NationStates Jolt Archive

You guessed it.

http://online.wsj.com/article/SB123638394500958141.html
Top U.S., European Banks Got $50 Billion in AIG Aid

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

[...]

The reason I'm posting this is that I suspect there may be more mainstream news on this issue soon if there isn't already (not least because I really don't see the company seeing the end of the year, but that's another story). But note that there is nothing sneaky or illegal about this. AIG was being a bunch of idiots (http://www.bloomberg.com/apps/news?pid=20601087&sid=aHx9vZa0IJAo&refer=home) writing CDS contracts (http://en.wikipedia.org/wiki/Credit_default_swap) like there was no tomorrow, and the banks happened to be their counterparties. The reason AIG needed government money was because they couldn't pay all the obligations that came up because of those contracts, and once they received the cash they paid up like they were supposed to: to other financial institutions of course.

The strange thing now is that there are politicians demanding this list of counterparties, presumably to be at the forefront of some public outrage. But the question is: wasn't it patently obvious that this was the plan from Day One? Wasn't that bailout money used exactly for the purposes it was made available for?

so they used the money to pay outstanding debts? is that what you wrote?

To my non-expert eyes as well it seems they used the money to pay debts. That would seem then to be the LEAST controversial thing they've done in all this time. In fact, the only thing they've done right.

if those payments (of legitimate debt) help to keep foreign banks solvent, its a win/win isnt it?

if those payments (of legitimate debt) help to keep foreign banks solvent, its a win/win isnt it?
There won't be a glimmer of win in this situation until AIG is broken up and gone forever. That beast should be propped up only as long as it takes to parcel out its bits and sort out which of its executives to prosecute.

if those payments (of legitimate debt) help to keep foreign banks solvent, its a win/win isnt it?
It's a fail. Helping foreign banks survive is unpatriotic, traitorous, and unamerican. It would be much better to let whoever has mostly foreign debt to to crash.

It's a fail. Helping foreign banks survive is unpatriotic, traitorous, and unamerican. It would be much better to let whoever has mostly foreign debt to to crash.
dont be silly.

dont be silly.
I'm not. Why should Joe the Plumber pay his hard-earned money to save the salaries of French and Swiss bankers?

I'm not. Why should Joe the Plumber pay his hard-earned money to save the salaries of French and Swiss bankers?
because if other countries fail, we wont prosper.

dont be silly.
I think that post was meant to be sarcasm.

Though, to be fair, that's probably how a lot of people in the US do feel.

Or, to put it in a less confrontational way, there are likely a lot of people who would take the position that the fate of foreign banks is meaningless if the entire American economy is falling apart at the seams. Money allocated to fix things should be patching things up at home, not flowing out of the country to help foreign interests.

Then again, the fact that a lot of the bailout money isn't even remotely going to places where it should has been obvious to anyone with half a brain and who has actually been paying attention. Paying off debts is probably one of the LEAST wasteful things that money is being used for.

Or, to put it in a less confrontational way, there are likely a lot of people who would take the position that the fate of foreign banks is meaningless if the entire American economy is falling apart at the seams. Money allocated to fix things should be patching things up at home, not flowing out of the country to help foreign interests.

Debt is debt, outstanding debt hurts our economy, regardless of to whom the debt is owed.

because if other countries fail, we wont prosper.
The converse of that is, if the US economy fails, we're probably taking most of the world with us. So it's also in the best interest of other countries to see us recover, regardless of how they might feel about the US personally.

I thought you were going to say "Manchester United".

I think that post was meant to be sarcasm.

Though, to be fair, that's probably how a lot of people in the US do feel.

Or, to put it in a less confrontational way, there are likely a lot of people who would take the position that the fate of foreign banks is meaningless if the entire American economy is falling apart at the seams. Money allocated to fix things should be patching things up at home, not flowing out of the country to help foreign interests.

Then again, the fact that a lot of the bailout money isn't even remotely going to places where it should has been obvious to anyone with half a brain and who has actually been paying attention. Paying off debts is probably one of the LEAST wasteful things that money is being used for.
thats what i thought until he denied it in his response to my post.

we have a world economic system. if our big partners fail, it hurts us. big time. if WE fail, our partners take a huge hit.

i guess thats why the big economic powers are trying to work together on this thing.

thats what i thought until he denied it in his response to my post.
Did I? Oh, anyway. The point is that we obviously should discuss whether US should support the unamerican economies, or let them help themselves.


we have a world economic system. if our big partners fail, it hurts us. big time. if WE fail, our partners take a huge hit.
You have used some right adjectives. Yes, a big failure in an overseas partner does some harm to US. But a failure in US causes a massive hit to overseas partners.

The world's structure isn't egalitarian. In this unipolar world, countries' relations with US aren't symmetrical partnerships, they are hierarchical. Overseas events don't affect US a quarter as much as American events affect foreign ones.

For instance, the price of oil (mostly bought by US) rises 3 times - Americans have to squeeze out a bit more for gas and many might consider switching to a mid-size. The price of oil falls 3 times - the oil exporters go down catastrophically. It works similarly with positive correlation events. Having kept isolationist for a long while, US is pretty much the only country in the world that could live on its own.

Apart from absolute measures, consider the comparative advantage US gets from other countries failing, allowing it to retain the position of the world's leader for a longer while.

Did I? Oh, anyway. The point is that we obviously should discuss whether US should support the unamerican economies, or let them help themselves.



You have used some right adjectives. Yes, a big failure in an overseas partner does some harm to US. But a failure in US causes a massive hit to overseas partners.

The world's structure isn't egalitarian. In this unipolar world, countries' relations with US aren't symmetrical partnerships, they are hierarchical. Overseas events don't affect US a quarter as much as American events affect foreign ones.

For instance, the price of oil (mostly bought by US) rises 3 times - Americans have to squeeze out a bit more for gas and many might consider switching to a mid-size. The price of oil falls 3 times - the oil exporters go down catastrophically. It works similarly with positive correlation events. Having kept isolationist for a long while, US is pretty much the only country in the world that could live on its own.

Apart from absolute measures, consider the comparative advantage US gets from other countries failing, allowing it to retain the position of the world's leader for a longer while.
our position as world leader isnt as important as a good life for our citizens. if taking down the rest of the world a peg or 2 means that we live less well there is no big benefit. if everyone prospering means that we are not so far above everyone else but our people live better anyway, its a good thing.

our position as world leader isnt as important as a good life for our citizens.
It isn't, but it is more important than the foreigners.

if taking down the rest of the world a peg or 2 means that we live less well there is no big benefit.
But the good thing is, it doesn't. If a certain bank is so important to them, they'll bail it out themselves with taxes. Come on, all US partners are commies. They will.

Ultimately, investment into American industries is more effective for improving American quality of life than investment into foreign companies.

Yeah, I don't think this is news really. It was obvious at the time what the AIG bailout was about. And yes, the money has been used for exactly what it was intended. I'm pretty sure I mentioned it at the time.

I think the problem is that the AIG bailout was sold as a bailout for the insurance/annuity side - which was obviously bullshit if you think about it. Guaranteed that other insurance companies will go under because they are only in the 'insurance' business.

Troubles me that they haven't taken down much of the risk yet, nor has there been regulatory change in Euroland.

It isn't, but it is more important than the foreigners.


But the good thing is, it doesn't. If a certain bank is so important to them, they'll bail it out themselves with taxes. Come on, all US partners are commies. They will.

Ultimately, investment into American industries is more effective for improving American quality of life than investment into foreign companies.
well i dont think that we need to give money directly to our big partners. (there may be circumstances where we need to send money to a few of the more strategic little players though. to maintain their stability)

but to have one of our troubled companies pay off their own foreign debt (instead of defaulting on it i suppose) thus keeping those foreign institutions stable is not an outrageous use of our bailout money.

I'd just like to say that the AIG owes me £20 and I think its time they paid me back :p

also I'm just confused on what to say its pretty straight forward really and very much a non-issue in my eyes

well i dont think that we need to give money directly to our big partners. (there may be circumstances where we need to send money to a few of the more strategic little players though. to maintain their stability)

but to have one of our troubled companies pay off their own foreign debt (instead of defaulting on it i suppose) thus keeping those foreign institutions stable is not an outrageous use of our bailout money.

If AIG had not been funded to do this, then the entire global financial system would have collapsed about three days later. You'd have all woken up and none of your debit cards would have worked. Possibly ever again.

It's all an interconnected mess. See the havoc that Lehman failing caused? Would be nothing compared to DB/Soc. Gen. et al failing. All these dudes owe money to each other, and those debts have to be counter party good for them to remain functional.

Hell, global shipping froze for about six weeks just because of Lehman. Unimaginable chaos if AIG had gone under just after that.

More properly it should be asked why things were allowed to get to this point in the first place, and why people aren't being punished now.

Yeah, I don't think this is news really. It was obvious at the time what the AIG bailout was about. And yes, the money has been used for exactly what it was intended. I'm pretty sure I mentioned it at the time.

I think the problem is that the AIG bailout was sold as a bailout for the insurance/annuity side - which was obviously bullshit if you think about it. Guaranteed that other insurance companies will go under because they are only in the 'insurance' business.

Troubles me that they haven't taken down much of the risk yet, nor has there been regulatory change in Euroland.
yeah but is "euroland" just slow at changing banking regulations or are they going to continue with the useless regulations that they have?

WE havent changed much yet have we?

Though I approved of letting lehman fail.

If AIG had not been funded to do this, then the entire global financial system would have collapsed about three days later.

O_o

If AIG had not been funded to do this, then the entire global financial system would have collapsed about three days later. You'd have all woken up and none of your debit cards would have worked. Possibly ever again.

It's all an interconnected mess. See the havoc that Lehman failing caused? Would be nothing compared to DB/Soc. Gen. et al failing. All these dudes owe money to each other, and those debts have to be counter party good for them to remain functional.

Hell, global shipping froze for about six weeks just because of Lehman. Unimaginable chaos if AIG had gone under just after that.

More properly it should be asked why things were allowed to get to this point in the first place, and why people aren't being punished now.
did you see that youtube video of the.....senator?....talking about how if we hadnt stopped banking withdrawals on a specific day a few days after lehman brothers went down that the whole banking/financial system would have collapsed in about 3 hours? that was kinda scary.

the feds are investigating many of the big boys of finance. i dont know what they can get them for but im hoping that at least some with serve jail time.

yeah but is "euroland" just slow at changing banking regulations or are they going to continue with the useless regulations that they have?

WE havent changed much yet have we?

Both in the US and in Euroland, bankers exercise a great deal of political power. As long as the taxpayer is happy to keep funneling them money, there is little incentive on the behalf of politicians to do much of anything.

Ultimately it is the responsibility of voters. I suspect there won't be any real outcry until pensions and the rest start to disappear. Until then, we'll be happy to accept this stuff in the guise of 'getting banks to lend again'. or 'protecting jobs' yada yada yada.

Personally, I'd nationalize the financial sector as an emergency measure. It's going to happen eventually anyway - it's sort of happening in a piecemeal fashion anyway - so it might as well be done properly and quickly.

did you see that youtube video of the.....senator?....talking about how if we hadnt stopped banking withdrawals on a specific day a few days after lehman brothers went down that the whole banking/financial system would have collapsed in about 3 hours? that was kinda scary.

the feds are investigating many of the big boys of finance. i dont know what they can get them for but im hoping that at least some with serve jail time.

Friday after. It was a run on US money markets - allegedly. I'm a bit skeptical of that one to be honest.

That said, I'm all for jailing plenty of these clowns. Unfortunately Madoff is serving as an excellent distraction from far more pervasive and destructive problems.

I thought you were going to say "Manchester United".

Bloody hope so.

Bailout Money used to bail company out of debt?

Stop the presses...

Bailout Money used to bail company out of debt?

Stop the presses...

yeah! what news! Bailout money used for that and not multi-million dollar bonuses for the CEO's! SHOCKING!!!

I understand that the only reason we're bailing these companies out is for our own benefit, i.e., so that the structure of our economy does not collapse. I'd rather the bailout money be used on American companies and goods, to be honest. We're in no way responsible for helping foreign banks who invested in a failure like AIG, so why don't other countries bail out their own corporations if they want them to survive?

To my non-expert eyes as well it seems they used the money to pay debts. That would seem then to be the LEAST controversial thing they've done in all this time. In fact, the only thing they've done right.
You'd think so, wouldn't you. But then...
http://www.reuters.com/article/newsOne/idUSTRE52624P20090307
Pressure may mount to know who got AIG bailout blns

Where, oh where, did AIG's bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.

[...]

Senators were outraged by the lack of details about where the bailout money has gone.

"That we find ourselves in this situation at all is ... quite frankly, sickening," said Senator Christopher Dodd, the Democrat who chairs the committee. "The lack of transparency and accountability in this process has been rather stunning."

[...]

U.S. lawmakers have said they are running out of patience with regulators' refusal to identify AIG's counterparties.

On Thursday, Richard Shelby, the top Republican on the banking committee, said: "The Fed and Treasury can be secretive for a while but not forever."

the solution is obvious declare me head of all banks.

the solution is obvious declare me head of all banks.

I've noticed that the absurdity of your posts have been increasing exponentially. Have you been drinking? :p

I've noticed that the absurdity of your posts have been increasing exponentially. Have you been drinking? :p

Hyde, Hyde, Hyde... After all this time, haven't you learned that with Greed and Death, it's not 'Have you been drinking', but rather 'How much have you been drinking?'.:p

Hyde, Hyde, Hyde... After all this time, haven't you learned that with Greed and Death, it's not 'Have you been drinking', but rather 'How much have you been drinking?'.:p

I've noticed that the absurdity of your posts have been increasing exponentially. Have you been drinking? :p

I do admit this is where i come on da net to get drunk and say the weridist thing.

I'm not. Why should Joe the Plumber pay his hard-earned money to save the salaries of French and Swiss bankers?

Joe the Pluber should die in a horrible burning 'accident' involving a flamethrower.

well i am happy/ AIG sent me my check for 5 mil. time to relax.

the solution is obvious declare me head of all banks.
That couldn't be any worse than holding them up by building money counterweights for some sort of bank-based Weekend at Bernie's.

That couldn't be any worse than holding them up by building money counterweights for some sort of bank-based Weekend at Bernie's.

interestingly that's where i met the CEO and convinced him to give me a few mil

To my non-expert eyes as well it seems they used the money to pay debts. That would seem then to be the LEAST controversial thing they've done in all this time. In fact, the only thing they've done right.

Sounds like a winner to me. And thats coming from one cynical guy who doesn't give the government credit for much. ha

You guessed it.

http://online.wsj.com/article/SB123638394500958141.html


The reason I'm posting this is that I suspect there may be more mainstream news on this issue soon if there isn't already (not least because I really don't see the company seeing the end of the year, but that's another story). But note that there is nothing sneaky or illegal about this. AIG was being a bunch of idiots (http://www.bloomberg.com/apps/news?pid=20601087&sid=aHx9vZa0IJAo&refer=home) writing CDS contracts (http://en.wikipedia.org/wiki/Credit_default_swap) like there was no tomorrow, and the banks happened to be their counterparties. The reason AIG needed government money was because they couldn't pay all the obligations that came up because of those contracts, and once they received the cash they paid up like they were supposed to: to other financial institutions of course.

The strange thing now is that there are politicians demanding this list of counterparties, presumably to be at the forefront of some public outrage. But the question is: wasn't it patently obvious that this was the plan from Day One? Wasn't that bailout money used exactly for the purposes it was made available for?

Clearly you did no a chance to read the juicy Bush documents. His intent for the bailout was the banks were supposed to use it to help homeowners. Since they didn't use a dime to help Americans, Bush was pissed. You should hear him ranting on that tape. It's classic. Sounds like the banks f*** him, Obama, and the rest of America over. In the meantime, those Europeans are making themselves filthy rich off American's misery.

I am hoping that all that money those Europeans and those multinational banks got from the bailout were for legit bills that AIG foolishly ran up before the crises because if it was for stuff after the crises started, we need to demand our money back.