Sigh. What more can be said? Sigh.
The government agreed late Sunday to provide $30 billion more to American International Group as the company prepares to report a $62 billion loss today, people involved in the discussions said.I hate to ask as a Conservative, but would it be cheaper to just let AIG go bankrupt and promise to fund all the displaced people for 5 years via the unemployment system, when the Recession will likely have passed?
The insurer’s quarterly loss would be the biggest in history.
The intervention marks the fourth time that the federal government has been forced to step in to help AIG avert bankruptcy.
3 comments:
Not exactly unexpected. It's like with kids. Give them something to get a desired result, and you have to keep giving it to them to keep getting that result. "Johnny, if I give you the bear, will you go to sleep?" and then Johnny always needs the bear to sleep.
Why does no one understand this principle?
Because Congress and the President do not want to "deal" with the issue at any fundamental level. They ultimately see the Recession as simply something hampering their agenda. They want to throw it a bone and have it go away, so they can focus on Universal Health Care and the like. After all, this kind of politics worked so well BEFORE the Recession.
This is the problem with electing the people who CAUSED a problem, and then asking them to SOLVE that same problem. (And before anyone assumes otherwise, we'd be in the same place if we had elected Republicans. We need a clean sweep.)
BANZAI7 WORLDWIDE NEWS WATCH
March 2, 2009
WASHINGTON - The following joint statement was issued on Monday by the Treasury and the Federal Reserve on American liquidation Group:
The U.S. Treasury Department and the Federal Reserve Board today announced yet another restructuring of the government's assistance to AIG in order to cover this frightening intergalactic financial blackhole in a manner that yet again extorts the helpless US taxpayer. Specifically, the government's restructuring is designed to prop up this failed sorry excuse of a company while facilitating the orderly completion of the AIG global garage sale.
The company continues to face significant challenges, primarily driven by the rapid deterioration in the financial markets largely caused by its own reckless stupidity and the continued turbulence in the markets also caused by its own reckless stupidity. The additional resources will help stabilize the company until its next quarterly TARP fix, and in doing so further destabilizing the already destabilized financial system.
As significantly, the restructuring components of the government's assistance begin to separate the rotten dog and catfood lines of AIG, as well as unravel the twisted opaque intestinal blockage constituting the company's finances. The long long long long-term solution for the company, its fleeing customers, the fleeced U.S. taxpayer, and the discombobulated global financial system is the rapid recombobulation and capitalist re-education of the firm. This will take a long long long long time and quite probably more and more and more government support, since markets are not going to stabilize or improve in the near near near term.
Given the doomsday risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government action will be extremely higher than government inaction. AIG provides insurance protection to more than 100,000 entities (god save their souls), including fledgling small businesses, insolvent municipalities, 401(cents) plans, and Fortune 5 companies who together employ over 100 million furious Americans. AIG has over 30 million policyholders in the U.S. and is a major source of layoff insurance for, among others, underpaid teachers and Madoff fleeced non-profit organizations (god save all of them). Most importantly the company also is a significant counterparty to Goldman Sachs, Goldman Sachs, a number of major European financial institutions as well as Goldman Sachs.
AIG operates in over 130 countries with over 400 dimwitted regulators and the company and its juggernaut of regulated and unregulated subsidiaries are subject to a plethora of impotent resolution frameworks across their broad and diverse operations without a single viable resolution mechanism. Within the few options available, the restructuring plan offers a multi-part approach which we hope and pray every night brings forward the ultimate resolution of the company, has received feeble acquiesence from key stakeholders and the seal of approval of the useless rating agencies that helped create this fiasco, and hopefully provides the possible protection for taxpayers in connection with this commitment of resources at this moment in time.
The steps announced today provide tangible evidence of the U.S. government's commitment to the baiout of AIG time and time again in the face of the certainty of further market dislocations and economic deterioration. Orderly restructuring is essential to AIG's repayment of the ransom it has received from U.S. taxpayers and to hopefully preserving financial stability. The U.S. government is committed to continuing to bail AIG to maintain its ability to generate more and more obligations as they come due.
Treasury has stated that public ownership of financial institutions is not a policy goal but a reality and, to the extent public ownership is an outcome of Treasury actions, as it has been with AIG, it will work to reprivatise State owned enterprises to create business for unemployed bankers as soon as possible.
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