"Bailout" for AIG, but not Lehman Bros. or Merrill Lynch - cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board

Solon · 09-17-2008, 03:33 PM

"Bailout" in quotes because it's a loan with some pretty thick strings attached. Either way, the feds have rescued them.

Was it a wise move?

http://www.economist.com/finance/dis...tures_box_main

I'm guessing it'll be years until all the ramifications come to light, but what are the initial thoughts?

Financial guys?

landpoke · 09-17-2008, 03:41 PM

My thoughts are I still don't know what it is exactly AIG does that makes it so important. All I keep hearing is that it's ginormous so I guess that's good enough reason for me. I trust that the government knows what they're doing.

BarbaraGordon · 09-17-2008, 03:43 PM

Quote:

Originally Posted by Solon

"Bailout" in quotes because it's a loan with some pretty thick strings attached. Either way, the feds have rescued them.

Was it a wise move?

http://www.economist.com/finance/dis...tures_box_main

I'm guessing it'll be years until all the ramifications come to light, but what are the initial thoughts?

Financial guys?

There had to be a bailout. The negative ramifications of the alternative were too frightening to consider.

Whether this bizarre publicly-underwritten version of the world's largest underwriter is the best bailout, I have no idea.

Jeff Lebowski · 09-17-2008, 03:44 PM

We need Pelagius to stop lurking and give us his thoughts.

BarbaraGordon · 09-17-2008, 03:47 PM

Quote:

Originally Posted by Jeff Lebowski

We need Pelagius to stop lurking and give us his thoughts.

I agree. Perhaps he's still busy trying to console his students over the underwhelming performance of their Buckeyes on Saturday.

Solon · 09-17-2008, 03:50 PM

Quote:

Originally Posted by landpoke

I trust that the government knows what they're doing.

Please surrender your proof of Wyoming Residence immediately. You're being deported to the east coast.

landpoke · 09-17-2008, 04:09 PM

Quote:

Originally Posted by Solon

Please surrender your proof of Wyoming Residence immediately. You're being deported to the east coast.

I'm well within the big tent of Wyoming political thought. I think the government knows what's right, just not what's right for me.

Cali Coug · 09-17-2008, 04:32 PM

AIG is gigantic. Almost all divisions of AIG are quite profitable. They just have one or so that were involved in complex derivatives transactions that was losing huge amounts of cash. AIG needed about $70 billion to make payments coming due for that division. AIG's credit rating was then downgraded, making it almost impossible for them to obtain additional needed financing. In stepped the government with a "bailout."

This could wind up being hugely profitable. The money loaned to AIG is at LIBOR plus 8.5% (which is about 11.5% right now). Plus, the government gets almost 80% ownership of AIG. They can sell off bits and pieces of AIG (which are hugely profitable) in an orderly fashion and make a ton of money in the process. The markets will like the orderly restructuring as opposed to the fire sale that would have happened if the government doesn't step in.

MikeWaters · 09-17-2008, 04:34 PM

Quote:

Originally Posted by Cali Coug

AIG is gigantic. Almost all divisions of AIG are quite profitable. They just have one or so that were involved in complex derivatives transactions that was losing huge amounts of cash. AIG needed about $70 billion to make payments coming due for that division. AIG's credit rating was then downgraded, making it almost impossible for them to obtain additional needed financing. In stepped the government with a "bailout."

This could wind up being hugely profitable. The money loaned to AIG is at LIBOR plus 8.5% (which is about 11.5% right now). Plus, the government gets almost 80% ownership of AIG. They can sell off bits and pieces of AIG (which are hugely profitable) in an orderly fashion and make a ton of money in the process. The markets will like the orderly restructuring as opposed to the fire sale that would have happened if the government doesn't step in.

it was so potentially hugely profitable, than no one in the private sector wanted to do it.

Archaea · 09-17-2008, 04:54 PM

Quote:

Originally Posted by MikeWaters

it was so potentially hugely profitable, than no one in the private sector wanted to do it.

Wise skepticism of government's ability to do anything orderly or in a profitable manner. The US Postal Service is a model of efficiency and profitability.

09-17-2008, 03:33 PM	#1
Solon Senior Member Join Date: Mar 2007 Location: Happy Valley, PA Posts: 1,866	"Bailout" for AIG, but not Lehman Bros. or Merrill Lynch "Bailout" in quotes because it's a loan with some pretty thick strings attached. Either way, the feds have rescued them. Was it a wise move? http://www.economist.com/finance/dis...tures_box_main I'm guessing it'll be years until all the ramifications come to light, but what are the initial thoughts? Financial guys? __________________ I hope for nothing. I fear nothing. I am free. - Epitaph of Nikos Kazantzakis (1883-1957)

09-17-2008, 03:41 PM	#2
landpoke Senior Member Join Date: Jul 2007 Location: North Central God's Country Posts: 1,534	My thoughts are I still don't know what it is exactly AIG does that makes it so important. All I keep hearing is that it's ginormous so I guess that's good enough reason for me. I trust that the government knows what they're doing. __________________ I see a hobo. And when I see the hobo, I think to myself, "This man is poor. His monetary value is low, and my monetary value is high, and it's a shame that he is himself. What can I do?"

09-17-2008, 03:44 PM	#4
Jeff Lebowski Charon Join Date: Jan 2006 Location: In the heart of darkness (Provo) Posts: 9,564	We need Pelagius to stop lurking and give us his thoughts. __________________ "... the arc of the universe is long but it bends toward justice." Martin Luther King, Jr.

09-17-2008, 04:32 PM	#8
Cali Coug Senior Member Join Date: Dec 2005 Posts: 5,996	AIG is gigantic. Almost all divisions of AIG are quite profitable. They just have one or so that were involved in complex derivatives transactions that was losing huge amounts of cash. AIG needed about $70 billion to make payments coming due for that division. AIG's credit rating was then downgraded, making it almost impossible for them to obtain additional needed financing. In stepped the government with a "bailout." This could wind up being hugely profitable. The money loaned to AIG is at LIBOR plus 8.5% (which is about 11.5% right now). Plus, the government gets almost 80% ownership of AIG. They can sell off bits and pieces of AIG (which are hugely profitable) in an orderly fashion and make a ton of money in the process. The markets will like the orderly restructuring as opposed to the fire sale that would have happened if the government doesn't step in.