muck Posted September 17, 2008 Share Posted September 17, 2008 Wouldn't a gov't buyout of AIG be even closer to socialism. See above. Quote Link to comment Share on other sites More sharing options...
Clubfoothead Posted September 17, 2008 Share Posted September 17, 2008 This wipes out 80% of the equity value of the stock holders ... and ... promotes financial stability in the US and abroad. As with FNM and FRE, I would expect that the US Gov't will wind down the balance sheet of these companies and sell them to the public at some point down the road. I would guess that there is better than a 50% chance that (i) all loans get repaid in full with interest ... and ... (ii) the US Gov't sells it's equity in all entities for a gigantic profit. If the profit is realized, I am hopeful that it would be used to shore up medicare / medicaid and/or be used for a partial privatization of social security. Maybe something like, everyone with a SS account would receive a portion of their SS account at IPO prices of a combined FNM/FRE and in AIG ... which they could sell and reinvest ... or keep ... and merge the SS distribution into their existing IRA or 401(k) to continue tax efficient growth. This approach would have the triple benefit of (i) providing stability in the times of great distress ... (ii) reminding capitalists everywhere that bad business practices will not be tolerated without repurcussions ... and ... (iii) reducing the future SS / medicare / medicaid costs to the system. There's a better than 50% chance? 50% chance of what? The American taxpayer not footing the bill for the bailout only? Or for the American taxpayer to not foot the bill AND the federal government to make a profit off of this action? Or hat that the American tax payer will not only not foot the bill but that the federal government will also make a profit off of this action that will also be used to the benfit of the American people? If that's what you are telling me that sure as heck sounds a lot like that windfall tax on Exxon you are so opposed to. Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 There's a better than 50% chance? 50% chance of what? <snip> That the American tax payer will not only not foot the bill but that the federal government will also make a profit off of this action that will also be used to the benfit of the American people? If that's what you are telling me that sure as heck sounds a lot like that windfall tax on Exxon you are so opposed to. Exxon hasn't mismanaged their business so badly that the only way they can stay in business is to have the gov't give them a loan. Hugh difference. Years ago, when Chrysler got a loan from the gov't (which was repaid in full, like I expect both FNM, FRE and AIG to be), the gov't should have taken 80-100% of them, too ... only to have sold it back to the market 5-10yrs later at massive profit ... NOTE: This is NOT a decision to take lightly and doesn't apply to just any ol' business. If I fjord up my business, I'm toast. The only businesses that are probably big enough to approach the gov't and get a "yes, we'll give you money" now are the Bank of America / Merrill Lynch entity, maybe Goldman Sachs, maybe JP Morgan, maybe Morgan Stanley, maybe Citigroup ... but, probably BAC and C are the only two that would even get a passing glance ... all others would probably be would down via the bankruptcy courts ... Quote Link to comment Share on other sites More sharing options...
bushwacked Posted September 17, 2008 Share Posted September 17, 2008 It is only socialism when the government helps American people. When it helps big multinational companies it's called replacing the outdated and ineffective patchwork quilt of regulatory oversight. Well yea, of course. Obama is a mooslim, Obama hates America, Obama is a socialist. Repeat as necessary until you can effectively mislead 1/2 the voters. Quote Link to comment Share on other sites More sharing options...
Clubfoothead Posted September 17, 2008 Share Posted September 17, 2008 Exxon hasn't mismanaged their business so badly that the only way they can stay in business is to have the gov't give them a loan. Hugh difference. Years ago, when Chrysler got a loan from the gov't (which was repaid in full, like I expect both FNM, FRE and AIG to be), the gov't should have taken 80-100% of them, too ... only to have sold it back to the market 5-10yrs later at massive profit ... NOTE: This is NOT a decision to take lightly and doesn't apply to just any ol' business. If I fjord up my business, I'm toast. The only businesses that are probably big enough to approach the gov't and get a "yes, we'll give you money" now are the Bank of America / Merrill Lynch entity, maybe Goldman Sachs, maybe JP Morgan, maybe Morgan Stanley, maybe Citigroup ... but, probably BAC and C are the only two that would even get a passing glance ... all others would probably be would down via the bankruptcy courts ... Exxon's behavior is worse than mismanagement and the government gives them how many millions a year in subsidies? Those are loans right? Or are those better than loans, are those gifts? But to the point, if it is so easy wind down the balance sheet and sell at a profit, why does the government need to do it? Why is this not a correction that should just be allowed to play itself out? Quote Link to comment Share on other sites More sharing options...
Egret Posted September 17, 2008 Share Posted September 17, 2008 See above. Yes, but it's still gov't buying a stake in a company. Even if it is only a loan, there's still the potential to have the gov't left holding the bag. Gov't buying a stake in a company is essentially socialism, right? Quote Link to comment Share on other sites More sharing options...
keggerz Posted September 17, 2008 Share Posted September 17, 2008 Exxon hasn't mismanaged their business so badly that the only way they can stay in business is to have the gov't give them a loan. Hugh difference. Years ago, when Chrysler got a loan from the gov't (which was repaid in full, like I expect both FNM, FRE and AIG to be), the gov't should have taken 80-100% of them, too ... only to have sold it back to the market 5-10yrs later at massive profit ... NOTE: This is NOT a decision to take lightly and doesn't apply to just any ol' business. If I fjord up my business, I'm toast. The only businesses that are probably big enough to approach the gov't and get a "yes, we'll give you money" now are the Bank of America / Merrill Lynch entity, maybe Goldman Sachs, maybe JP Morgan, maybe Morgan Stanley, maybe Citigroup ... but, probably BAC and C are the only two that would even get a passing glance ... all others would probably be would down via the bankruptcy courts ... auto industry? Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 But to the point, if it is so easy wind down the balance sheet and sell at a profit, why does the government need to do it? Why is this not a correction that should just be allowed to play itself out? The important thing is that it happens in an orderly fashion. Unwinding it is easy. Unwinding it so that it doesn't wreck the entire world's economy is more difficult...immensely more difficult. And, the best way for this to happen is to have patient hands holding the reigns. Again, all this is IMO. I'm sure that others will view this differently. Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 auto industry? No loans. Please no loans...please. ...either that, or I just don't understand the issues at all... Quote Link to comment Share on other sites More sharing options...
keggerz Posted September 17, 2008 Share Posted September 17, 2008 No loans. Please no loans...please. ...either that, or I just don't understand the issues at all... i was referring to a bailout, my bad Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 i was referring to a bailout, my bad No bailout for the auto industry. Besides, maybe the Ford family will have to sell the team and new ownership can infuse it with real management. Quote Link to comment Share on other sites More sharing options...
Double Agent Posted September 17, 2008 Share Posted September 17, 2008 These guys seem to take the news well. Two Guys Quote Link to comment Share on other sites More sharing options...
TimC Posted September 17, 2008 Share Posted September 17, 2008 These guys seem to take the news well. Two Guys That's funny. What does our financial markets and homosexuality have in common? The Government should stay out of both issues. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 17, 2008 Share Posted September 17, 2008 Muck is a very smart man. Quote Link to comment Share on other sites More sharing options...
Kid Cid Posted September 17, 2008 Share Posted September 17, 2008 Yes, but it's still gov't buying a stake in a company. Even if it is only a loan, there's still the potential to have the gov't left holding the bag. Gov't buying a stake in a company is essentially socialism, right? uhh, only in a very simplistic and not very accurate way. Socialism Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 NOTE: The US Gov't is receiving LIBOR + 8.5% on the loan they / we made to AIG. LIBOR was a shade over 3% earlier today ... so, this is an 11.5% loan right now ... plus 80% of the company ... I wish I had $85B to have made the same investment on the same terms. I believe the US taxpayer will end up making a pile of money on AIG once its all said and done. Not as sure about FNM and FRE, though. Quote Link to comment Share on other sites More sharing options...
Egret Posted September 17, 2008 Share Posted September 17, 2008 uhh, only in a very simplistic and not very accurate way. Socialism I'm not an economist, so simplistic works for me. Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 I'm not an economist, so simplistic works for me. Does inaccurate work for you, too? Quote Link to comment Share on other sites More sharing options...
DemonKnight Posted September 17, 2008 Share Posted September 17, 2008 NOTE: The US Gov't is receiving LIBOR + 8.5% on the loan they / we made to AIG. LIBOR was a shade over 3% earlier today ... so, this is an 11.5% loan right now ... plus 80% of the company ... I wish I had $85B to have made the same investment on the same terms. I believe the US taxpayer will end up making a pile of money on AIG once its all said and done. Not as sure about FNM and FRE, though. Wonderful. Means we can pay for a few more years in Iraq. Congrats Haliburton!!! Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 Wonderful. Means we can pay for a few more years in Iraq. Congrats Haliburton!!! You may want to lighten up on your cynical pills a bit. Quote Link to comment Share on other sites More sharing options...
Tboogs Posted September 17, 2008 Share Posted September 17, 2008 NOTE: The US Gov't is receiving LIBOR + 8.5% on the loan they / we made to AIG. LIBOR was a shade over 3% earlier today ... so, this is an 11.5% loan right now ... plus 80% of the company ... I wish I had $85B to have made the same investment on the same terms. I believe the US taxpayer will end up making a pile of money on AIG once its all said and done. Not as sure about FNM and FRE, though. yippee ...thats a 900,000,000 profit at 11%!!! AIG will be known as P.I.G (Peoples Insurance Group) when they default on the loan...thats socialism at its best! Quote Link to comment Share on other sites More sharing options...
WaterMan Posted September 17, 2008 Share Posted September 17, 2008 "Yes of course America will pay for that. They are hard working after all." Quote Link to comment Share on other sites More sharing options...
muck Posted September 17, 2008 Share Posted September 17, 2008 yippee ...thats a 900,000,000 profit at 11%!!! AIG will be known as P.I.G (Peoples Insurance Group) when they default on the loan...thats socialism at its best! 11.5% * $85B > $9.5B ... you missed a decimal place ... Quote Link to comment Share on other sites More sharing options...
Tboogs Posted September 17, 2008 Share Posted September 17, 2008 11.5% * $85B > $9.5B ... you missed a decimal place ... yeah that's what i meant... Quote Link to comment Share on other sites More sharing options...
TimC Posted September 17, 2008 Share Posted September 17, 2008 yeah that's what i meant... Don't worry Tboogs. In this economy that nothing will ever be paid back, you can move decimals around anyway you like it!! Quote Link to comment Share on other sites More sharing options...
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