Excuse me for asking, but...

[usmc1]

Where did we find the $85-billion lying around that we could afford to use it to front AIG?

And, if we've got that kind of change under the sofa cushions and the change basket on our dresser, couldn't we, shouldn't we use to to develop some jobs for the 600,000 people whose jobs went away last year?

Or maybe, to fund some health care for people without?

I mean, well actually, I know, a billion is not what it used to be, right? But you'd think that $85-billion would go a considerable way toward solving some of the problems we have? Wouldn't you?

And, you'd think maybe New Orleans, or the Mississippi Gulf Coast, or Galveston or Houston, would relish a little taste, now wouldn't you?

Afterall, $85-billion while not all it once was, ain't exactly hay either, is it?

And. If I might. Just one other question. Who in the name of holy screeching hell is going to bail out Uncle Sam?

[CAMERA]

You and I are going to pay for it. Where else does the government get their money?

[Qikdraw]

Daily Kos had an amusing blurb today...

Long Live the New Union of Socialist Republicans (http://www.dailykos.com/storyonly/2008/9/17/74214/0916/698/601376)

Welcome news comrades! We the People are now We the Owners. The People's Insurance Company, formerly known as AIG, was saved for the time being from the forces of capitalism by the new Union of Republican Socialists, formerly known as the GOP. Somewhere in the great beyond, the ghost of Karl Marx is grinning while the spirit of Adam Smith forks over the one dollar bet with an invisible hand:

Now that the People own a major insurance company, it's fair to ask how the People's Insurance Company, along with the People's Mortgage Companies and the People's Investment Banks, will benefit the People who Own them. Can we expect lower premiums, equity sharing, and corporate perks for our hundreds of billions of dollars? Should we start checking our mailbox for dividend checks? Who gets paid first, claimants, bondholders, stockholders, or we the new taxpayer owners? We the Owners, want to know, and the Union of Socialist Republicans better damn well tell us, fast.

Humourous, but has some very good points.

[Qikdraw]

You and I are going to pay for it. Where else does the government get their money?

The Chinese.

[David77]

The Chinese.

Since USA does not have adequite money in the coffers, we borrow foreign money, on which we will be paying interest for "ages".

[atalanta]

The Government and, in some way, US taxpayers will likely make a fortune from the dismembering of AIG which has profitable businesses in almost every country. Critics should also consider that their own home/auto/life/business insurer is almost certainly directly or indirectly interwoven with AIG. Insurance is about sharing risk and insurance companies trade risk with each other. The consequences of a player as large, widespread and complex as AIG failing would be cataclysmic. You should be thanking Hank Paulson et al.

[NudePete]

I understand it to be borrowed money, either directly or indirectly.

By borrowed, I mean the U.S. Fed sells government bonds (i.e. collects the money which it is borrowing) in return for a promise to pay it back at maturity (the loan agreement), as well as monthly, quarterly or yearly interest payments (i.e. the carrying cost of the loan).

Who is buying these bonds? Domestic investors, pension funds, financial institutions, as well as lots of foreign firms and governments. It would be interesting if the proportions of this distribution were available. Who is America indebted to?

[Qikdraw]

What I find scary/ironic is that this administration, and the republicans, keep talking about national security, but have added 4 TRILLION dollars of borrowed money onto the national debt. What happens if those countries that hold our debt decide to come collecting? What if they decide to sell that debt for pennies on the dollar? What would happen to our economy?

[usmc1]

I understand it to be borrowed money, either directly or indirectly.

By borrowed, I mean the U.S. Fed sells government bonds (i.e. collects the money which it is borrowing) in return for a promise to pay it back at maturity (the loan agreement), as well as monthly, quarterly or yearly interest payments (i.e. the carrying cost of the loan).

Who is buying these bonds? Domestic investors, pension funds, financial institutions, as well as lots of foreign firms and governments. It would be interesting if the proportions of this distribution were available. Who is America indebted to?

Well here's a chart that answers part of that question. But, you know what, I think there's some very interesting stories buried in there.

Take for example Luxembourg. I've been there, nice place to visit, but not exactly a place you'd think of as being one of the primary lenders to the USA.

And Mexico? You'd think we be loaning them money. Of course they provide their citizens cradle to grave health, dental, vision care for about $300 a year, and have enough left over to lend to us at a profit.

No wonder we've become the butt of worldwide jokes.


<table class="wikitable"><tbody><tr><th colspan="2">Foreign owners of US Treasury Securities (April 2008)</th> </tr> <tr> <td align="center">Nation</td> <td align="center">billions of dollars</td> </tr> <tr> <td>Japan</td> <td>592.2</td> </tr> <tr> <td>China, Mainland</td> <td>502</td> </tr> <tr> <td>United Kingdom</td> <td>251.4</td> </tr> <tr> <td>Oil Exporters</td> <td>153.9</td> </tr> <tr> <td>Brazil</td> <td>149.5</td> </tr> <tr> <td>Carib Bnkng Cntrs</td> <td>115.4</td> </tr> <tr> <td>Luxembourg</td> <td>84.8</td> </tr> <tr> <td>Hong Kong</td> <td>63.1</td> </tr> <tr> <td>Russia</td> <td>60.2</td> </tr> <tr> <td>Norway</td> <td>45.3</td> </tr> <tr> <td>Germany</td> <td>44</td> </tr> <tr> <td>Taiwan</td> <td>42.6</td> </tr> <tr> <td>Switzerland</td> <td>42.5</td> </tr> <tr> <td>Korea</td> <td>40.5</td> </tr> <tr> <td>Mexico</td> <td>38</td> </tr> <tr> <td>Singapore</td> <td>33.3</td> </tr> <tr> <td>Turkey</td> <td>31.1</td> </tr> <tr> <td>Thailand</td> <td>27.9</td> </tr> <tr> <td>Canada</td> <td>24</td> </tr> <tr> <td>Ireland</td> <td>18.5</td> </tr> <tr> <td>Netherlands</td> <td>15.5</td> </tr> <tr> <td>Sweden</td> <td>13.1</td> </tr> <tr> <td>Egypt</td> <td>12.7</td> </tr> <tr> <td>Belgium</td> <td>12.5</td> </tr> <tr> <td>Poland</td> <td>12.5</td> </tr> <tr> <td>Italy</td> <td>10.6</td> </tr> <tr> <td>India</td> <td>10.5</td> </tr> <tr> <td>All Other</td> <td>154.2</td> </tr> <tr> <td align="center">Grand Total</td> <td align="center">2601.8</td></tr></tbody></table>

[Centauri4]

I hear so many people, including my father, talk about how LESS government involvement would be better for our nation and then I see the experts on television explain how AIG is tied into so many 401K retirement plans that its failure would have made Enron look like the collapse of a roadside lemonade stand! WOW!! What was Enron'ss tab? Lower in the billions. I seem to recall the MCI/Worldccom debacle as being only 7 or 11 billion and that it was just "financial misrepresentation". A little bit better I suppose but still very scary!

People complain about taxes, government regulation and "oversight committees" but these are the things WE THE PEOPLE have created or allowed to be created over time that allow bailouts to even be possible! I have no idea how this money will be repaid, how long it will take (how many generations) or whether the impact of taxes will be immediately painful or not, but MY FEAR is equal that society (our economy) as a whole would have been knocked farther into the "hurt locker" if this bailout had not happened.

I almost wish I had studied economics in school now (these days). I predicted things were going to get worse a few months ago, I didn't know how exactly but I think this sort of justification proves my "gut feeling" was right.

Gotta go contribute my effort to the rebuilding of America's economy right now, but maybe I will have time for additional comments later.

My BIG question is: "Who's going to be next?"

~

[atalanta]

What I find scary/ironic is that this administration, and the republicans, keep talking about national security, but have added 4 TRILLION dollars of borrowed money onto the national debt. What happens if those countries that hold our debt decide to come collecting? What if they decide to sell that debt for pennies on the dollar? What would happen to our economy?

Indeed very scary. The Dollar was originally backed by a fixed amount of gold, and exchangeable for same on demand. When that became inconvenient, the gold backing was removed. So what backs the currency now? Go out and buy gold, or something comparable of limited production and high and enduring value.

[nudenwv]

i'd like to sell my portion back to the government!

[NatureFred]

The Government and, in some way, US taxpayers will likely make a fortune from the dismembering of AIG which has profitable businesses in almost every country. Critics should also consider that their own home/auto/life/business insurer is almost certainly directly or indirectly interwoven with AIG. Insurance is about sharing risk and insurance companies trade risk with each other. The consequences of a player as large, widespread and complex as AIG failing would be cataclysmic. You should be thanking Hank Paulson et al.
I agree that this is a case of the government making a huge expenditure which will probably NOT impose crushing debt on generations to come, as some folks in this thread seem to fear. But I can't help relishing the irony that it is the current, Republican, administration that is stuck with having to nationalize a number of big businesses this way.

And another thing: we should be asking some very hard questions about how any one player got so large, widespread, and complex that its failing would be cataclysmic. Perhaps it would be better if the economy were more strongly regulated--yes, according to classic economics, a strongly regulated economy is not as efficient at creating wealth. But perhaps we should ask whether efficiency at the price of periodic cataclysms isn't a bad choice. I for one would be happy with modest, steady growth with occasional small setbacks, rather than the screaming roller-coaster ride that a completely free market provides.

[Qikdraw]

My BIG question is: "Who's going to be next?"

~

Washington Mutual apparently, and if no one is around to buy it, and the FDIC needs to step in, the FDIC will need a bailout.

This is how bad it is, and we still have people claiming everything is fine!

[Naturist Mark]

Washington Mutual apparently, and if no one is around to buy it, and the FDIC needs to step in, the FDIC will need a bailout.

This is how bad it is, and we still have people claiming everything is fine!

Ironic isn't it?

Do you think that those people who proclaim that capitalism works best when the government can't interfere and that regulation is tantamount to socialism understand that we are now getting real socialism (our government OWNING a big portion of corporations) because it has to bail out firms that failed due to lack of proper regulation.

-Mark

[atalanta]

Fred, you cannot control corporate growth by putting some artificial ceiling on it without distorting, and maybe destroying the whole free-market system. How did GE get so big? Or Boeing? Or Exxon? Would they be better/more efficient enterprises if they were smaller? No. Will someone some day break them up to achieve greater value from the sum of the parts? Quite possibly - that is the way of the world.

[usmc1]

Ironic isn't it?

Do you think that those people who proclaim that capitalism works best when the government can't interfere and that regulation is tantamount to socialism understand that we are now getting real socialism (our government OWNING a big portion of corporations) because it has to bail out firms that failed due to lack of proper regulation.

-Mark

They ignore that. They look off into space. The tug at the skin around their Adam's apple, and then spit into the dust and roll that little ball of mud around with the toes of their boots. They attack Social Security. They attack the victims of poverty, of want, and of hunger as being lazy or undeserving and getting their just rewards.

They do nothing. Except engaging in avoiding acknowledgment and acceptance of the fact that unregulated and unrestrained capitalism is a perniciously competitive system where the end-game is for one person to acquire all the wealth.

[NatureFred]

Fred, you cannot control corporate growth by putting some artificial ceiling on it without distorting, and maybe destroying the whole free-market system. How did GE get so big? Or Boeing? Or Exxon? Would they be better/more efficient enterprises if they were smaller? No. Will someone some day break them up to achieve greater value from the sum of the parts? Quite possibly - that is the way of the world.

I'm all for distorting the free market system. The touted efficiency of the unfettered free market system is the efficiency of creating wealth. Not widespread well-being, not fairness, not happiness, not health--wealth.

I don't believe in Marxism, either, but a somewhat-distorted free market? Bring it on! Give growing corporations a choice--stay below the radar and escape the heavy hand of regulation, or grow to the size of a GE or Boeing, and greet the regulators with open arms.

I notice that conservative politicians love to talk about how small businesses are the backbone of our great nation. But it's not the SMALL businesses they're bailing out. So let's give the small businesses an edge, and clamp down on the big ones.

[atalanta]

Regulation for the big but not for the small corporation doesn't sound to me like a good system. Seems like something made for the benefit of organized crime.

[NatureFred]

Regulation for the big but not for the small corporation doesn't sound to me like a good system. Seems like something made for the benefit of organized crime.

I guess you're going to have to explain that one to me. I'll explain my suggestion:

In the USA we currently exempt very small businesses (typically, those with fewer than 50 employees) from a number of regulations that apply to larger businesses. My suggestion would be to create another, considerably higher, threshold at which point regulators would step in and intensively review the company's investment strategies, entanglements with other companies, and so on. In short, to see whether the company was running the risk of becoming, like AIG, so big and pervasive that it could not be allowed to fail. At that point, it either backs off or it starts putting its own bailout money in escrow with the Feds (which would severely reduce its profits and discourage it from going there).

Note that in the USA we also have laws against the formation of monopolies, which are another occasional outcome of unfettered free markets. When a company starts buying up too many of its competitors, or driving them out of business, it gets much more heavily regulated. The AIG problem is a slightly different one, apparently--it just became so big and entangled with so many other players that it is indispensable.

[atalanta]

To clarify my last comment, in the bad old days of the 30s, 40s, 50s the proceeds of criminal activities were recycled into the mainstream economy through controlled small enterprises in legitimate businesses. That is largely why we now have such strict money laundering rules and why opening a new bank account involves almost a third-degree investigation. I thought NatureFred's suggestion implied that small businesses should not be subject to current controls. I do recognize that a company producing only paper-clips with a turnover of $1m or so does not require the same depth of regulation as a $100bn conglomerate.

On the other hand, to regulate the $100bn conglomerates as suggested would require full-time teams of people as qualified as the management - the cost is unimaginable. In general I suspect we are already over-regulated, especially in the European Union with the Brussels "one size fits all" approach when clearly in such a diverse group of countries it does not. There is a huge expenditure of resources in simply complying with red tape. This is not to say that the regulations are correctly focused. Recent events show clearly that they have not been.

By the way, I could not agree more that the only thing worse than a State monopoly is a private monopoly.