A little while ago I got a release from Jim DeMint that said in part:
Americans should be very concerned by the size and frequency of these government
bailouts…
Well, I am, Jim — I am. And I’d really like to see someone give me an intelligible explanation of why it was important for me, as a taxpayer who’d rather see his money spent on Iraq or universal healthcare, am bailing out yet another private company.
First Bear Stearns. Now AIG. Presumably, this was another company "too big too fail," which evokes the obvious response, "evidently not." Let’s see — we had to bail out Bear Stearns (and I still don’t know why). We didn’t have to bail out Lehman; we let that go into bankruptcy (another form of relief our government offers). We let the marketplace deal with Merrill Lynch — specifically, another private company bought it. And now, ta-da!, another private company is buying Lehman. The market at work, one would think.
So why AIG? I get Fannie and Freddie; as little as I understand about High Finance, I always understood them to have a special relationship to the government. If nothing else, you couldn’t let them go under for the same reason a Mob boss can’t let a made guy get whacked without doing something about it. You lose respect, both on your own turf and abroad. You gotta do something; you got no choice.
But why AIG? I don’t get it.
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Here’s a link to reactions from both presidential candidates, in a bit of painful and incontrovertible evidence that this campaign is being dragged further into the quagmire of talking about the economy.
At least Obama managed to win my sympathy by demonstrating that he didn’t know what AIG was, either:
That proves Obama is in touch with guys like me.
Obama’s entire campaign consists of being in touch with the ignorant masses who don’t understand economics and hate those who do.
Yup. The American taxpayer is on the hook yet again. Apparently, according to this article in Salon,
http://www.salon.com/tech/htww/2008/09/16/mccain_and_aig/index.html
John McCain through his erstwhile economic guru Phil Gramm is largely responsible for this bailout. An excerpt:
But why, after snubbing Lehman, and initially denying AIG’s request for help, would the Bush administration change its mind? There’s a great story that isn’t getting enough attention — a clear a connect-the-dots drama that links AIG to the unregulated credit derivatives market to former Senate Banking Committe chairman Senator Phil Gramm all the way back to John McCain, the Republican presidential candidate currently fulminating all across the land about the recklessness and impropriety of using taxpayer money to bail out corporations such as…. AIG.
Actually, bud, if you’d follow that link I provided on my initial comment above, you’ll see that while McCain was initially opposed to the AIG move, his position shifted.
That said, both he AND Obama don’t think the bailout should extend to AIG management getting a free pass on having screwed things up.
Not everything fits into a one-party-good-guy, other-party-bad-guy, Unified Field Theory that crams everything into a simple electoral choice. Actually, I believe almost NOTHING fits into that narrative, which is one reason you and I frequently disagree. But for now, this being a subject area where I lack confidence, I’ll settle for saying "not everything."
Brad,
All you gotta do is go to http://www.fec.gov (Federal Election Commission) and do a search on campaign contributions for “American International Group”.
They dumped $330K (that we know about) into the coffers of just about every Presidential campaign (even Chris Dodd!!) and both the general Democratic ($45K) and Republican ($60K) Party funds.
Money buys access. Access buys favors. Favors buys buyouts.
Not exactly a shocker.
Just wait til the automobile manufacturers come for their slice of the pie. Who gets turned away now?
Trouble is Brad the things I dislike about Obama are things where he’s too much like McCain. I oppose the death penalty. Both men apparently are ok with it. I believe we should greatly reduce the size of the military. Both candidates seem to support huge military budgets and overseas adventurism. Obama just a bit less. I don’t much care about the immigration issue. I can’t tell much difference in the 2. Medicinal marijuana should be legalized. That is a non issue in Washington. However, an Obama appointee to the supreme court could affect medicinal marijuana by letting state laws stand.
None of these things are areas that Obama supports. Yet in virtually all issues he comes closer to my views than McCain. And whether you want to admit it or not McCain is just not the same man he was in 2000 and that scares me. He’s acting more and more like Bush every day. His choice of Palin solidifies that belief.
A quick check of Lindsey Graham’s current donors includes $10K from the American Bankers Association PAC, $3K from Bank of America PAC, $4K from BBT Bank, $9K from Credit Union PAC…
And that’s just a quick check of the A,B, and C names.
Oh, and there’s $5K from Alamo PAC which got money from AIG.
Thanks for mentioning Lehman Bros Brad. I was seriously wondering what they did to tick off the Feds as they were the only one not bailed out. In all seriousness, if these private institutions are so absolutely vital to the overall economy of our country and the world, maybe we should watch them a little closer. Maybe we should require a whole lot more collateral and a whole lot more accountability. We don’t let the airlines dictate what mechanical conditions they are allowed to fly their planes in or the qualifications of their pilots. We don’t say “it’s a free market and if they crash too much, people won’t fly them anymore so they’ll go out of business.” Some things just require a greater check and balance on human greed.
Actually, bud, I suspect some of our interlocutors here aren’t waiting for medicinal marijuana to be legal, if ya know what I mean…
As more and more financial instutions near the brink of going over the waterfall, without a barrel, no less, it seems that the economy is built on a “House of Cards”.
An excerpt from Fed’s $85 Billion Loan Rescues Insurer (NY Times)
A.I.G.’s portfolio included insuring risky securities, such as, junk bonds, sub-prime mortgages, and hedge funds. No wonder Wall Street was drunk with greed. When one insures themselves from losing their shirt with risky investments, it’s a win-win for them; the one left holding the bag is the insurer!
With the Feds controlling 85% of A.I.G., for those two years, A.I.G. should stop underwriting risky investments.
Yet the socialists are not at all worried about Social Security and Medicare being bankrupt, and having to be continually bailed out by payroll, tax increases, the surplus stolen, bailed out again…
Oops! Minor mistake in posting.
We don’t own 85% of A.I.G; we own 80% of A.I.G.
I’m just glad to see that free market economics is thriving here in Bu$hCo, er, America.
And Brad, I’d take the decrim of cannabis much, much farther than for medicinal usage. That would free up all the DEA resources to actually fight dangerous, refined substances like cocaine and heroin, versus throwing hundreds of thousands of citizens into prison for a plant that occurs naturally and for which we have receptors in our brains waiting for nothing but the THC that the plant provides.
Maybe we should put God in prison for “marijuana” (a made up term by Hearst to make it sound like a threatening Mexican thing) cultivation, eh?
lee it is nice that you are admitting a surplus. we baby boomers have “overfunded” social security for years; the issue will come as we retire and both parties have ignored actuarial projections on what contribution levels need to be set at to keep the system sound. the overall surplus that you think president bush made up when he used it as a justification for tax cuts could have been differently applied to truly srengthen america rather than invade a country that wolfie and the (nonvet) 90s neocons decided should have a “democratic” government like saudi and the emirates or china. that said i have not heard the dittos this week repeat their mantra that wall street’s expert financiers should be running social secutiry. just like republicans are now against legislative subpoenas/investigations of executive, right lindsay?
Funny, Brad, that you’re concerned about you bailing out AIG, when you want us to bail you out on your allergies.
Getting some idea now what your $2/gallon gasoline tax would have done?
It concerns me that Obama is in touch with guys like you. It should concern you, too.
The surplus in Social Security was put in place by Ronald Reagan, after the system went bankrupt under Carter for the 7th time.
The FICA tax increase was excessive, in order to repay money stolen to finance deficits under Carter. But the Democrats in control of both houses, used those excess taxes to finance more deficit spending. This continued under Clinton and now Bush.
Since the politicians have no intention of repaying Social Security, you could say the deficits are actually smaller – the money is just spent.
FACTS:
There are no “trust funds” or separate accounts for Social Security.
Social Security is not an entitlement. The Supreme Court long ago ruled that no one has a claim to receive any payments.
Social Security is just a welfare program.
Social Security will be unable to pay all its recipients by 2014.
Brad – Thanks for putting the Robert Samuelson column in yesterday. None of this made any sense to me before then. Now about half of it makes some sense. I still don’t understand what McCain and Obama are saying and how they propose to fix the problem, but at least I think I now understand what the problem is.
And, yes, Rev. McCallister, who could oppose the legalization of marijuana when we need more people sitting in corners contemplating the splendid limits the drug imposes on their already limited brains?
If everybody gets high and nobody does an honest day’s labor, that would no doubt help us all.
My last comment over on Brad’s blog here references “mark-to-market” rules put in place as one result of the Enron scandal.
Today’s WSJ has a great column explaining the intricacies and impacts of that and other little understood rules on AIG and other financial firms.
In an earlier comment over there I remind bud that McCain was not censured in Keating 5:.After a lengthy investigation, the Senate Ethics Committee determined in 1991 that Alan Cranston, Dennis DeConcini, and Donald Riegle had substantially and improperly interfered with the FHLBB in its investigation of Lincoln Savings. Senators John Glenn and John McCain were cleared of having acted improperly but were criticized for having exercised “poor judgment”. By my count, that’s three Dems who interfered, and one Dem and one GOP who were stooopid. And there’s this:
So I wish he’d describe the episode a little more accurately.
I don’t want a stoooopid president. That’s why I’m voting Obama. To characterize McCain’s actions as having been exonerated is not exactly true. He did behave rather badly in that incident. His recent association with Phil Gramm make the Keating 5 incident even more alarming.
bud –
Biden, Reid, etc. voted for the Gramm bill.
Here’s the bottom line on the economic front. The GOP, starting with the Reagan years, has been the party that wants to “get the government off the backs of the American people”. They’ve pushed that theme over and over again. With GOP majorities in both houses of congress for 10-1/2 years out of the last 14 it’s clear that they’ve achieved more victories than defeats on the deregulation front. Have the Democrats contributed to the deregulation debacle? To some extent that’s true. But the liberal wing of the Democratic party has stood fast against agressive deregulation. Given the GOPs constant harping on the fact that Obama is the “most liberal” member of the Senate I would maintain that he is also among the “most likely” guys to favor additional, and needed, regulations.
On the other hand, the evidence suggests that McCain (Keating 5, Gramm) will be less inclined to move in the favor of effective regulation. On the fiscal front he’s clearly in favor of tax breaks for the extremely wealthy, a group that has failed to bring about the financial security of the rest of us. Since “trickle down” has failed so completely, why not just give tax breaks directly to the working class people? Let’s give “trickle up” a chance. Besides, Obama is smarter than McCain. I trust his instincts better than the man who finished third from the bottom at Annapolis and by Mike’s own admission is stoooopid.
bud –
You can’t ignore what got the Gramm-Leach-Bliley Act passed:
As a practical matter, all parties understood that getting a satisfactory CRA (Community Reinvestment Act) score meant issuing just enough substandard / subprime loans to satisfy whatever regulator was okaying the merger, acquisition, or whatever.
Here’s the proof:
At first no company knew for sure what it would take to get a satisfactory rating, but all quickly learned that it had a subjective, political element to it, and the real answer was “the more questionable loans, the better.”
It is unfathomable that one could actually waste time trying to connect AIG dots to John McCain, or any other politician currently in the news. Instead, they should be asking about Eliot Spitzer’s role in the AIG debacle. Remember him? He with the character-challenged idea of who is above the law and who is not? In the process of busily seeking to ruin those of whom he was most jealous, from his lofty “Holier-than-thou” AG tower in New York State, he managed to “retire” Hank Greenberg, founder and CEO of AIG. Spitzer’s blackmail operation cost the taxpayer’s hundred’s of millions of dollars, at the time, due to the ripple effect Spitzer’s witch hunt created within the Nation’s Pension system. Oh yeah, that was 3 years ago, but who’s to say the forced ouster of the company’s leader, a proven executive working at the company he founded, the selection of an obviously second-rate “management team” to replace him and their subsequent absolute failure to guide the company thorugh all their bad decisions over the past 3 years was not directly tied to Spitzer’s vendetta? Add to that, the pressure to recover its stock price (which dropped about 20% as a result of Spitzer’s threat to indict the company) and you have a recipe for bad decisions to make high-risk investments. Its a shame all this drama has been carried out to satisfy Spitzer’s lust for attention and headlines, just so he could run for Governor. Wow, look where that got him — exposed and embarrassed for the cretin he is, working in daddy’d real estate empire while the Amereican taxpayer figures out how to foot the bill for the AIG bailout he caused. What’s next — could Marsh & McLennan be far behind?
bud –
Obama’s certainly smart, his record is murky but decidedly far-left. He seems to hide many details of his past, so there’s a lot that we don’t know about his track record, but what we do know, things likehis role at CAC and spending $160M on screwy education efforts without measurable effect on student outcomes, do not inspire much confidence.
As for his plans, they do shift around a bit, and this week his tax increases are off. But we do know that he’s for anything for unions, anything for the plaintiffs’ bar, and so forth. As for fiscal responsibility, legislation he’s offered to date doesn’t show it.
But you are certainly welcome to your opinion.
Here’s an excellent analysis from 2000 on the impact of the Community Reinvestment Act.
Too bad nobody was paying attention.
The latest daily tracking poll from Rasmussen shows the race a dead-heat. Other polls suggest Obama with a slight lead. Rasmussen is, in my humble opinion, the best of the polls so I’ll go with them. Given McCain’s obvious ties to the failures of the Bush Administration including his ongoing man crush with Phil Gramm, support of 100 years of war and the atrocious choice of VP why is Obama not way ahead?
Here’s my theory. McCain is, indeed a war hero. He’s successfully played that card well. And in spite of the evidence to refute it (his well-documented adultery) he has convinced many people that he learned to put others and his nation above his own personal interests and ambitions. His selective use of his life story does garner many sympathetic votes.
Plus, the choice of Governor Palin allows McCain to continue making the claim that he is a maverick and a reformer. Again, this is mostly about perception. His roll in Keating 5 and new-found closeness to Bush undercut this claim but in many circles, and especially in the MSM, the claim has legs.
On the other side we have Obama. He’s obviously much more intelligent than McCain. His fiscal policy ideas are similar to the successful Clinton era policies that created the greatest economy the world has ever seen. By choosing Joe Biden for VP Obama has demonstrated further that, unlike McCain, he is willing to put the country ahead of short-term expediancy. Yet he is unable to convince the folks in the middle politically that he is the real deal. Why? Because folks are afraid of someone young and new to the stage. Although his senate record is a fine one and he reaches across the aisle well (just check out his record on securing nukes), he is a bit green. Folks are a bit hesitant to trust his tax proposals because of the GOP’s skilled spin machine. That spin has partially drowned out his tax proposal message.
Then we have the Palin effect. That has had a temporary impact on white female and evangelical voters all out of proportion to the actual governing impact she will have. It does appear that Gov. Pallin’s effect is starting to fade and given her dismal performance with Charles Gibson perhaps she even hurts McCain in some quarters.
And finally there’s the media. Bless the MSM’s heart. They do so try to keep the playing field nuetral. McCain has certainly been far more strident in his negative campaigning that Obama. Yet the MSM feels obligated to play tit for tat. If McCain says something really outrageous (the sex ed for kindergarteners smear) they will dig up something much more benign to balance things out (Biden’s comment that Hillary would make a better VP). The MSM depends on a close race to maximize ratings so this is understandable if disingenuous.
My advice to Obama is to stay on message. It seems to be working now that the failed GOP economy has been exposed. This is not a campaign for the faint of heart and more swings in the polls are coming. Hopefully the positive message of Obama will drown out the negative spin by McCain and his surrogates.
In the end the country will be better served by change rather than a third Bush term. Let’s hope the American people can understand the substance in this debate and not the spin.
Spin? Obama has gotten quite, er, aggressive with his ads, which is fine. But even ABC finds Obama’s new ad wrong on the facts: “The Obama campaign has crossed a line into misleading the viewers of its new TV ad. In Spanish, the word is erróneo.”
Occasional missteps like that happen, but do you sense a hint of the Brownshirt in Obama’s Action Wires? (Lotsa links at this link.) Comparing his gang to Lyndon LaRouche followers (what about Code Pinkos?) seems cruel, but appears apt.
And now he’s exhorting his followers to get in the face of Independents and Republicans. I’m sure that will backfire. If you want to convert, speak softly, no?
Bud-
just asking….
are you wearing a cheerleader’s sweater with a big “O” on your chest, cavorting with your pom poms; tv tuned to cnn, while a cloud of hemp smoke drifts around the room?
you are certainly entitled to your opinion, but give us a break, people like you are why “O” is called the ‘messiah’.
i really think you are howard dean blogging under an assumed name.
I forgot the most important factor keeping this election close. Obama made a huge error by not picking Hillary for his VP. That opened the door for the Palin phenomenon. That mistake will probably cost Obama 1-2% of the electorate.
I like Obama but he’s hardly my messiah. Too bad George Mcgovern isn’t running. He was politically just about perfect.
It was Obama’s radical group, ACORN, which used charges of racism to force banks to make risky loans to blacks, both residential and business.
ACORN received shakedown hush money from banks every time they wanted to merge or expand in urban areas.
Obama received over $300,000 in donations from AIG, Fannie Mae and Freddie Mac, and voted to extend the Community Reinvestment Act and eliminate down payments for subprime minority borrowers.
Sub-prime mortgages were created specifically to make risky loans, and avoid charges of racism. In 1992, subprime loans made up 2% of all loans. By 2002, they comprised over 20% of loans.
In 1994, Janet Reno held a press conference and threatened to prosecute any lenders who “exhibited racism”, by such things as:
* asking for proof of income of non-whites
* considering employment history of non-whites
* considering loan repayment history of non-whites
* asking for higher down payments from of non-whites
McCain received $117,500 from Lehman Bros.
Obama received $370,524(!!) from Lehman Bros.
John McCain got $36,875 from AIG
Barack Obama raked in $75,899
Top Recipients of Fannie Mae/Freddie Mac Campaign Contributions, 1989-2008
1. Dodd, Christopher $165,400 in 15 years
2. Obama, Barack $126,349 in 3 years!!
Yeah, bud, McGovern was about 1,000 percent perfect, if I remember correctly.
No, actually, that’s what he said about his running mate, Thomas Eagleton, before he found out he’d picked a VP with a psychiatric habit.
Yeah, bud, McGovern was about 1,000 percent perfect, if I remember correctly.
No, actually, that’s what he said about his running mate, Thomas Eagleton, before he found out he’d picked a VP with a psychiatric habit.
AIG is an INTERNATIONAL giant, selling their goods to people all over the world. Why isn’t China, India, Great Britan, Australia taking part in bailing out this international giant as well. Why is it all falling on the lap of the taxpayers of America. AIG has been around since 1919 and is spread all over the world. It started in China. Why is the Fed. bailing them out? Should not the all the major countries of the world where AIG does business be pitching in then?
AIG is an international giant. Why isn’t this crisis being solved on an international level? THis is being sold as a national crisis, and one that must be paid for by America. What am I missing here? Where are the contributions from the Indian , Asian, Australian, European governments? America is called to bail out the world economy?