McCheese before Thunderdome ....              and then McCheese after Thunderdome!

 

 

 

It's pretty worrying.

This is basically a controlled demolition. As far as I can tell the $85 Billion will come from the Fed directly (the Treasury isn't involved) meaning they will just "lend" the $85 billion tomorrow and take 79.9% control of the company. The loan will have to be paid back over two years @ 8.5 points over the 3 month LIBOR (meaning this is an adjustable rate loan /irony) according to Bloomberg. It also sounds like they will not be required to sell assets to pay for this loan, but I can't see any other way that AIG can pay this off.

Now this is where it starts to worry me -- with a controlling stake in the company, they can pretty much decide where and to who the assets are sold off. Then you have to consider that most of the liquidity raised from the sale of assets will go to feeding the interest and repayment on this loan. This is where you cross into a gray-area. The Federal Reserve of course is a corporation, with shareholders. The shareholders of course, are not disclosed (minus the US Gov't) but it is probably reasonable to assume that they have ties into other businesses if they are shareholders in our central bank.

This is where I see a possible confilict of Interest. Where does the interest on $85 billion go once it is paid? I imagine some portion of the profit gets paid out to the shareholders, and this presents a scarry opportunity. That being to dismantle and sell off AIG to a company you control as a central bank shareholder and then pocket the money through interest on the loan while keeping the asset. I dunno but the conditions seem right.

And then when you think about how banks gave people loans even though they couldn't afford them...is this loan to AIG so different? I think this needs a serious overview. All of this stuff is done with no oversight at all. I mean we are reading about secret meetings between the bankers and the Feds, negotiations done after hours...does anybody really understand what we are doing here?

Give me your thoughts.

This is all backroom deals between aristocrats. No one understands what exactly they are doing besides what the PR flacks spin. I doubt they even really know fully what they are doing.

Re: AIG, my understanding is that most of the company is extremely profitable so you may very well be right about the Fed's backers wanting to chop it up and eat it. It's a fucking insurance company, not a bank - so wtf is the Fed even involved for?

It's funny how all these fuckers suddenly become a bunch of socialist pinkos as soon as the shit hits the fan.

Exciting indeed.  Looks like the greed of the super rich corporate bastards could destroy their undeserved wealth far faster than income redistribution fiscal policies ever could!

I mean, it'd have been so much nicer if the government could have just TAKEN all that money and given it to the less fortunate (we have the right to, right?), but lessening the fat cats' wealth is still lessening it.  Good times, good times, we're all on a little more level playing field today, and one step closer to true equality!

 

From what I understand, AIG insures the loans when banks loan to each other. Kind of an FDIC for banks.

I'm not as convinced that the rich are getting pummeled.

Just keep submitting news stories, we can create a map of whats happening.



Many of these companies still own profitable assets. Look at the Barclay's story in the first post. They are looking to take performing assets and leave the junk mortgage securities.