BF2S Forums Fed's bailout AIG

It is pretty bad when Jim Cramer calls you (AIG) out. By the way, a year ago he predicted the market was going to tank.
http://consumerist.com/5050824/crazy-ji … y-to-gloat

Agent_Dung_Bomb wrote:

Mek-Stizzle wrote:

How much will $85bn reduce the impact? How bad will shit be when AIG finally goes under? (serious questions, I don't know much about the global finance and insurance racket)




What about man utd?

The idea is to give them enough capital to sell off assets slowly.  If they go under very abruptly their assets become worth less because it all goes onto the market at one time, and must be sold quickly.  Allowing them to sell it off gradually will get them better returns on the sale of the assets.  Ultimately AIG will go away, just more slowly than if allowed to completely fail all at once.

Also note that the Federal Reserve is not a government entity.  They are actually a corporation with shareholders.  The US Treasury, however, is a government entity and not the one providing this loan.  The Treasury only backs the Federal Reserve on our hard currency, not loans such as this.  Ultimately the taxpayers shouldn't be liable for any of this if it fails.

There is a serious problem with this bailout. It comes in the form of a loan but everytime the Federal Reserve gives out money, it is doing so by printing new money, this increases the money supply and devalues the dollar. What the fed is doing is using the relative strength in the dollar to cushion the bottom of the financial crisis. An increase in the money supply will devalue the dollar and increase imports including oil which will now go back up in price and the increase in the money supply will also increase inflationary pressures. It will also decrease savings and hurt people on fixed income. All this amounts to a hidden "tax" on income which you and I will be paying. All the talk about the tax payers being covered by warrants against assets is bunk, we are going to be paying for increased costs. Evidence of this can be seen in the sharp $85 raise in gold as people are rushing to dump the dollar and are seeking inflation proof investments.

Welcome to an new era of stagflation