irrationally for periods of time. The bigger issue for me is that if we (Fed, treasury, taxpayer) step in to guarantee every loss then the guarantee stops meaning anything. Having said that, and being a free market person by nature, I am not sure those that call for the government to allow all of these firms to fail are completely thinking through what that would mean to them... it would negatively effect every single person in this country... Even those that owe no one and own every asset free and clear.

The single most important thing that cn ahppen to stop this downward spiral is to see residential housing values stabilize. We are beginning to see early and faint signs of this. Time will tell but in the end, time is what needs to pass to get through some of this crap...

[Conan71]

BOK- thanks for your analysis.  I guess the way I'm thinking is if the government removes the risk entirely by stepping in and mopping up after every debacle, that only encourages more shenanigans down the road.  IOW- seems as if they are rewarding or encouraging stupid and bad behavior in Corp. America.

If we want the gov't to take away all risk we might as well let them start nationalizing one industry after another.

[MDepr2007]

So what does this have to do with the "Political Arena" ?

[Conan71]

quote:Originally posted by MDepr2007

So what does this have to do with the "Political Arena" ?

Might have something to do with our government taking over AIG.  Been reading the papers the last few days?

[Conan71]

Conseco's shares took a dive today as they revealed they had exposure to AIG and Lehman securities.