Once again the federal government has tossed a taxpayer lifeline to another private company that Washington says is too large to be allowed to fail.
First it was the $200 billion lifeline to mortgage giants Fannie Mae and Freddie Mac in an effort to rescue the nation's crisis-ridden housing and credit industries. On Tuesday, an $85 billion lifeline was thrown to American International Group Inc., the nation's largest insurance company, in a frantic effort to save that company from a collapse which, according to top U.S. officials, could have rippled out from Wall Street, across the nation and around the globe, threatening the world's financial system.
After the costly Fannie Mae and Freddie Mac rescue effort, the Bush administration said no more bailouts -- failed firms would have to suffer the consequences of their bad decisions.
For several days the administration held firmly to that policy, resisting pleas to bail out brokerage giant Lehman Brothers. The impending AIG failure was apparently too much to bear, though.
So far, Treasury Secretary Henry Paulson seems to have pulled the right strings: The stock market actually gained a bit of ground on Tuesday after the gloom of Monday.
One wonders, though, whether we can afford to bail anyone else out. Can the feds draw a line in the sand that will last?
Truth is, we couldn't afford these bailouts. The federal government already has spent $9 trillion more than it has, and is borrowing more every day.
As long as government is bailing out these ostensibly private businesses, it ought to consider bailing out taxpayers too. The only way to do that is to cut spending to gain control of the hundreds of billions in soaring deficits made worse by the bailouts.
Washington -- and both presidential campaigns -- claim the bailed-out companies are too large to fail. Well, the federal government is also too large to fail. But failing it is. And slashing spending is the only way to save it.
The Augusta Chronicle ©2010. All Rights Reserved.
Will the Federal Government help me pay for college? Nope, I work for a living and I'm a U.S. citizen so that prevents me from getting free money as they call it. Our government pays for foreign nationals to come to this country and go to college, they take one class a semester and get tuition, room and board, money to spend and it just goes on and on but as a citizen my family gets the ....
At some point this will be similar to bailing out the Titanic, with similar results, especially for the taxpayer. I believe we have seen this previously and it was call the Great Depression.
We're in the midst of a panic and the current government intervention will only help extend it, but it will end soon. This tumbling of the huge investment banks puts a light on the fact that some regulation is needed to stop these entities from leveraging their available funds twenty times!! This irresponsible over investment and the STUPID collateral free housing loans have led to this reorganization of wealth. Greed and no accountability at the top has precipitated this mess. The inevitable overreaction will be ugly.
I'm not even sure the government is within it's constitutional right to bail out these private businesses. What guidelines are used to determine who gets the bail out? Do we have any say? After all. it is our money that is being used. I agree with PT. This will pass. More importantly we need some type of voter approved set of rules for how this will be handled in the future. We can't keep spending money we don't have. If all of our loans are with the Chinese, guess who will have their hand up the a$$ and make the head of our president turn and whose voice we will hear. I'm not sure China has our best interests at heart.
Well, we can always write a book and call it the Rise and Fall of America at the greedy levels.
I guess that "self-regulation" thing didn't work out all that well for the financial markets - it's the same reason communism never works either. The Treasury operates pretty much independently of the government, that's why taxpayers do not have much of a say in this debaucle. We don't get a say in Federal Funds rates, either. BTW, this whole thing didn't start with Fannie & Freddie, but back with Bear Stearns. Yes, China has bought most of our debt - they've been doing that for the past couple of years. Nice to see someone else thinks that DUH, that might be a bad idea....
Well patriciathomas you have your socialism, except it's not coming from Obama or any other democrat. These greedy socieopaths rip-off Americans, then have the people they are ripping off be their passionate defenders, as they have painted these blind right-wingers a picture of America that is being turned into a socialist state by providing social programs to people in need like children, those with mental illnesses and developmental disabilities. They have led the right-wing by the nose to tell them the majority of people on social programs don't deserve it. They should have made better choices. They play on race and bigotry to get the blood boiling. I am sure they are having a big laugh now as they collect their welfare check.
The chickens have come home to roost and the buck stops here with the taxpayer. It may surprise some people but the government doesn't "produce" and it doesn't "earn" money. Ultimately the taxpayer foots t he bill and any taxpayer "bailout" only makes the situation worse. The bailout or Fannie, Freddie an AIG was applying a touriquet to keep the economy from bleeding to death. Reality has arrived and it's time to bite the bullet.
The democratic congress may adjourn and let the Fed/Treasury handle it because they're too inept: http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aVPBaUbYV_qQ
Where did Uncle BS get his misinformation?? He made it up.
Uncle BS,you'll love this
http://www.youtube.com/watch?v=cK5TprmkgRw&feature=related
uncle bs what an idiot you are.probably 90-95% of the students in this country receive some kind of financial aid.someone besides the parents are providing this free lunch mentality.i pass by the usc campus in columbia daily,during the summer many are around the various pools getting suntans and getting ready to party at night.explain to me why these precious kids can't work and help their parents,and the folks who pay for their tuition?our parents did it.oh i forgot that was america then, i don't know what we have these days.yes. i worked and went to school.i got my tan wherever i could.i used the gi bill these kids today don't know what that is,they probably think it's some kind of currency.
The average age of the world's greatest civilizations has been two hundred years. These nations have progressed through a sequence; from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependence; from dependency back again into bondage. We are currently in the last dependency phase.
shivas, I feel sorry for your family and anyone else you have authority over. Your obvious and hate fill insanity can't feel good.
Due to AIG's reach the government was scared to let it fail. That does make sense. Maybe AIG was too big though. Maybe it had too much monoply and should have been broken up into seperate enteties before all this could happen. Too late now though. The government did what it thought it had to do. I do not like it, but then again it may be better than the alternative had they let it fail. All we can hope is the government learns from this (although after a great depression, savings and loan scandal, etc it appears lessons are not fully comprehended). Although I think Sean Hannity understated things claiming this is just a regular part of the cycle, I do think PT is partially right about overraction. People make these things self fulfilling prophecies. If everyone thought positively, and invested money into some of these companies while the stock is down, then the companies would have the capital to do some succesful things, raise their value and then the shareholders and company both succeed. If I had more money I would be doing so.
These bail outs are socialism for the rich, the well connected and Wall Street (i.e. where profits are privatized and losses are socialized). Feds said they wouldn't bail out Lehman, but they asked JP Morgan Chase to advance Lehman the 87 billion, then the Federal Reserve Bank of New York repaid Chase. Wait, wasn't everyone patting the government on the back for not bailing out Lehman?
Technically, they didn't bail out AIG, they loaned them money. No one expects the company to exist as it once was. Basically, the bailout was to allow the company time to liquidate its assetts in a measured manner and to stem panic on the stock market. I heard an analysts say that if the government hadn't done what did when it did, then the market would have fallen a thousand points the next day.
I also heard that certain AIG properties are doing well; it's only the mortgage insurance division thats really cracking up. No Wall Street Company was willing to buy the whole cow, but there are definately companies that would be willing to buy certain AIG properties (i.e. did you know they lease private jets?) which would go a long way to paying off their debt to the U.S.
We are charging the 11 percent interest on the loan, btw. If it works out, the taxpayers will make a fair amount of money.
Now, whether or not I think its right for the government to step in and do this sort of thing....I don't know. It sounds to me a little like socialism, even though we aren't technically owners of the company.