With no apparent short term impact on the taxpayers, the Fed continues to demonstrate its socialistic tendencies, offering your hard earned money to one of the most powerful companies in the world. AIG, proud sponsors of Manchester United (arguably the most powerful sports franchises) and the largest insurer in the world has made some poor, miscalculated business decisions and is now reaching foreclosure. So to stop the doomed company from defaulting, the Fed provides a bailout of $85 Billion which, when combined with Baer Sterns, Freddie Mac and Fannie Mae, makes the U.S. Government the largest financial “company” in America.
Think about it, The U.S. Government now has vested control over the stability of our finance, insurance and housing industries. They are on the hook for turning these industries around. All other companies must now compete with them over resources, customers, assets and guarantees. Does this set the tone for failure for the next 20 years? Jim Cramer, touted as one of the most foremost (or visible) financial annalists included “I would radically have to change my view about where the market’s going to go if AIG failed, because it’s so unquantifiable what they have”. This is true that when a company as large as AIG, with so much influence and cross industry touching business, their failure would have a ripple effect on almost every industry, company and sector. But what message are we sending? Get your company big enough and the decisions you make will have a guaranteed stop loss (i.e. The U.S. Treasury).
We are spending billions of dollars with little to no say in the matter. Our elected officials are out of touch with the average American and they think a 20 billion her and 100 billion there does not impact the future of our society. So far this year, the U.S. Bail bondsman has spent over $500 BILLION of your money.
The Stimulus Package: Total cost $150 Billion
Bear Stearns: Total Cost 29 Billion
Fannie Mae & Freddie Mac: Total cost $200 Billion
Various financial institutions (banks): Total cost (estimated) 20 Billion
AIG: Total Cost $85 Billion
These bailouts represent every tax payer in America, instead of using their purchasing power to stimulate the economy and buying things like Gas for their car, groceries for the family, or clothing for their children, sending this money to Washington.
But wait there is more in the works:
Retooling Detroit: Up to $50 Billion
The remaining financial institutions: $$$
Lehman Brothers: $$$
The Obama Stimulus plan: over $100 Billion
Pork Barrel spending: A bridge to your pocket book!
Etc.
4 responses so far ↓
Daniel Igersheim // September 17, 2008 at 6:48 pm
One thing left out in this great article is that a Republican President’s administration is leading the charge for this vcastly increased government. If Republicans truly stand for smaller government, market independance, and truly leaving the people alone to mind their own business, why are the Republicans of America not uniting in uproar to this gross injustice. If a Carter, Clinton, or Obama administration would have done what this Bush administration has done there would be impeachment trials. I think I am going to start a webpage kickbushoutoftherepublicanparty.com (though that might be too long)
UK Voter // September 18, 2008 at 12:33 am
Yes, the fallout will be interesting given capitalism seems to be turning into socialism. I don’t think the Fed had much choice other than to intervene, much as it pains me to think that central government and more specifically the tax payers of America should end up picking up the bill for the largesse of corporate America. We are in for an interesting few months, as the face on banking and investment banking is changed forever.
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