AIG and the USA
I’ve been a fan of Yves for quite some time and I really like the way that she can just lay it out straight. There’s no denying the way that she thinks but yet she does it with a lot of tact and much more politely than many.
Yves brings up some very solid points about the relationship between AIG and the USA, namely:
- We own AIG
- We should have been raising their rates as their performance faltered, rather than lowering them.
- We should face up to the fact that we’re not going to get our money back from AIG.
- We should start acting like we own them rather than like we currently are.
Unless we change the way we are thinking and acting, the problems in the financial markets are going to continue……
Tom Vanderwell
The Problem With Financial Services Compensation (AIG/Pay Czar Edition) « naked capitalism
Reality check, please. In case you were not paying attention, the US is NOT going to get its money back from its little AIG rescue operation. When AIG came a year to the Federal government a year ago, in desperation, it agreed to a deliberately punitive interest rate (11.50%) because it was confident (or deluded) that it could sell some divisions and pay off the borrowings pronto. Its tune quickly changed, the deal was retraded several times, with the net result that AIG got MORE money and had the terms of its loans made MUCH more favorable.So let us pause here. If any private sector lender had a borrower pull that stunt, the rates on the old money would have stayed in place and and the incremental money would have been on vastly worse terms. 15%-20% plus even more intrusive oversight would be entirely reasonable.
So let us not forget the first premise: whatever results AIG is reporting are misstated. They reflect an indefensible subsidy from the US taxpayer, one vastly in excess of the already egrigous subsidy of bailing them out without taking control. The extent of government support to AIG means it owns the place from an economic standpoint, yet is perversely loath to act like one.
Technorati Tags: AIG, Bailout Nation
The Effects of the Bailouts….
by Tom on July 18, 2009
in Market Musings, Videos
As many of you who read Straight Talk are aware, I read and follow what Barry Ritholtz says quite closely. Barry recently wrote a book called “The Bailout Nation” and here’s a video of him discussing the ramifications of the bailouts…..
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