Seriously wtf is going on!?!?! Govt. doing a huge bailout? This is such a stupid short-term fix. Great so my taxes are going to increase tremendously. Socialism creeping???
The good way to put it - Socialism under the skin of Keynesianism The bad way - Taxpayers: trust me; F&%$ you!
“Markets will remain irrational longer than you can remain solvent.” - John Maynard Keynes Markets work, as long as participants trust each other. When there is complete lack of trust, government has to step in until the trust is restored. Also, government should step out as soon as that happens. Besides government is entering the picture only as one big greedy market participant who everybody wants to trust. Look at the lending rate on AIG loan. IMO what govt is doing is bottom fishing and govt. might end up making some decent money for taxpayers when it exits the scene.
Do you think the folks at the dmv will manage aig… And make a profit…
Fed has lent 85B$ at 8.5 + LIBOR … afaik AIG management doesnt change. All those bank CDS that were marked-down will come up again once confidence is restored and ppl r convinced that sky is not falling. It will also restore AIG rating and its capital need will go down automatically. In fact AIG will want to get rid of this loan as soon as possible … who wants to carry 11-12% cost debt. The moment AIG manages financing from somewhere else and it will pay the Fed. All in all I think Fed got a good deal for taxpayers in AIG case. I don’t know the details of comprehensive mortgage takeover plan, but they can get a good deal there too.