Lumuhuku

Arbitary Obsessionist's Blog : Ambition is redundant. In life, mission is everything.

AIG = America Is Gone !!

with 2 comments

“US government bails out insurer AIG with $ 85 billion of taxpayers money. “

Americans!! are you sleeping again? It was a terrible mistake to bail out Bear Sterns. Your government repeated it with Freddie Mac and Fannie Mae. And now AIG.

We thought China was a communist, but it seems USA is a bigger communist country.

Now most people don’t know what is written below –

When AIG ousted CEO Martin Sullivan back in June, he received a $47 million severance package.  Yes, after two quarters of record losses he still received $15 million cash, a bonus of $4 million for the portion of the year he worked, and held on to outstanding equity and long-term cash awards valued at about $28 million.

 

Exiting CEO, Robert Willumstad, who reigned for all of three months, joined AIG with a $1 million annual salary, and a possible $21 million in annual bonus and incentive awards. He also got restricted stock and options once valued at $36.5 million.  Word is he now leaves with nearly $9 Million in compensation.

$9 Million for three months at a company which has now been bailed out by Taxpayers.

Oh come on, bonuses should be tied to performance, not attendance.

Bailout

And why should the tax dollars go to bailout companies and reward their executives for their failure in a free market? There is absolutely no reason or sense for government to interfere in a free economy. I agree that repercussions of the falloff giants would have been felt for long, but what the US is doing is, just delaying the inevitable. Wall Street has to pay for its mistakes. That’s the way a free market works!  And in time the market will correct itself, and it always does.

Government interference only delays the inevitable downfall and slows the market correction that is desperately needed to avoid a deeper recession or possibly a depression if the government does not get out of the way. 

Till now I was not very sure of the recession of US economy. But if the government continues its passionate ‘bailout‘ing, rest assured, recession will not be a part of your nightmares, but reality.

Now what’s wrong with recession. I say nothing! If it takes a recession or a depression for the market to correct itself, than so be it.  Time heals all wounds, and other businesses will be there to pick up the slack.People simply have to understand that you can’t have success without failure.  Simply put our federal government is trying to erase the concept of failure. And that is simply being stupid, very stupid.

And do you think this is the end? Then go and wash your face and move to another country, as your US is a sinking ship as of now. All these mistakes of the past are going to come back to haunt the US for long.

bailouts22

To quote a similar example from American history itself, I quote the story of  Chrysler, which was bailed out in 1979. Everyone knows what Chrysler does: they make cars. Yet the justification and impacts of the bailout are similar regardless of whether the firms produce a tangible car or intangible investment instruments.Congress bailed out Chrysler, which means the subsidized loans were paid for by taxpayers. AIG is being subsidized by the Federal Reserve, and since the Federal Reserve has the ability to “print money”, taxpayers will still pay for the bailout, but through higher inflation rates, not taxes.

And you need to know this too. This bailout of AIG is only a 2 year loan. If you have to bail someone out and pay the mortgage off, how can you expect it to pay you back in two years?. AIG will not pay back and the U.S. will own a bunch of nicely appointed offices around the world until a “buyer” comes along to buy it from the government at a discount.

Now isn’t it immoral that the bad investment decisions of Bear Sterns, Freddie Mac, Fannie Mae & AIG management had suddenly become the liability of American taxpayers?

My friends in America, the debate on whether your taxes will increase or decrease in the future has been ended. In addition to the rising cost of programs like Medicare, Medicaid, and Social Security, the recent government bailouts have just ballooned the deficit and there’s no end in sight. If this continues, there will be no choice in a decade or two of whether your taxes are raised or not. It will have to be hiked substantially to meet our debt burden. Your children will face an exorbitant tax burden to fund the mistakes made over the past decade.

According to insiders and analysts, the company will eventually be liquidated. Now no need to surprised. The bailout is just a trick to buy some time and make the process neat and tidy.

My suggestions (not many, as I am no expert)-

    1. Why not bail out the American health care system instead and putting 85 billion dollars to save a firm that is bound to die anyway? Being all capitalist sounds stupid these days… 😉
    2. It seems that it is a government policy what it likes to think of as stability rather than allowing large scale companies that get into trouble to receive proper market discipline. The dramatic government bailout should prompt Congress to break up Fannie and Freddie and privatize them – and discard the model. Privatizing profits and socializing  losses is hardly a formula for increasing the blessings of prosperity.

So what more can I say to you friends, best of luck and hope there are no more bailouts. Keep praying…

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2 Responses

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  1. it’s hard to object to the government’s mass bailouts as similar debt-producing methods were put into action to bring the U.S. out of the Depression… our economy has been supported and driven by debt ever since

    kingdom media

    September 19, 2008 at 7:31 pm

  2. Big business should not be allowed to become too large to fail. A business with that much influence is too big for a free market. It has access to wholesale market manipulation. And it has the privilege of depending on a government safety net if it fails.

    The recent economic crisis demonstrates that such businesses will now be rescued at taxpayer’s expense when they suddenly collapse. The CEO of AIG has even demonstrated on national TV that big business leaders expect tax funded rescues. And that diminishes a primary incentive for them to be efficient and prudent. It may even encourage their board members to strategically create a crisis requiring a government bailout rather than suffer losses over time on their own. These business leaders have developed an attitude of entitlement that should inspire corporate welfare reform.

    If businesses that are too big to fail are allowed to exist, then they should pay for their own government entitlement programs. This has been the arrangement for the lower classes. That is why social security tax rates in the United States become less for those who become wealthier. Wage earners should not be expected to pay for business welfare too. The influence these businesses have over markets should help them pay for their government programs. And to discourage corporate welfare fraud, those in charge of businesses that either purposely or by neglect cause the government to pay for their rescue should be punished for a kind of embezzlement.

    Bryant Arms

    Bryant Arms

    September 20, 2008 at 8:38 pm


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