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davepamn davepamn
 

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M$1.00  Funded By Mahalo ? |  March 05, 2009 11:14 AM

Should AIG be allowed too bankrupt?

http://www.cnbc.com/id/29476319/

American International Group should be allowed to go bankrupt because keeping it and other sick financial alive on government support risks ruining the US economy, legendary investor Jim Rogers told CNBC Tuesday.

Do you agree with Jim Rogers?

Rogers says, "AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we'll never start over"

What impacts will result, if AIGs trillions of dollars of obligations fail?

Do you agree with this free market thinking, don't chase bad money with good money?
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sryanmi sryanmi
 
 March 05, 2009 12:41 PM
I have to agree that they should be allowed to fail. That is in the sense that the taxpayers should not be paying the salaries for those CEOs who have neglected their responsibilities to the company and their shareholders. AIG has been big in the news because many feel that the collapse of AIG will effect the global economy as well because of the amount of investors and such. I am of the opinion that those who invested in AIG, or for that matter any company that the taxpayers are having to bail out, should have know that the stock market is a gamble. Just because it was a great company at the time of investment doesn't mean you will not lose money if you hold on for too long. My question to the entire bailout, AIG especially since they have taken multiple bailouts, is why should all taxpayers and the government have to put nearly a trillion dollars towards an individual groups irresponsibility? Yes it will hurt many people financially. However, if the govenment wants to help the American people give the money to the people! If the same money that was blown on the bailouts (I say blown because none of the bailout money can be accounted for) was given to the taxpayers it would have equaled about $35,000 per taxpayer. Those of us who are responsible would have paid off our bills, credit cards, cars and mortgages. Thus giving the banks we were borrowing from that money back rather than our cars, houses, etc as securities. In turn giving them the ability to lend to anyone else. Which is why they claim they need the bailout is so that they can increase lending so that more Americans will start buying. On the other hand, those who are not as responsible will go out and buy that $30,000 car, or blow their money on other consumer goods and in their own right boost the economy through their spending.
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davepamn davepamn
 
March 05, 2009 02:48 PM
Rogers says the pain of failure will be felt for 2-3 years. I think a failure could cause 20 years of pain because of the impact on CDO market. Can your refute the impact consequence of failure?

1. In 2008, AIG loss was $99 billion.

2. AIG does business in 130 countries and has 116,000 employees and oversees 74 million insurance policies.

3. In 2009, Gov Rescue totals $162.2 billion for AIG with $40 billion more

4. In 2007, Banks worldwide have taken $693 billion in writedowns and losses on loans.

5. In 2007, AIG held more than $440 billion of credit-swap trades linked to CDOs. (2008, CDOs totaling close to $43 trillion) - $4,300 billion.

6. Many financial institutions in Europe and Asia bought credit default swaps from AIG for corporate debt and mortage securities. The companies depend on AIG to cover their debt in default. If AIG defaults or is unable to meet obligation, these companies will have to take a write-down and claim a loss.

7. Investors are starting to doubt AIG CDS indicators that the company can pay its debt.

8. AIG faces a credit rating downgrading.

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davepamn davepamn
 
March 05, 2009 02:49 PM
43 trillion dollar is 43,000 billion dollars

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toofat2ser... toofat2ser...
 
March 05, 2009 01:58 PM
The whole bailout concept is flawed from the start on numerous levels:

It is a knee jerk reaction born of the uniquely American need to "do something about it." Since we can't really solve the problem, we'll throw money at it to keep things going until we can. It's only delaying the inevitable.

It sets a dangerous precedent for corporate responsibility. Now. Every time a corporation goes titsup, it will be begging Uncle Sam for money. And it only feeds the ready over developed sense of entitlement that many (certainly not ALL, so don't get offended, reader)gen x, y, and young-ers already have (they think the world owes them something BEFORE they work for it).

And, as scary as it would be to have all these companies fail, we will get through it. The Depression was hard, miserable, and deadly to many. But we have to face those challenges and realities, instead of stalling for time. The difference is that we'll be going into a depression with more of a national debt than if we had just let it happen naturally.

Wow. Mahalo, I hope you don't mind, but I'm copying my own answer for my blog. I needed to vent this :) I'll give you a nod though (and I already have your widget :))

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davepamn davepamn
 
March 05, 2009 02:53 PM
Your talking about a complete rebooting of the system. Complex system don't like reboots. I don't want to be out of a job for twenty years. I don't have enough capital to survive that long. I will be live out of my car.

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sryanmi sryanmi
 
March 05, 2009 03:51 PM
It is not a complete rebooting of the system. Yes there will be hardships suffered as we go into another depression. Honestly I would be willing to bet that the oncoming depression could rival that of the Great Depression because of America's current dependancy on the new technology and our current lifestyles. However, I don't think that it will take 20 years to recover. We will be forced to actually bust our butts working for what we want. Working on and redeveloping the principals America was founded on to begin with. As toofat said, and I completly agree, the bailout is setting an example to corporations to rely on Uncle Sam to support them. While they want to retain the independance from government oversight. If the companies recieving the bailouts were truly responsible they would have provided a budget for the bailout money and have the oversight to show what has been done with it. Instead they mix the bailout money with what they are saying is profit and spending it on lavish "operating expenses". Trips to Las Vegas, corporate jets, etc... They claim that those expenses are normal operating expenses, and that the bailout money was not used for those expenses. Yet, when asked where the bailout money was spent or what they have done with it they can provide no answer because the money pools were mixed. It is contriversal. If they are asking for a bailout from the taxpayers, they should be cutting all of the unnecessary "normal" operating expenses. davepamn, you say you dont have the capital to survive 20 years. How can we expect future generations, who obviously dont have any capital, to take over the resposibility we are passing them so that we can avoid the hardship?

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263236 263236
 
March 05, 2009 05:30 PM
Yes it sould be let go.
AIG will continue to lose money and will require additional (taxpayer/government) funding in the future.
It's time to pull the plug on this terminally ill patient,take our losses and at least be able to put this problem behind us and move on.

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