AIG - losses 62 billion . . .

[scenic58]

Whatever happened to the old principle of running your profits and cutting your losses?

5 quarters of loss, the last one over $20 billion a month, and still good money being thrown after bad.

Did I read even half correctly that this latest injection was to prevent the ratings agencies from downgrading yet again?

What is here to downgrade, there is less than 50 cents there as it is.

 

[Landis82]

Quote from swtrader:

i'm no 'big government' guy, but isnt this as much a lesson about deregulation?

allowing a 'too big to fail' insurance company to venture into the unregulated industry of 'debt insurance' just becasue they called the insurance policy a 'credit default swap'?

the lack of regulation put the taxpayer(slave) into hock to communist china, as 'guarantor of last resort'

Exactly.
And you can thank Dick Luger, Phil Gramm, and Pete Fitzgerald for that.

 

[Martinghoul]

Quote from scenic58:

Whatever happened to the old principle of running your profits and cutting your losses?

5 quarters of loss, the last one over $20 billion a month, and still good money being thrown after bad.

Did I read even half correctly that this latest injection was to prevent the ratings agencies from downgrading yet again?

What is here to downgrade, there is less than 50 cents there as it is.

That's the beauty of selling optionality/insurance! The pain never stops, even when you think you got nothing left to give.

 

[TGregg]

Quote from swtrader:

i'm no 'big government' guy, but isnt this as much a lesson about deregulation?

In a way. Certainly the case can be made that if some organization is "too big to fail" meaning that we'll shore it up as much as needed on the public dime, then it is also by definition "too big to be free". Rather than regulate and bailout, we should let banks run (more or less) free, then when bad things happen take over, slice up, sell off and close down.

It's like everything else. If you want the fruits of free market capitalism (meaning the success) then you also have to take the bitter failure as well. To the extent that we reward failure and punish success, we receive more failure and less success - more bitter and less sweet.

It's not rocket science. Our grand parents were well aware of TANSTAAFL, and you can bet our grandkids willl have that lesson burned into their soul. Unfortunately, we've forgotten it, or perhaps never really learned it.

 

[oraclewizard77]

Agree, I don't think it was too big to fail. Just let it chapter 11 with all the other banks and we would not be in this mess now.

Nationalize all the banks that failed. Sell off their assets to new investors at whatever the price will be say 20 cents on the dollar.

Instead of bailing out the banks, the government should have just lent money directly to anyone who could provide 20% down and had good credit.

What is point of bailing out the banks when I can not get a loan even with good credit and willingly to put 20% down.

Since I have to keep the business where it is, I told the landlord we are in a recession and there were many places I could lease from so I got him to reduce the monthly payments by $ 200 per month for the next 2 years. Hopefully, one day credit will flow again, but the stupid government sure made the situation worse not better.