Author Topic: So long AIG, and thanks for $22.7b in profits from the bailout  (Read 5432 times)

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Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #30 on: December 12, 2012, 01:57:32 PM »

Offline Interceptor

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The force they responded? Laughable. They were sporadic - some companies get saved, some go it alone. Companies are forced to take TARP funds because they don't want banks later saying "we don't need it". All of the sudden TARP funds are given to GM and Chrysler, then the Gov't runs the bankruptcy deal, privileged bond holders are disadvantaged to help protect unions? That's not certainty.
That's government, when forced to respond to something unprecedented. There was a blizzard of resources committed to the rescue efforts. The focus was uneven. The results were mixed. Overall it was positive.

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IMO we traded a 6 months of pain, for 3 months of pain + a decade of anemic growth. Bad deal that.
Sure, but I don't believe that your six month deal was on the table. The last time that we tried letting the economy sort itself out after a massive financial crisis, we got something called the Great Depression. It's not like we haven't seen this film before.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #31 on: December 12, 2012, 02:03:13 PM »

Offline Interceptor

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What exactly is the interest on that debt we needed to incur in order to make available the monies for all these bailouts?
People are literally paying the United States to hold their money. Take a look at the return on 10-year Treasuries.

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There's a lot more that goes into the full P&L of the bailouts than some of the very simple numbers being thrown around by the government agencies who's job it is to make the bailouts look good.

Any accountant or business owner can tell you you that.
This is true, but there are also benefits that are unaccounted for. Accountants and businessmen have the distinct advantage of only having to look out for themselves.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #32 on: December 12, 2012, 02:15:53 PM »

Offline angryguy77

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What exactly is the interest on that debt we needed to incur in order to make available the monies for all these bailouts?
People are literally paying the United States to hold their money. Take a look at the return on 10-year Treasuries.

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There's a lot more that goes into the full P&L of the bailouts than some of the very simple numbers being thrown around by the government agencies who's job it is to make the bailouts look good.

Any accountant or business owner can tell you you that.
This is true, but there are also benefits that are unaccounted for. Accountants and businessmen have the distinct advantage of only having to look out for themselves.

You do realize that people "paying us to hold there money" is money that we have to pay back at some point right?

You should probably reword that so your statement isn't so misleading.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #33 on: December 12, 2012, 02:19:20 PM »

Offline Brendan

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@Interceptor - I don't think you support your position or address mine. You're making a tautological argument that the US gov't is lender of last resort and therefor needed to make loans of last resort. Doesn't show that these loans were useful. I think the forbes analysis on money, and again you haven't shown any of the assumptions, observations, or analysis in the article are wrong.

Also re: GM - GM doesn't fit your category of "critical financial institutions" regardless of macro environment. You might at least try to reconcile your own analysis from earlier in the thread.

And of course, thank you for sharing your opinons. Stated as fact they may be, evident truths they aren't.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #34 on: December 12, 2012, 02:23:21 PM »

Offline Brendan

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IMO we traded a 6 months of pain, for 3 months of pain + a decade of anemic growth. Bad deal that.
Sure, but I don't believe that your six month deal was on the table. The last time that we tried letting the economy sort itself out after a massive financial crisis, we got something called the Great Depression. It's not like we haven't seen this film before.
Completely false - Great Depression was a period of the most intensive gov't intervention ever. Read Amity Shales' Forgotten Man for a good historical discussion of the variety of intervention. Price controls? Wage controls? Forced nationalization of companies and utilities? Etc. etc.

If that's your example of "letting things sort them out" you are just completely wrong. Or using a language other than English,

And of course just like with FDR, Obama accelerated the intervention of his Big Gov't Republican predecessor. Yes we've seen the movie before, and we're seeing it again. Get ready for 1937.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #35 on: December 12, 2012, 02:24:23 PM »

Offline Brendan

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What exactly is the interest on that debt we needed to incur in order to make available the monies for all these bailouts?
People are literally paying the United States to hold their money. Take a look at the return on 10-year Treasuries.

Quote
There's a lot more that goes into the full P&L of the bailouts than some of the very simple numbers being thrown around by the government agencies who's job it is to make the bailouts look good.

Any accountant or business owner can tell you you that.
This is true, but there are also benefits that are unaccounted for. Accountants and businessmen have the distinct advantage of only having to look out for themselves.

You do realize that people "paying us to hold there money" is money that we have to pay back at some point right?

You should probably reword that so your statement isn't so misleading.
LOL. If only it wasn't for those meddling accounts and businessmen just looking out for themselves.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #36 on: December 12, 2012, 03:33:13 PM »

Offline JSD

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How did the federal reserve come up with the money to give AIG?

If there is $10 that exists in country X and I magically create another $10 and give it to failed companies of country X, then I generate $2 of interest from that and give it to said country, is that country better off?

I know it's a bad anology but I'm working on a final and don't have time give it much more effort. My point is this is fools gold and a sham.
« Last Edit: December 12, 2012, 03:43:19 PM by JSD »

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #37 on: December 12, 2012, 03:57:26 PM »

Online BballTim

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It wouldn't have been isolated to the European banks, though.  If they failed, the next shoe to drop was probably going to be Goldman Sachs.  Bailouts suck, suck, suck, suck, SUCK, which is why I wish they'd blow the [dang] banks up into smaller pieces now that things have stabilized, but the *world* financial markets couldn't have handled an AIG failure at that moment.

  I agree with this. Any company that's "too big to fail" should be broken up into pieces that aren't.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #38 on: December 12, 2012, 03:59:06 PM »

Offline JSD

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In Jan 2007, the national debt was $8.7 trillion.
Today it is $16 Trillion.

And people are celebrating a few billion profit? I just don't understand.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #39 on: December 12, 2012, 04:47:43 PM »

Offline JSD

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Did I really kill this thread by pointing out one simple fact?

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #40 on: December 12, 2012, 04:53:39 PM »

Offline Interceptor

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You do realize that people "paying us to hold there money" is money that we have to pay back at some point right?
This question is insulting. He asked about interest on the debt, I responded with a point about interest on the debt.

@Interceptor - I don't think you support your position or address mine. You're making a tautological argument that the US gov't is lender of last resort and therefor needed to make loans of last resort. Doesn't show that these loans were useful. I think the forbes analysis on money, and again you haven't shown any of the assumptions, observations, or analysis in the article are wrong.
That's your prerogative, but I don't agree with the assessment. I feel as though you are not accurately accounting for the potential disaster of a global financial collapse.

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Also re: GM - GM doesn't fit your category of "critical financial institutions" regardless of macro environment. You might at least try to reconcile your own analysis from earlier in the thread.
GM is no AIG, but the over-arching rule applies: the federal government has a responsibility here. An orderly bankruptcy was the best solution, but it required financing that nobody was willing to provide, so the government had to step in. There were more than just jobs at GM at stake, there was also the supply chain to take into account, which could have taken down even the relatively healthy Ford.

Completely false - Great Depression was a period of the most intensive gov't intervention ever. Read Amity Shales' Forgotten Man for a good historical discussion of the variety of intervention. Price controls? Wage controls? Forced nationalization of companies and utilities? Etc. etc.
You give me grief for Krugman, and you bring up Amity Shlaes? I'll see this and raise you Ben Bernanke.

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Or using a language other than English
Is this entirely necessary?

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Yes we've seen the movie before, and we're seeing it again. Get ready for 1937.
I've been getting ready. Simultaneous spending cuts and tax increases are just around the corner, sure to throw us back into recession just like in 1937. Although maybe this time, we've learned something.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #41 on: December 12, 2012, 05:13:32 PM »

Offline Interceptor

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Did I really kill this thread by pointing out one simple fact?
I can't speak for anyone else, but I chose not to respond to it because it's off-topic.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #42 on: December 12, 2012, 05:48:08 PM »

Offline Rondo2287

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Did I really kill this thread by pointing out one simple fact?
I can't speak for anyone else, but I chose not to respond to it because it's off-topic.

Well if the topic is we made 22.7 billion dollars and can't extend to the broader picture its not really much of a topic.  Again when you look at the big picture and look at the other components of the accounting of the AIG situation you see that it isnt a net positive of 22.7 Billion.

Then when you look at the even bigger picture like JSD is pointing out its even worse. 

But yay, 22.7 Billion.  It certainly is better than nothing.
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Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #43 on: December 12, 2012, 05:54:15 PM »

Offline JSD

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Did I really kill this thread by pointing out one simple fact?
I can't speak for anyone else, but I chose not to respond to it because it's off-topic.

So the money given to AIG to produce these billions of "profits" is off-topic? I don't think so.

The bailouts are the most significant reason our debt has doubled in that time span, which I'm sure you understand.

It is not off-topic.

Re: So long AIG, and thanks for $22.7b in profits from the bailout
« Reply #44 on: December 12, 2012, 06:03:10 PM »

Offline Interceptor

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Well if the topic is we made 22.7 billion dollars and can't extend to the broader picture its not really much of a topic.
Don't feel as though you can't talk about it if you want to; I just think the debt is much more complex issue that goes far beyond the bailouts. I only replied because it looked like JSD was fishing for someone to respond.

The bailouts are the most significant reason our debt has doubled in that time span, which I'm sure you understand.
This is not true. The bailouts have largely been paid for already, and even if they weren't, things like the drop in revenue and the built-in unpaid-for spending from the Bush years are pretty big contributors as well.

 

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