$30 Billion More to AIG: A Breach of Public Trust Without "Claw-Back" and Dismissing Management
The descent into the bottomless pit of bailouts continues. Today, American International Group, Inc. (AIG) is expected to report a $60 billion quarterly loss, the largest in corporate history. According to news reports AIG is getting another $30 billion in lifeline support from the government. Details are meant to be forthcoming today as well.
And for what? For having held our entire financial system up to ransom through possibly the most self serving and misguided exercise in mismanagement in the annals of American business. All the while the malign bumpkins who got AIG and us into this mess sit fat and happy in their sinecures in the corner offices of their bleeding company, counting the munificent paychecks and bonuses they cashed in along the way.
Please, don't take my word for it, but do read Joe Nocera's "Propping Up A House of Cards" in Saturday's New York Times. It will make your hair stand on end. Given all the mumbo jumbo and purposeful obfuscation that have become part and parcel of this financial disaster, it is reportage that for once is clear and lucid and permits one to fully understand the dimensions of the self-serving greed that has gotten us all to this place. To quote from Nocera's article, "It was extreme hubris fueled by greed."
It was the whole mindset in the banking/insurance casino industry that permitted obfuscation as a key element in "getting away with it," because no one but insiders could fully understand what was happening. One example cited is the term "credit-default swaps." What does it mean? If you know, well and good. But for most, it draws a blank, and yet it is an instrument that has put AIG, and now us, at risk for nearly $400 billion, bringing the entire financial system to the edge of the cliff, flirting with systemic disaster. Had it been called "credit default insurance," which in essence is what it is, clarity might have permitted earlier action. And worst of all, the inclusion of the word "insurance" would have obligated AIG to set aside mandatory reserves which might have permitted it to navigate through this mess. Anyway, read Nocera and you'll understand how we have all been taken to the cleaners.
By the way, one needs wonder why Joe Nocera and Gretchen Morgenson (another terrific columnist on the Business Pages of the New York Times) are not given their own column on the ever more somnolent op-ed pages of that heralded newspaper. Certainly what they are writing about strikes at the very core of today's issues. But then again the "Old Grey Lady" must know what it is doing as it navigates these treacherous shoals.
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Liquidate AIG and other Swaps Insurance companies and the Rating companies that rated stuff AAA to pay the Swaps that are dues, invalidate all current swaps. Write off all remaining swaps debt.
Instead, wall street is trying to legitimize Swaps.
Let AIG crumble and let a new industry or a new insurer take its place. They are not so important that they are indispensible. Issue discussed further detail here: http://www.ricoexplainsitall.com/politcs-economy/2009/3/4/the-irrational-aig-bailout.html
I think you mean cran down...but check out some of the stuff that Ellen Tauscher is doing with the New Democrat Caucus. It's sickening. she used to be a bankster lobbyist and SHE'S writing the mortgage help law! You can find alot on Fire Dog Lake. THEY are watching her like hawks over there.
Why can't we see where the money we are paying into AIG is going? With all of these CDS's out there we should know who holds them and they should be discounted to account for the foolish expectations of those who bought them and perpetuated the madness that they supported. In addition, if these were being promoted recklessly then their probably is some fraudulent activity going on by people who should of and certainly could have known better. Simply blaming the phenomenom on unbridled greed does not dismiss those who were responsible for the liability for doing wrong or failing to do what is right. We should be opening this process up completely and hold to account those financial gurus and institutional leaders and at least fire and hopefully charge them or sue them for their misdeeds. We need to what current leaders and advisors drank this coolade and tell them that they must pay back those that are digging them out.
They're "too big to fail". . .?. . .well, I got news - I'm too small to bail. . .
Show me a salary list among the management at AIG. . .
Raymond,
A little Trivia, what does the current collapse of our financial system and the collapse of the banks prior to the 1913 creation of the Federal Reserve, JP Morgan and his Bank. JP Morgan created the bank runs prior to 1913 with rumor campaigns and market manipulation, and JP Morgan bank created the instruments known as Credit Default Swaps. Do you know where JP Morgan got his money for his Bank, answer -The Rothschilds.
Question, Who owns the money supply of the 'Free Country' the United State of America?
Question, who does the Federal Reserve Work For?
Mr. Learsy - The media and our new administration is doing a lousy job of explaining in the banking crisis in basic terms, which all of us could understand. In some ways, the truth is too frightening.
May I suggest you listen to a recent broadcast by NPR's "This American Life." It's not pretty but it will reduce the complexities to a level that most people will better understand.
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375
Incidentally, we're hostage to AIG. They are too big to fail: consider what would happen to us when 19 million life insurance holders suddenly started cashing out their AIG life insurance policies.
Starve the Beast!! Decapitate the vampire predatory debt-financial capitalist economy into smaller, more manageable and more competitive entities.
http://eye-on-washington.blogspot.com
here's an idea.
obviously if aig goes down, it will pull the rest of the world down with it. this thing is
way to huge for american joe's and janes to wrap their heads around.......so let
the government keep throwing money at them................meanwhile make sure
the "loans" are paid back to the taxpayers. to the tune of an insurance policy
on every taxpayer who makes less than $250,000. when a taxpayer passes away,
aig has to pay that policy when presented with a death certificate
to the estate. i think $150,000 sounds fair...................trillions + interest......divided by..........
AIG bet on a house of cards, cynically calculating that if the worst came to pass, someone else would have to pay. Like a bookie taking a long shot bet, that were holding more markers than they could square when the race results came in. They'd like to be on the lam, but are stuck by insurance contracts that were so cheap everybody took them. The AIG bailout, simply put, is replacing U.S. sovereign wealth, derived from businesses and taxpayers, with AIG corporate captal depleted by bad business practices. There's good reason to want to keep the collapsed house of cards from becoming a game of international bank dominos falling one after the other, but no reason to keep the foreign and domestic banks 100 percent safe at taxpayers expense. One solution is to calculate what AIG owes, what it has, and decide how much creditors would get if AIG were to go into bankruptcy now, and add enough U.S. government money to bring that pecentage up to no more than 25 percent on a one time basis, by issuing a 10 year T-bill in the additional amount that would pay market interest if held to maturity. . Creditors could take one quarter of their debt, or could trade it to some one else to hold to maturity, or they could take their chances and just keep whatever paper demands they have on AIG without any future promise of U.S. assistance. No more refis for AIG!
Who are the counterparties? No one, neither AIG nor the Treasury, is saying who they are, but they are the ones "stealing" the taxpayers money. The counterparties made bad investments and turned around and insured their investments against loss. Now the insurance company, AIG, doesn't have enough money to pay the claims and the taxpayer is covering them. The only way the taxpayer is going to know the reason why is by knowing who the counterparties are.
See this link for worth of derivative market
http://www.newsweek.com/id/164591
very good link.
So what is your proposal?
Doesn't have one...just another regurgitation of opinions and links to people who actually know what they are talking about.
Tonight on PBS as they were discussing AIG and $60 billion loss, one of the people interviewed said that AIG had credit default swaps obligation worth $600 trillion, mainly to other banks including European ones. These would be triggered were AIG to fail. They had no reserves to cover these as no one expected the original derivative contracts to fail.
Read that elsewhere as well.
Might explain why no one knows how to "solve" this mess.
$600 TRILLION!
"Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going."
Worse, the Obama administration says they'll only look at derivatives and swap rules "later", meaning, never, or they'll beat up on rating agencies to be the fall guys.
Excellent article. Note with AIG, the article notes that the European banks are in trouble with this scam via the London office, not Americans. Query, why are we paying then? TO keep them servicing our ever bigger deficits? Making good on promises mortgage derivatives were government backed?
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