AIG

[dragknee66]

<10 years until our country is doooomed!?!?

[jeffmeden]

stolen from http://market-ticker.denninger.net/archives/P2.html for anyone who isn't up to speed:

What is AIG? The largest insurance company in the United States.

 

So what would make AIG detonate, and why would AIG blowing up kill the financial system?

 

Because AIG, like so many other insurance and similar companies, wrote Credit Default Swaps to virtually anyone, had inadequate (read: no!) margin supervision, and they now are in liquidity trouble.

 

In short, they levered up their balance sheet like the rest of the geniuses on Wall Street, and like most of these other clowns, aren't well-enough capitalized to survive a ratings downgrade.

 

To put this in perspective they are now trying to put together a 70 billion dollar credit line from multiple banks in order to allow AIG to be able to post collateral.

 

$70 billion dollars?! Yep.

 

These folks have a one trillion dollar balance sheet. And, like the rest of the financials, they have operated in a "no regulation" world for the last 20 years, and thus were running hog-wild making money hand-over-fist writing these swaps.

 

The worse news is that essentially everyone on Wall Street - and Main Street - is in some way connected to these folks. Either as a swap-buyer or as a buyer of some other form of insurance. So if and when they "boom" we have an instantaneous mess that hits everyone at once.

 

The extremely red bottom line here is that Deregulation (insistence that the 'free market' will self-preserve and self-correct) has created a mess so huge, that if assistance didn't come at the federal level there would be so many huge lumbering giants collapsing you would think the dinosaur extinction was happening all over again. Your invested retirement would be wiped out. Your uninsured bank balances would be gone. Your job (if you worked in a field remotely related to finance) would be toast. And for the next 10 years, the turmoil would cause hell for the rest of the country. If the government didn't step in today, we would be living in post-soviet russia (which is a lot like living in soviet russia except without the impressive military.)

 

Of course, this could have been avoided entirely if the federal government (or the state governments in which these institutions operate) were actively regulating the activity of the banks, investors, and insurers.

 

To me, this is the nail in the coffin of the "free market, deregulation for all, invisible hand will coddle us all the way to heaven" argument. The free market would work if everyone had the same interest in mind: the market. It's all to easy to see that the vast majority of the decision makers at these companies had only one thing in mind, short term profit. The "free market" champions that rode high on these companies are walking away with millions/billions in their pockets, as the companies crash and burn and the little guys are stuck with the bill.

 

I could rant for days.

[jeffmeden]

<10 years until our country is doooomed!?!?

 

You are right, it is less than ten years. The actual number is 0 years. This is the bed we have made by deregulating and allowing profiteers to invade every nook and cranny of the economy.

 

The future is looking like this: Government services will get thinner and less reliable, loans of all types will get harder to come by, unemployment will continue it's steady march upward, inflation will too, and the quality of American life as we knew it from 1995 to 2005 will be a distant, fond memory.

[jeffmeden]

And to tie this firmly back to the Political Mayhem theme, there are some interesting links between Republican Candidate John McCain (whom I am sure is a swell guy) and AIG:

McCain's campaign has ties to AIG. Harvard economics Professor Martin Feldstein, whose advice has been sought by McCain, is on the board of directors. One of McCain's top fundraisers, Wayne Berman, is registered to lobby for AIG, congressional records show. AIG paid Berman's firm, Ogilvy Government Relations, $100,000 during the first six months of the year.

 

McCain's congressional liaison, John Green, formerly lobbied for AIG at Ogilvy. He has taken a leave of absence from the firm to work on the McCain campaign.

[Putty]

Yet one more down the tubes....We are headed for disaster..!!!!

[LJ]

You are right, it is less than ten years. The actual number is 0 years. This is the bed we have made by deregulating and allowing profiteers to invade every nook and cranny of the economy.

 

The future is looking like this: Government services will get thinner and less reliable, loans of all types will get harder to come by, unemployment will continue it's steady march upward, inflation will too, and the quality of American life as we knew it from 1995 to 2005 will be a distant, fond memory.

 

 

I take it you never heard of 1979-1982?

 

please

[LJ]

The bailout was not simply handing over cash to the failing company. It is a guaranteed loan at more than 11%. The fed actually stands to gain from the deal even if it has to break up the company in smaller pieces after a default.

 

I don’t think it should have ever gotten to this point but not taking this action would have caused such a disruption in the money market funds that ordinary people would not trust investment vehicles that were once considered inherently stable.

 

 

Yep, gov't was guaranteed ~$790 billion (~$740 of which are level 1 assets) for an $85 billion 2 year loan.

 

Gov't wins

[jeffmeden]

I take it you never heard of 1979-1982?

 

please

 

Yes, please remind us of the joys of stagflation.

[Archie]

lol. yeah man, its definitely cloudy. im not a conspiracy theorist, but i highlighted an made bold the sections that were the important ones. ive got a whole bunch of info on this, as it was the subject of one of my senior papers.

 

the other was on how we were safer from nuclear attack during the cold war than now.

 

I've said the same stuff about the FED/Rothschilds and people have called me a paranoid conspiracy theorist... People just need to do their own research.

 

A really good movie (also kind of boring) to watch is "The Money Masters", it outlines how throughout history there has been a constant struggle for the power to print/loan money which has caused war, economic depression, ect.

Which right now, is in control of the largest banking cartel in the world, the Federal Reserve.

[LJ]

Yes, please remind us of the joys of stagflation.

 

 

About how what is happening now isn't anything near what happened then... or the S&L crisis of the 80's?

 

Go hide in your bunker if you are that scared

[jeffmeden]

About how what is happening now isn't anything near what happened then... or the S&L crisis of the 80's?

 

Go hide in your bunker if you are that scared

 

Did I say it would be as bad as crises in the past? I for one would like to think it wouldn't, but so far it is looking pretty damn bad. To say with such confidence that things are going to be fine is some pretty blind optimism, in my opinion. The banks that are in trouble are pillars of the financial system, you can't lose many of them before everyone down to joe blow starts to feel the repercussions. And to say that despite the federal banking system (and the federal government in general) swimming in red ink, that there won't be any pain... Come on, the money has to come from somewhere.

[LJ]

Did I say it would be as bad as crises in the past? I for one would like to think it wouldn't, but so far it is looking pretty damn bad. To say with such confidence that things are going to be fine is some pretty blind optimism, in my opinion. The banks that are in trouble are pillars of the financial system, you can't lose many of them before everyone down to joe blow starts to feel the repercussions. And to say that despite the federal banking system (and the federal government in general) swimming in red ink, that there won't be any pain... Come on, the money has to come from somewhere.

 

I rest my case.... you go from the world is ending to this... So if it won't be as bad as past crises, then why would our unemployment sky rocket (10.8% in 1982) and our quality of life decrease?

 

840 banks failed between 1979 and 1990, 49 in 1980 I believe.

[Orion]

Gov't wins

 

actually, its not the gov't. see my previous posts.

 

i agree with ken. it was necessary to bail out aig. but, it wasnt just because it was "good for the people". financial stuff is actually the ONE place where i am FOR the government having more of a role.

[jeffmeden]

I rest my case.... you go from the world is ending to this... So if it won't be as bad as past crises, then why would our unemployment sky rocket (10.8% in 1982) and our quality of life decrease?

 

840 banks failed between 1979 and 1990, 49 in 1980 I believe.

 

You talk like rising inflation and unemployment is a good thing. All I am saying is that things are going to get worse from the way they are today, before they get any better. It MAY not be worse than 1980 or 1929. Things were *not* good back then, so this isn't saying much.

[thorne]

Ummm, man I've got to go get my tinfoil hat .........

 

I never relized what the fed really is. I liked it better before I learned this.

 

Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof. Today however, the FED, which is a privately owned company, controls and profits by printing money through the Treasury, and regulating its value.

 

The FED began with approximately 300 people or banks that became owners (stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison (Reference 1, 14). The FED banking system collects billions of dollars (Reference 8, 17) in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money (through the Treasury) at no interest to the FED. The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud (Reference 1,2,3,5,17).

 

Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed:

 

Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy Goldman, Sachs of New York Warburg Bank of Amsterdam Chase Manhattan Bank of New York (Reference 14, P. 13, Reference 12, P. 152)

 

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America (our forefathers were fighting their own government), they planned to control us by controlling our banking system, the printing of our money, and our debt (Reference 4, 22).

 

The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank. (Reference 22)

 

First National Bank of New York James Stillman National City Bank, New York Mary W. Harnman

 

National Bank of Commerce, New York A.D. Jiullard

 

Hanover National Bank, New York Jacob Schiff

 

Chase National Bank, New York Thomas F. Ryan Paul Warburg William Rockefeller Levi P. Morton M.T. Pyne George F. Baker Percy Pyne Mrs. G.F. St. George J.W. Sterling Katherine St. George H.P. Davidson J.P. Morgan (Equitable Life/Mutual Life) Edith Brevour T. Baker (Reference 4 for above, Reference 22 has details, P. 92, 93, 96, 179)

 

How did it happen? After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation (Reference 3, 4, 5). When elected, Wilson passed the FED. Later, Wilson remorsefully replied (referring to the FED), "I have unwittingly ruined my country" (Reference 17, P. 31).

 

Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected (Reference 1, P. 208-210, Reference 12, P. 235, Reference 14, P. 36). The bankers employ members of the Congress on weekends (nickname T club -out Thursday...-in Tuesday) with lucrative salaries (Reference 1, P. 209). Additionally, the FED started buying up the media in the 1930's and now owns or significantly influences most of it Reference 3, 10, 11, P. 145).

 

Presidents Lincoln, Jackson, and Kennedy tried to stop this family of bankers by printing U.S. dollars without charging the taxpayers interest (Reference 4). Today, if the government runs a deficit, the FED prints dollars through the U.S. Treasury, buys the debt, and the dollars are circulated into the economy. In 1992, taxpayers paid the FED banking system $286 billion in interest on debt the FED purchased by printing money virtually cost free (Reference 12, P. 265). Forty percent of our personal federal income taxes goes to pay this interest. The FED's books are not open to the public. Congress has yet to audit it.

 

Congressman Wright Patman was Chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.

 

Congressman Henry Gonzales, Chairman of a banking committee, introduces legislation to repeal the Federal Reserve Banking Act of 1913 nearly every year. It's always defeated, the media remains silent, and the public never learns the truth. The same bankers who own the FED control the media and give huge political contributions to sympathetic members of Congress (Reference 12, P. 155-163, Reference 22, P. 158, 159, 166).

 

 

part of my senior paper research.

[jeffmeden]

You heard it here first! The country's largest insurer is taking a back seat to... Mac N Cheese. The Dow 30 is set to drop AIG as a component company, and replace it with the venerable Kraft foods. Next time you think you need some Insurance, just remember how tasty Easy Mac is, and everything will be alright.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=acrZ3rmB4ENA&refer=home

[BIG SHAFE]

actually, its not the gov't. see my previous posts.

 

i agree with ken. it was necessary to bail out aig. but, it wasnt just because it was "good for the people". financial stuff is actually the ONE place where i am FOR the government having more of a role.

 

So while we are already $9 trillion in debt, taken on another $5 trillion in debt from Fannie/Freddie, and going to have over $1 trillion in debt for the Iraq war, we should give out money?

 

I wish I could run my personal finances like the government.

[wagner]

http://www.cnn.com/2008/POLITICS/09/17/beck.wallstreet/index.html

[Conesmasher]

So while we are already $9 trillion in debt, taken on another $5 trillion in debt from Fannie/Freddie, and going to have over $1 trillion in debt for the Iraq war, we should give out money?

 

I wish I could run my personal finances like the government.

 

Don't you wish BIG SHAFE. It's too bad that the average American actually runs their household WORSE than our gov't. What's awesome is the national debt is backed by our ability to pay taxes. That 9 trillion is backed by us. Your ability to earn a dollar. China wants to make sure that you keep working so you can keep all of their cash safe. So just make sure you pay your taxes.

 

The 5 trillion is backed by real estate......that's only half of the mortgaged value of our country.

 

 

 

AIG was a necessary evil and it's not like the Fed gave $ away......it was a LOAN at LIBOR plus some, like 11 or 12 percent. Not free money. They didn't give it away. They authorized a LOAN

 

 

 

 

I tell you what. It's an AWESOME TIME to invest. If you haven't dropped all of your money into your ROTH or your traditional IRA, do it NOW. We are very close to the bottom and 5-7 years from now when the DOW his's 20k, you'll be wishing you had your dollars in the bucket.