AIG - economy - EOTWAWKI

[jonnyslick]

so are we headed toward the *end of the world as we know it* (EOTWAWKI)!?

think of this in the last two days:

biggest drop in the market since 9/11 (over 500 pts monday)
AIG almost goes under
American government (read TAXPAYERS) bails out a PRIVATE company
25% increase in fuel in 48 hours in some areas
highest fuel has prices our country has seen (some areas over $5.00)

you know the AIG thing is really really scary. it's hard to imagine that if one PRIVATE company goes under it could destroy our economy as well as have severe negative impact on a global economical scale. this is history in the making. 1st time that tax dollars have been used to directly give a loan to a private company ($85 billion). i think it's a total crock, but on the other hand if AIG would have been allowed to collapse the ramifications may have been too much for our economy to sustain.

on a side note this is not just an American thing, the British are going through the same things today as well. there going through several bank buyouts and upsets as well.

what you all think on this?

 

[Geesie]

It's really a shame that the people who control our economy are so bad at dealing with crisis. I'm not talking about Congress or the President - I'm talking about economists. Economists never, ever, prepare for the unexpected. Their economic models and forecasts and planning always assumes constant "normal" conditions. Events like this, according to their prediction models, shouldn't happen more than once a century. But we've seen the mortgage crisis, the dot-com bubble, the S&L crisis, the Asian Market meltdown, the crash of the 80s - and that's just in my lifetime.

"Economic forecasters are less accurate than weather forecasters, but more confident in their results"
- Tyszka, T and P Zielonka, 2002. "Expert Judgments: Financial Analysts Versus Weather Forecasters." Journal of Psychology and Financial Markets

For economists the real world is often a special case.

 

[R/T kota]

1st time that tax dollars have been used to directly give a loan to a private company ($85 billion).

I believe it was the US federal gov. that bailed out Chrysler back in the late 70s or early 80s.
No where near the 85 billion mark though. I think it was 8 million.
Chrysler payed back the federal loan in half the time allowed.

This being the end of the world? No.
I think this is the end of the 1% of the population controlling 99% of the wealth years though.
It was greed on the stock market that causes the high prices for everyone, oil included, and their greed finally bit them in the *ss.

 

[85 Cutlass Brougham]

THe thing that is so sad is that all these economists with PhD's failed to see what was obvious to me and my friends working at a pizza shop. The key market fundamental governing housing prices was out to lunch, namely the income to payment ratio for those buying houses. Eventually, the lack of income growth vs the high growth of the price of housing would collapse the market. It's economics 101, but the "educated" out there failed to see what a bunch of High School and College dropouts knew was coming. Just like the dot coms before it, it was an obvious bubble where the commodity being sold lacked the intrinsic value of the price that was being asked for it.

Out of a combination of greed and stupidity these firms became over exposed in the housing market without regard to the possible downside. The reason it was so easy to get a loan is that the companies thought that even a default would wind up in a profit due to the explosive growth in the price of housing.

 

[jonnyslick]

Well needless to say this will be an interesting week. On a positive note, looks like fuel costs have come down to day on average.

 

[85 Cutlass Brougham]

Oh, and the rich will always control a larger portion of the economy than they occupy. This is because the lower classes fail to understand the underlying economic factors and trends like the rich do, which is why they get rich in the first place. It takes a concerted effort to get and maintain wealth, an effort that most people are not willing to go through. Otherwise, average people would study economics and international politics far more than they do now.

 

[megaladon6]

think about this, GM has been losing billions a year, but they're still afloat since they had some diversity and cash reserves. wouldn't you expect a BANK to understand those concepts? that and risky investments are a great way to make money...if it works. it's called a risk 'cause you're very likely to lose. smart people back up risks with some sort of safety net. oops.

 

[srercrcr]

You can thank the Republican led Senate of the 90s for this crash. Senator Phil Gramm of Texas was the head of the Senate Banking committee and pushed deregulation of the industry so banks and insur cos could invest in all this risky crap to make MORE MONEY! You remember Gramm, He's the fat cat that McCain fired from his Chief Economic Advisor slot for saying "Americans are a bunch of whiners". So vote Republican and get more of this. The rich get richer and the poor get poorer.
You think your retirement is in jeopardy now?? Well guess what. If Bush and the Repunlicans had gotten their way and adopted Private Accounts in Social Security (so they could make MORE MONEY as brokers), you're SS would be in the toilet today.

 

[85 Cutlass Brougham]

Naah, you can thank 2 of Obama's financial advisers, both of whom were caught cooking the books when they led Fannie Mae.

 

[midwestls]

I'd say BLAME BUSH!!!!! Good thing he HAS to go away soon :!: