Wednesday, September 17, 2008
i ownz ensurantz compinny?
I feel very unknowledgeable about the true import of what is going on in the US economy this week ... wade in if you dare ...
So the news is telling me that the Fed finally decided to bail out AIG. I assume most people have not heard of AIG until recently, but it is one of the top 25 companies, in size, in the entire world, and the largest insurance company in the U.S. (not sure who is bigger worldwide, but AIG is one of the biggest).
And in return for a line of credit up to $85 billion, the Federal Reserve Bank now owns 79.9% of AIG. The press releases don't say it quite this way -- but we have nationalized this company. what the hell is going on?
Among the questions that occur to me is why Chapter 11 bankruptcy (a reorganization bankruptcy - you keep operating subject to bankruptcy law protections from creditors, like the airlines have done many times) was not acceptable for AIG?
Do we get to fire those in charge of AIG now, and take back their surely huge corporate bonuses, or cut their salaries?
according to one article, one analyst says this "not a nationalization because the Fed does not intend to run AIG. The Fed will get a profit on this, which it should." so, we own 80% of AIG, but don't intend to have any say in how it is run?
Is this like the (much smaller) 1979 bailout of Chrysler, which this conservative org. article from 1983 lambasted?
I am trying to figure out how these recent government decisions from people supposedly dedicated to the free market (including the retaking of Fannie and Freddie) are not socialism. (opinion piece here from unvetted source - "the New American?" - that seems to agree) McCain can say nationalized insurance for health care would be bad, but we just nationalized the largest insurance company we have!
ETA: Even that idiot Jonah Goldberg at The Corner doesn't seem enthused about the buyout.