Rescue AIG? Or Stick a Fork in Em They’re Done? Avoiding the Consequence is Not a Solution

 

              What’s about three times the size of the Bear Stearns bailout, about ten times better than a quarter point Fed rate cut and likely to take place over night?  How about the new Federal Reserve Loan Package about to be offered to AIG whose claim to fame is being “too big to fail” unlike those turkeys over at Lehman Brothers. Once more unto the breach for the stoic front man of the global banking cartel, the Chairman of the Federal Reserve, Benjamin Bernanke as he comes up with a big chunk of money for AIG on the last possible day. So let’s recap the events of recent days:

·        The Global Money Trust (aka the Federal Reserve) arranges buyers at very favorable terms to buy out the ailing Bear Stearns.

·        Treasury Secretary Hank Paulson mortgages your children’s future to take over Freddie and Fannie essentially nationalizing the mortgage loan industry.

·        Bernanke and Paulson went camping and roasted marshmallows over the campfire while Lehman Brothers declared bankruptcy and Merrill Lynch was sold for a song. The Dow drops over 500 points.

·        The Global Money Trust (the Fed) shows its discipline and determination by refusing investors the quarter point interest cut they were expecting signaling a new era of non interference in the market.

·        Toward the end of trading a report that the Global Money Trust (The Fed) is “reconsidering” putting a 90 billion dollar loan package together for AIG insurance emerges in the press.  Apparently they get that lucky designation of being “too big to fail”.  I’m sure glad the Fed didn’t give out that quarter point cut earlier or some might have seen them as week and too prone to intervene in the markets!

                    What’s the outcome of all this high drama and funhouse mirror accounting and lending?  There are two possibilities:

1.      The Global Money Cartel makes the loan and saves the day. The cobble together private companies to get the money and guarantee the transaction or facilitate the loans needed or what have you.  If this does not come with some sort of guarantee from the federal government to guarantee payment, thus mortgaging your grandchildren’s grandchildren’s future, I would die of shock.  The Devil is in the Details and the saving of AIG will come at a steep price, as yet unknown, to the US taxpayer.  What’s an extra one trillion dollars in liabilities to the federal government who doesn’t even have to show it on their books if we taxpayers end up in the insurance business by essentially nationalizing the largest insurance company in the world. At the very least, even if they can’t make the deal, it saves us from facing another loss of say 300 to 1200 stock market points lost on the day.

2.      Neither the Global Money Trust (the Fed) nor the Treasury Department dare try to rationalize further interference lest it blow up in their face.  After all we had a 9.5 Trillion dollar debt before then Paulson bought all our mortgages and now we have about 15.5 Trillion and add another trillion or so for AIG worst case and you’ve got about 16.5 Trillion Dollars and its only Tuesday. So AIG goes belly up and the market looses a thousand points for the day and the law of unintended consequences kicks in on a global basis shutting down the world markets for the rest of the week.  Wouldn’t that be fun?

 

                    I have the strange feeling that tomorrow, Wednesday, won’t be all sunshine and rainbows on Wall Street.  And even if we survive the AIG situation we still have Washington Mutual to deal with and the Auto Companies and who knows what beyond that.  If they had a deal ready to go to bail out AIG than they would have announced it so this situation is still very fluid and whatever they decide there will be huge repercussions. Still it looks like the Dow is going to end the day up about 100 points and we live to fight another day.

We can be thankful for that, right?

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One response to “Rescue AIG? Or Stick a Fork in Em They’re Done? Avoiding the Consequence is Not a Solution

  1. I am so sick of this AIG bail out talk. They have been on CNBC all day pitching the Fed bail out. Insurance companies never want to honor policy claims and now they want the tax payer to bail them out. Let them go, the market’s are working themselves out.

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