CNN is reporting on the government bailout of AIG.
What is going on? I feel like I’m living in a Twilight Zone episode where America is a socialist country. What happened to the “private” in private companies? Maybe the Fed and Treasury are confused and believe a publicly traded company means it’s really owned by the government.
The media continues to justify the government’s actions as necessary to prevent a major financial crisis, though in my estimation it is better in the long term to let AIG default on their loans because a major default like this would:
- Put more pressure for lenders and investors to provide better oversight of the companies they invest in (at least until they forget about this crisis when the next bubble comes along)
- Limit direct losses and risk to investors and lenders in AIG rather than spreading it out over all taxpayers
- Stop the current trend of big government bail outs of large corporations (e.g. Freddie Mac, Fannie Mae, Bear Stearns), which will only desensitize the public and establish precedence – both which may make it more common in the future.
More importantly, the government sucks at running pretty much anything besides the military (and even they are infamously wasteful). I don’t see how it is the government’s and our responsibility as taxpayers to prop up large corporations – even if their failures will have effects on the broader economy. Recessions are normal market corrections that need to happen. A lot of companies dug themselves really deep holes and now the market needs a serious correction. The government bailing out a few of the big dogs doesn’t change the fundamentals but rather postpones the inevitable and spreads the losses over all taxpayers. I think welfare programs stink, but this is especially disgusting. For all the clamoring that Republicans did in the 90s to reform welfare with the support of President Clinton (which made welfare better than it was), this is far worse. The $285 billion (estimated for Freddie, Fannie, and AIG) is like loaning 10 million American’s with bad credit $28,500 each to keep them out of foreclosure. We’d rightly be pissed out of our freaking minds if that happened and so we should in this case as well.
I also cannot help pointing out how one sided CNN is. There is no mention of the negative consequences of the government taking ownership of AIG and becoming responsible for their debt, only of how it will help stabilize the world markets. That is first class, one sided reporting. I applaud you CNN for your journalistic integrity. Why should U.S. taxpayers be responsible for saving world markets?
There is a lot of turbulence in the markets – and for good reason. A lot of companies are built on a house of cards and the effects of their bad management and people who invest in these badly managed companies should be allowed to ripple through the market. Why should the government and U.S. taxpayers give a rats ass if world stock markets are down for the next 5-10 years. Why should U.S. taxpayers who don’t even invest in the stock market have their money used to artificially prop it up?
The only thing good that happened is that – just prior to the bailout – AIG stole… er, raised… $20 billion in private money before the government took over, so that should offset tax payer risk somewhat.
I haven’t seen Obama’s or McCain’s opinion on the AIG takeover, but I doubt they are going to say it was a bad idea, based on their general agreement with the Fannie and Freddie takeovers. The Senate and House appear to have the same mob mentality that was rampant on wall street with the housing market (must bail out, must bail out, no other options, must bail out). 534 Manchurian candidates (-1 for Ron Paul).
Fortunately, there is another.