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The morning after
“Thank God, they bailed out AIG.”
That’s the word from personal finance expert Suze Orman on the government’s decision to lend up to $85 billion to rescue the troubled insurance giant. Although the move has eased some of the uncertainty surrounding the U.S. financial market, the AP reports that “investors’ anxiety is far from erased.”
Topic: Newsworthy, WorldMagBlog
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back to top64 Comments to “The morning after”
WE bailed out AIG.
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I’m halfway surprised to see that WoW doesn’t describe Orman as “lesbian personal finance expert.”
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What’s good for AIG is good for America?
This demonstrates yet again a George F. Will dictum: if you put up safety nets to protect banks or individuals or multinational insurance conglomerates from the consequences of bad managemt, poor stewardship or other risky behavior, often the very act of putting the safety net in place only encourages more risky behavior.
What interest rate will AIG be charged for this loan?
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We loaned $85 billion to AIG, supposedly an insurance company, whose sole purpose for existance is supposed to be safe, conservative investments in order to pay claims.
Yet thanks to some incredibly stupid public policy they allowed AIG to invest in some incredibly stupid investments, get into the mortgage insurance business and do just about anything to insure the rapid growth of its executives’ monstrous salaries, bonuses, options and perks.
And now WE get the bill. When nobody else in the wild and wooly world of capitalism would lend a nickel to this thinly disguised criminal conspiracy masquerading as a company, we came up with enough money to fund health care, education, infrastructure, what-have-you for many millions of people.
I wonder how many of the people running AIG will be asked to give back their ill-gotten gains?
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Night Train, some of us know Orman’s orientation. Ditto Andrew Tobias. But neither one as far as I’m aware has ever used their on-air time to promote anything beyond sound financial managemt, investment tips etc. Would you expect anything less? More?
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Sawgunner. Nominally, 11+%. But they have conclusively proven that they are deadbeats. Nobody, nowhere would lend them anything.
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With a rebel yell, I’ll cry more, more, more.
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Night Train what does that have to do with the price of tea in China? Look there’s a chicken!
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Kim, I was answering Sawgunner’s question in #5.
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I was asking about your post #2
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Thanks for clearing that up, Kim!
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Privatize the profits.
Socialize the losses.
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This was a really bad move. The US has nationalized enough businesses in the last year to compete with Hugo Chavez. Taking away the specter of failure will only produce more immoral behavior.
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I guess no one on here has ever heard of cascading defaults. The reason the Fed bailed out AIG is because of the prospect of them going under was too horrible to contemplate. The Fed isn’t going around bailing out every big financial institution. They let Lehman fail over the weekend, didn’t they? Yes, they did. But they were too terrified of the consequences to let AIG fail.
Many, many financial writers have said that if AIG failed, it could lead to a world wide financial tsunami. As one of the world’s biggest insurers of banks and another financial institutions, they’re mixed up in all sorts of derivatives, etc. If they went under, it could’ve started a chain reaction that could’ve brought down the entire house of cards.
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Nationalized. I thought of that, Mac, when the two Fs were “taken over.”
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#7 One day He will wipe away ever tear, including your own. There now, don’t cry.
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#12 Mr.Lumps
“Privatize the profits.
Socialize the losses.”
Aren’t both houses Congress run by the Democrats?
Follow the money.
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What’s this about Hillary cancelling out an appearance at a Jewish group-sponsored, anti-Ahmadinejad rally at the UN? Hillary down for it till she learned that Sarah was going to be there as well?
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Bob: The crisis now being bailed out started when Republicans controlled Congress and the White House.
Democrats are doing the prudent thing by keeping AIG from going under (see #14).
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Americans, whose, overall real median income in 2007 was $50, 233, up $600 from 2006, and real median income for intact families-mother and father in the home- rose to $78,000 need to take this Wall Street crisis in stride. We, also, need to be glad that Ben Bernanke, a Princeton economist who specialized in the causes of the Depession in the thirties, is in charge of the Fed and that we have a very able financial man at Treasury, Paulson.
The government that Sunday allowed Lehman to fail and yesterday bailed out AIG has actually managed the crisis well.
The basic cause of this crisis was the interest rate cuts the Fed made in the 2000-2003 period in order to deal with dot com collapse and recession. This led to a huge excess of easy money that was leveraged into these sub-prime and alt A mortgages. Most manias and panics over history are caused by easy money.
The fundamental point to keep in mind is that The Global Competitiveness Report 2007-2008 ranks the U.S. #1 in the world, ahead of Switzerland, Denmark, Sweden, and Germany. We have a first-rate, well managed work force along with the most efficient system delivery of capital in the world, this mortgage related debacle notwithstanding.
In my view we are getting close to the rock bottom of this crisis and, as long as the American people stay steady by not falling for the media and political hype, and the leaders in Washington and Wall Street keep their cool, we should come out of this in decent shape. America has the leading economy in the world by far; this shall not change.
America’s more basic problem has to do with decadent morals and manners brought on by a rise in secularism and a decline of serious religion. These economic crises merely distract from this.
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I saw in the paper yesterday that the Feds will NOT pay the golden parachutes to the Fred and Fannie Mae head honchos, so that’s a good deal–saves us taxpayers $15M, though that’s a drop in the bucket compared to $85B.
BTW how do you spend/loan that much money? The number boggles my mind.
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What’s this about Hillary cancelling out an appearance at a Jewish group-sponsored, anti-Ahmadinejad rally at the UN? Hillary down for it till she learned that Sarah was going to be there as well?
Do you not have a clue as to what “off topic” means? Or are you just incredibly rude?
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We’re watching HSK reboot conservatism (see recent thread)! George Bush has taken over the financial industry.
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Arcadia, maybe you can answer this question.
My husband says part of the mortgage mess is because of a government decision made requiring more loans to minorities–claiming they were being unfairly prejudiced against in the housing market 10 years ago or so.
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Bob,
As Night Train and Steve point out, what other option did Congress have in this case? AIG underwrites so many important institutions, and if they did nothing and let the card house fall, you would blame them for doing nothing. We’re just getting started down this road paved by the Republicans. There will be other big names burning along the way. Hold on, and pay attention to your investments. This is going to be an interesting ride.
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Michelle. Your husband might want to read a little about Phil Gramm’s Commodity Futures Modernization Act, and how it relates to the situation we are now seeing play out.
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Michelle, it certainly seems to have played a huge part in what’s going on. Here’s an IBD article about it.
http://www.ibdeditorials.com/IBDArticles.aspx?id=306370789279709
And here’s an article called The Diversity Recession or How Affirmative Action Helped Cause the Housing Crisis
http://snipurl.com/3r5qu
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Thanks fo telling me about the golden parachutes, Michelle. I made a sarcastic remark about that to someone last night. That makes me fell a little better. While I know this AIG bailout had to happen for the reasons Peter Leavitt explains, but emotionally, I resent it.
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From Newsmax.com
Between the $20 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the FHA, Tuesday’s $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.
“We’re essentially continuing a system where profits are privatized and …losses socialized” (Nouriel) Roubini said.
(A professor at NYU Stern School of Business.)
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Ah, yes, Nouriel Roubini. Didn’t they use to call him a crackpot? Until his long ridiculed predictions of a massive credit crisis started coming true?
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Night Train has a good link at snipurl, above.
Charles Karultheimer mentioned that last night. It’s the faule of Congress, Republican and Democrat, in an effore to increase home ownership. But to paraphrase a comment in the link, The lower class never had more money, better work habits nor sense of responsibility about repaying loans.
As I said before, banks do not like to lend money to people who don’t have resources. Until Congress tells them to do so, they won’t.
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#1 ARCADI,
Yes you, the left, bailed out AIG. You are the only ones who legally could do so.
OPPPPSSS, unlike the left taking over Fannie and Freddie legally, it looks like the left didn’t approve of this take over legally by a legislative vote so they had to take it over another way – with an unapproved bridge loan for 80% of the worthless AIG stock as collateral. You guys take the cake.
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#3 Sawgunner,
Supposedly 875 basis points over the going fed rate. So it looks like 10.75% but i havenlt seen the docs yet.
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Call it what it is, creeping Socialism. The government is now calling the shots. The haves must share their wealth with the have nots and the investment challenged.The blame falls equally on both Congress and the politicians of both parties. Frankly, maybe we need the impending crash, painful as it might be.
I learned a new term the other evening from one of the news shows – Ninja loans = No job, no income, no assets. That explains a lot.
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John McCain knows how to fix this mess.
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Roubini (A professor at NYU Stern School of Business.) said:We’re essentially continuing a system where profits are privatized and …losses socialized.
This is the sort of unhelpful arch generalization one comes to expect from the professoriat. There is plenty of blame for these financial excesses to be spread among present and past congresses, administrations, Wall Street, and Main Street. The question is how to deal with the present realities. In my view Bernanke and Paulson with the support of Bush and Congress have by and large done well containing this crisis.
While part of the problem has been necessarily socialized, the private sector has properly taken enormous losses including all the shareholders at BearStearns, Fan and Fred, Lehman, and AIG . Talk to these shareholders about socialized loss and private gain.
Bernanke and Paulson in dealing with these realities have had to weigh a complex set of both private and public interests and try to decide what is best overall for the public interest. We shall see how it turns out, though my guess is that it will turn out far better than in the thirties when both the government and private sectors made what turned out to be disastrous calls.
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What people fail to see is the truth. They don’t want to know the truth. It stares them in the face but they make up all kinds of reasons why things are the way the are but they forget to follow the transactions and follow the money to find the truth.
It is easy for some weak minded folks to say that AIG was totally incompetent and that they were crooks or worse but this is not the case. These people were not crooks like Skilling and Ebbers were in Enron and World come where they cooked the books to save their skins and make a killing. These people were sabotaged by the fear mongers who want to profit by the collapse of the companies that they have decided to target for financial attack of the worst kind – all based on promoting fear on one side while having huge ego with mega greed on the other. These are the same people who manipulated the oil market – wall street speculators and their minions.
In the oil market they sold futures contracts to each other so that each barrel of oil was bought and sold at least 10 times from the producer to the end user – while they told the world there is a shortage of oil, the demand is huge the world is going to end unless you buy oil for $150 a barrel. They profited by creating a situation where only they could profit and everyone else would lose. The hedge funds and other market manipulators got their minions – pension funds and insurance companies to go in with them saying look how much money we are making – you need a part of this action too.
But eventually this bubble burst. Bush said enough is enough, I am removing the drilling moratorium in the USA. The next thing you know the speculators knew the jig was up and headed for the hills actually buying puts trying to force the price of oil down in the same market they just convinced their minions to buy calls in hoping the market was going to go up. Who got stuck – Well your pension fund and insurance company for one and two and AIG for three.
These same speculators then turned their attention to Bear Sterns creating fear in the market that they could not make it by claiming the world was going to end in the helpful media while they bought puts in Bear Stearns to drive the price of their stock into the ground. It worked like a charm so they turned their attention to Freddie and Fannie and just drove them into the ground and followed this up up by killing Lehmann two weeks ago and AIG last week. They tried to kill WAMU at the same time as Lehman but probably got them today.
If you want to find out who is behind the destruction of the US financial system – just find out who is making the money in spreading the rumors, who is spreading them and who is short or owns the puts.
This is what happens when people are told they should be very afraid of something that was never there in the first place.
Ask yourself this. How could this trillions of dollars in net worth be wiped out by home loan default rates in the USA going from a historic 1% to 2.5% when the extra default of 1.5% adds up to a measly $165 billion? They guys have been making a run on these companies like they were doing a run on a bank in the 1930’s. No difference.
You have been snookered once again and who loses? Why you do of course. These guys are not done yet but you will know who they are going to attack next because their willing accomplice, the MSM, will be telling you who it is before you know it claiming that death is surly at their door – you will be scared to death and believe them and help them kill their next victim for them -as they pocket billions adn billions of someone else’s money. This is all legal as can be of course. Too bad you weren’t in on it besides being on the receiving end as usual.
So, nothing new here. You are screwed and are blamimg the wrong people for it again. Hope you enjoy it because they are really giving it to you this time and they are not being gentle. They don’t care much about you I guess.
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The American middle class is being destroyed by these orchestrated events that wipe out their wealth, burden them with debt & will shove more and more power & control to the Fed until finally we’re forced into a one world gov’t scenario. The party’s over, folks. We’ve been had.
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PETER LEAVITT: . . . Bernanke and Paulson with the support of Bush and Congress have by and large done well containing this crisis.
Read: Bernanke has saved People’s Insurance Co, formerly AIG, from the forces of capitalism.
Hurrah, we’re all owners now! People’s Mortgage Co, formerly Fannie and Freddie, and People’s Investment Bank, formerly Bear Stearns, will be sending the We the People checks every quarter! Not to mention, We the People can expect lower premiums, portability, inclusion of pre-existing conditions, and no more denials of coverage.
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#38 Manxman,
How is the middle class being destroyed? So far, hardly any of them have been hurt at all – unless they lost their jobs. Middle class folks don’t own much of these these businesses being destroyed by these speculators. The business owners are the ones being destroyed financially. Business owners tend to be on the wealthy side of the scheme of things. In most all economic downturns that aren’t a 30’s type depression, it is the wealthy that lose by far the most – because they have the most to lose.
In this case, it is only a very few very rich wall street speculators and hedge fund folks who are winning. They be a real evil and especially greedy bunch of thieves.
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Moth, The U.S. government drove a hard bargain with AIG by gaining 80% of its equity through warrants in exchange for lending at 8.5% of up to $85 billion. They, also, fired the AIG president and installed Edward Liddy, former president of Allstate to head the company. Paulson et al figured that unlike Lehman an AIG fall would hurt many small insurance and other clients of AIG.
As to the shareholders of AIG, they now are in the disastrous position of potentially owning 20% of a company of which they formerly owned a 100%. There is a in fact a reasonable chance that before this is over the public will make out far better than the private interests.
During the Thirties, as Paulson and Bernanke well know, the government stood aside and the private interests soldiered on over a cliff, which seems to be the essential logic of your populist position. Since you seem to know best what ought to be done here, I should suggest that you write to Paulson and Bernanke and give them the benefit of your perspicacious knowledge of economics.
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Llama – name names. You wrote about 5,000 words on who the bad guys were, but never named names. Who are these bad, bad speculators? Why are they bad? Speculation is an essential part of capitalism. They found a market inefficiency and exploited it. No one complained because everyone profited.
And you say only the wealthy are losing money? More middle class people own stock today than ever before. And that stock has taken a beating these last few weeks. Sure, the super-wealthy have taken a bigger hit, but they have more of a cushion than a family of four who just saw their life savings take a dive.
I read the poor Lehman CEO lost over 500 million in stock options. But the article went on to say he still made over 30 million in cash over the past few years. Did he lose a lot? Yes. Is he poor? I doubt it.
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Peter – you are a man who knows finances and you know that easy money is one of the causes of this problem. Yet here is the government handing out easy money to fix the problem. I don’t see how anything is fixed, unless the government regulates the heck out of the financial side of Wall Street, ensuring that this can’t happen again.
I’m not holding my breath since the SEC doesn’t have the manpower or finances to investigate these big corporate entites who have far more money and manpower to find loopholes or stay one step ahead of the law.
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NT – – 22
Sawgunners remark is no more off topic than yours was in post #2.
I’ve noticed that two of your favorite take offs on many threads are either homosexual or racist complaints.
Very interesting……….
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Lester,
Well, while it is true that the middle class does own more stock than ever before they still own very little of it. It is the same for them as paying income taxes. They don’t pay much and if you increased their taxes by 100% they might pay a few hundred dollars more year. This pales in comparison to the Trillions of net worth that is being lost.
I was right about oil and I am right about this too and I won’t argue with you about this as I usually do but, your thoughts are wrong as usual.
Oh, and I no longer do lefties work for them anymore. If you want to know who owns the puts and shorted Bear, Fannie, Freddy, Lehman, WAMU and AIG – knock yourself out but if you find a llama’s name there – don’t be surprised. I readily admit to doing anything legal to make money while others panic and lose horribly. The stock market is a zero sum game. All the money the fearful others lose – goes to llamas that have no fear. I’m just telling you what is happening. Llamas are small potatoes in this scheme of things but when you add the whole herd of us up it can be frightening to say the least. FI you are not afraid yet, you should be
You might want to start with Goldman and their customers and take a look at Morgan Stanley too. Blackstone and other people with huge piles of cash like hedge funds are also a prime target. remember, cash is King, Just follow the transactions and where it went.
Watch Fast Money at 5 PM Eastern on CNBC and you will hear who is going to be taken out to the woodshed tomorrow.
No sense the Lester’s keep losing out – even if they haven’t lost anything yet.
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PETER LEAVITT: Since you seem to know best what ought to be done here, I should suggest that you write to Paulson and Bernanke and give them the benefit of your perspicacious knowledge of economics.
This isn’t about me. They have you, Pumpkin! They have Sarah Palin’s infallible populist instincts to guide them. And they must listen to McCain, who said no Monday morning and good move today. Of course, this pair couldn’t run an American corporation, according to the woman who couldn’t run HP – USA, but the country will be a piece of cake!
The fundamentals are strong! To think otherwise, is to insult American workers, but there you go talking about 1929. Bernanke is one of the world experts on the causes of the Crash and he’s worried, so I guess he doesn’t respect American workers, either. Experts, sheesh!
Are you enjoying the re-booting of conservatism yet, Pumpkin?
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Sawgunners remark is no more off topic than yours was in post #2.
Well, yes, if you’re a complete illiterate. But anyone who can read can see that I’m discussing Suze Orman, who’s explicitly mentioned in the post. In fact, her remarks are the subject of the post. Nothing is Sawgunner’s comment has anything to do with the post.
I’ve noticed that two of your favorite take offs on many threads are either homosexual or racist complaints.
No, you’ve hallunicated that, Victoria. I’m neither a racist nor a homosexual, so I can’t make homosexual or racist complaints.
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NT,
This topic is not about Suze Ornman being a lesbian, but you could not wait to launch into a questions game in post #2. Your post had nothing to do with finance, but in your mind it was important to mention lesbian and Orman in the same breath.
Twist it about NT, you blew it. LOL
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NT
I don’t know what you are – but I do KNOW that many times your first approach on a thread is one to attack someone of being racist or to bring up homosexuality –
Reverse racism is not all that difficult to identify.
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Llama – I really could care less who is short and who is long and who is making a killing and who is being taken to the shed. What I care about is personal responsibility – or in this case, corporate responsibility.
Like you said, the Lesters of the world don’t own a lot of the stock, but the Lesters of the world are bailing out the gambling bigwigs.
It’s funny, gambling is pretty much illegal except in Nevada. However, it is quite legal on Wall Street. The only difference is the gamblers in Nevada only gamble with their money. The Wall Street gamblers gamble with ours.
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Lester: Peter – you are a man who knows finances and you know that easy money is one of the causes of this problem. Yet here is the government handing out easy money to fix the problem.
This isn’t “easy money.” The government has offered a two-year short term loan of $85 billion at 8.5% on top of the Libor [London Interbank Rate] and equity stake warrants of 80%. These are very stiff terms, hardly comparable to the 2-3% money the Fed created in the 2000-2003 period. It wipes out about most of the stock value of AIG shareholders. Paulson, having headed Goldman Sschs, knew how to drive a hard bargain on behalf of the public.
AIG’s insurance business is solid along with many of its investments. It got in trouble with credit default swaps and sub-Prime mortgages. There is a reasonable chance that under Libby, the former head of Allstate, the direction AIG can be turned around, in which case the taxpayers will make a substantial profit, as was the case with Chrysler.
Paulson and Bernanke concluded that had AIG gone under the consequences would have been catastrophic including for average money market and mutual fund holders. In fact the Reserve money market fund had already broken the back of its $1.00 per share value due to large holdings of AIG short-term paper.
Again Bernanke and Paulson wisely let Lehman fold while backstopping Fred/Fan and AIG with stiff terms that croaked shareholders but protected the broad public interest.
While the liberal media and some politicians of both parties are trying to make populist hay with this issue, in my view the government has made a gutsy decision in the broad interests of the public.
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Lester,
You nare wrong. The middle income people are not bailing out AIG at least not much. The rich are. Only the rich pay any real income taxes and retire US debt. The middle cless is just along for the ride as usual.
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A lot of people I’m ignoring now at wmb.
What are the odds today that we are at the start of the 2nd Great Depression?
Many, many financial writers have said that if AIG failed, it could lead to a world wide financial tsunami. As one of the world’s biggest insurers of banks and another financial institutions, they’re mixed up in all sorts of derivatives, etc. If they went under, it could’ve started a chain reaction that could’ve brought down the entire house of cards.
I remember when I read something on Yahoo news about a plane crashing into one of the buildings of World Trade Tower. That’s an unfortunate accident I thought, without thinking much about it. By the end of the day, I realized that something quite a bit bigger and much less “accidental” was going on.
I don’t regard the present mess as an act or terrorism, but I do suspect that history is repeating itself, though it never repeats itself exactly.
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Not quite 80 years since “Black Friday” in October 1929.
Though the mills of God grind slowly, yet they grind exceeding small;
Though with patience He stands waiting, with exactness grinds He all.
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Since the Reagan the Republicans have spealized in freeing the market from the chains of gov’t. Now we witness the results of a poorly structured market — failure.
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It’s the Democrats turn to screw stuff up!!!
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#51 Peter Leavitt,
Oddly what did in AIG was their competitors and speculators buying AIG credit default swaps and then buying AIG puts, selling their AIG stock and shorting AIG stock. It’s like taking out $100 million in life insurance on your wife and then shooting her in the head only what they did was legal.
The same thing happened to Bear Stearns, Lehman, Freddy, Fannie. WaMu and now Morgan Stanley and Goldman. Someone has to stop these people.
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Peter,
What they did was legal but it was still, vile and despicable to buy their swaps and then kill the company. Just because you can do something doesn’t mean you should do it. Real people get hurt fatally at least financially in this case.
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Lester,
The original sin in this instance of easy credit goes to Greenspan who held the discount rate at 1% in 2003 and 2004 in the face of a raging bull market. I assume this is what you meant by too easy credit. The too easy credit available to consumers was cause bythe banking committee forcing mortgage companies to give loans to individuals in the subprime market who could not afford to pay them back. It was decided by the left and the banking committee to order mortgage companies to increase minority home ownership at all costs. Then they did not monitor what was really happening because of their new orders and they did noit want to know. But, they knew what was happening. They knew that these people could never ever meet conventional mortgage or subprime rules. The regulators refused to do their jobs, set rukles they knew were wrong and then they refused to even look at it and oretended they had nothing to so with it – but they blames Bush for it even though tney were supposedly clueless. What twits.
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Reverse racism is not all that difficult to identify.
Nor is reverse intelligence, Victoria.
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#20
Looking at the data of the Global Competitiveness Index you would see that the US managed to attain their number 1 rating because of their market size and labour efficiency — code word for overworked non-union labour force. Looking at macroeconomic stability (today’s topic) the US rated 75th out of 131 countries. They also scored 33rd in institutional stregth and 34th in health and primary education. Their nearest competitor Switzerland has a better rating in nearly every category but are handicapped by low market size. Third place social democratic Denmark scored even higher than Switzerland but was handicapped by an extremely low market size (rated 45th). Given the EU’s nearly open borders, Denmark’s market size should have included the EU and this would easily have led them to first place.
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NT
YOU WRITE:… “Nor is reverse intelligence, Victoria.”
You are right which brings us to yours…….
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Llama, AIG’s basic problem is the toxic credit default swaps on its balance sheet. Sure, some of its sleazy competitors and some Wall Stret sharks saw blood in the water and took advantage of the situation, though AIG set itself up for this. Holman Jenkins of the WSJ has sources that are sure that AIG’s overall balnce sheet is in decent shape. It got caught up in a short term cash-flow and credit crunch.
There are other companies out there with this toxic paper related to sub-prime and alt A mortgages along with the mainly stupid SIVs. In my view what needs to happen is what Volcker, Brady, and Ludwig talked about in yesterday’s WSJ, namely an equivalent to the Resolution Trust Corporation that took over the toxic paper from the Savings and Loan banks in the early nineties, steadied the overall credit market, and sold the paper in an orderly way on the market. Otherwise, we, as these gentleman argue, probably will face the mother of all credit crunches that could send us into a deep recession or worse.
I assume that Bernanke and Paulson have in fact put their staffs to work on formulating such a temporary corporation to remove this decayed tissue from the markets and get rid of it in a more orderly fashion. I, also, assume that leading wise heads on Wall Street and inside the Beltway including Paulson and Bernanke are at work to both tighten mortgage market regulation and straighten out the confusing bureaucratid regulatory mess that governs all the credit markets.
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Peter – that’s exactly what I mean. It’s easy money. No private company wanted to be within 100 yards of AIG. No one wanted to lend them money. But here comes the government – lending money they don’t have to bail out a company that made poor decisions.
Llama – speculation is a big part of capitalism and no you want to stop them? If Arcadia had said someone should stop these speculators, you’d be arguing against it. Which is it?
As for your contention that the CRA caused this – prove it. Should be easy to do. Overlay the geographical areas where the CRA applies with the areas of the most bad mortgages. If the two overlap then you might have causation.
Oops. You can’t. Several think tanks have tried this and failed. There is no proof that these bad mortgages stemmed from the CRA, which if you had ever read the bill never forced anyone to lend anything to any minority.
The fact is most toxic mortgages are owned by white people who bit off more than they could chew. And the mortgage companies were glad to lend it to them, CRA or not, because housing prices were always going up. Everyone could just refinance when the ARM came due.
Problem with that was the bubble burst. No big deal. Bubbles happen all the time. The problem was everyone trying to make money off mortgages – they turned a house into a financial instrument. And everyone is to blame.
Llama – you are quite the rich snob. Glad you thumb your nose at the middle class. I’m sure those lagabouts don’t buy any of the food from your supposedly-real food company. They do put the money in you bank that you supposedly turn into millions with your 100%, foolproof, never loses money TALARI system.
You are quite the Walter Mitty.
How about this – if the rich are doing it all, then why involve the government at all? Let the rich do it on their own. Why involve the government – it just adds a layer of bureaucracy and inefficiency to the solution. The Llamas could fork over all their millions to bailout these companies and the Lesters could ensure their tax money isn’t involved.
FYI – the Lesters, at least this one, does pay money in income tax. So I guess you are wrong again, as usual. But what do I expect from a Walter Mitty who can’t even add up simple baseball stats?
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