Sep 17 2008
I didn’t know we were so rich!
The numbers needed to bailout AIG was almost breathtaking. Is anyone adding up the tallysheet of how much we are going to have to spend on this crazy bunch of rescues? Have we hit a trillion dollars yet? I didn’t know we had so much cash just lying around to bail out firm after firm. Does anyone think we could get a bailout if we don’t want our house any more?
An economist interviewed this morning says that AIG is now owned by the taxpayers. Does that mean we can determine how much the CEO gets paid? I wonder if he/she could get a bonus base on true performance or no severance pay if that person messes up! I personally would like a CEO like Lee Iococa to come in and pay the money back to the U.S. treasury. I wonder if we could lure him out of retirement.
This reminds me of the time when Rockefeller was brought in during the Depression and consulted about policy extensively. Why? If his money were pulled out of the monetary system, the country would have gone broke. Such is the importance of AIG. It is extensive. It is not to be underestimated.
What will come out of all of this? Well, count on some kind of legistlation. Congress will investigate it thoroughly and then set up rules, and for good reason. In seventy-five years, a new generation will not remember how our nation got into this mess. Without regulation, history will not be remembered.
What worries me is that the dollar printing press is humming so hard that smoke is probably coming from the bearings. How far down will our dollar drop? Will we truly be able to print our way out of financial disaster? Even though there is precedent for doing that, it doesn’t mean we can do it again.
It will be interesting to see what we bail out next. I hope these big companies pay back our governent with interest.
Tomorrow we will look at some stocks to add to your portfolio to turn a profit. But we want to see how investors treat today’s baliout news.
Both political parties like to ask the other “How are you going to pay for that?” when a proposal comes up for funding. Yet both parties are happy to shell out billions to rich executives who have made chronic bad decisions about their money and resources. No one patted me on the back when my business was down 40%, gave me a check for $20,000 and said “Don’t worry, we know you’ll get through this…”
Where’s this money coming from?
Our children and grandchildren. Apparently the current folks that run things feel entitled to ruining what little chance at a safe, solid, stable future that our descendants may have had so they don’t have to face the consequences of their own short-sighted behavior.
All this deficit spending was planned by President Reagan to bankrupt the Soviet Union since their economy is/was more fragile than ours. It worked! They went belly up. Unfortunately, none of the successive presidents could resist continuing that irresponsible spending policy to reward their own special interests. So now we are faced with our own version of the Soviet collapse. It took longer because we’re bigger, but apparently not any smarter. Before we throw what few resources we have down into the black pit of our economy hole, I’d like to see a plan to get us out the other end after we are done contracting. Can we please have a new president that has the courage, vision and communication skills to look forward 40 - 100 years and not 40 - 100 days and sell that to congress and the American people? Let’s use this apparently limitless money on fixing our energy policy, health care, transportation or education instead of rewarding stupid rich people. Let them (and us) face the consequences of stupid decision, greed and lying about it.
There are so many people who agree with you about the disgust you have in your voice about these bailouts. However, keep in mind that these monies were approved by bipartisian support.
I think with the proper President, we could get out of the hole sooner than when our children are paying it off. But it has to be someone who can get our fiscal house in order. Martin Weiss, a favorite financial advisor from your grandfather’s point of view, feels both candidates will be more fiscally responsible. i hope so.
I would like to see something that would keep bad CEO’s and other upper management types from getting big severance pay packages if they fail. It is obvious that Lehman’s CEO was clueless about those deriviatives. And Cox at the SEC was offered help and legistlative help numerous times and turned it down. He’s another one that should have to do more than just go home and feel bad.
Thanks for your thoughtful insight and for stopping by.