Cynical Synapse

Wed, 08 Oct 2008

What Kind of Shell Game is AIG Playing?

Filed under: Behavior, Business, Economy, Gas Prices, Politics, Rants, Take action — cynicalsynapse @ 11:25 pm

Chicken Little probably couldn’t imagine how precipitously the markets seem to be falling. And it’s not just the US markets. The Pacific Rim markets fell record levels before Western markets opened this morning.

As a side note to this chaos, Obama called for firing AIG executives after a $400,000 conference at a California spa resort. Actually, Obama’s not the only one expressing this sentiment and Congress, that bastion of loyalty to the common man, is investigating. It’s not surprising people are upset with what appears to be AIG’s snub of the taxpayers. The salt in the wound is this luxury trip occurred just a week after the Fed’s $85 billion bailout of AIG.

But wait a minute. AIG’s expensive conference was from the insurance—the clean side—of the house. These aren’t the folks who needed the $87 billion. And, apparently, this type of pampering is commonplace in the insurance industry in order to attract and retain the best independent agents.

Ok, fine. But, if part of AIG is making a profit, why does the government—meaning taxpayers—have to bail out another part? I’ve always thought all these corporate subsidiaries were a convoluted maze designed to confuse and bury things, not unlike money laundering; the corporate world’s version of the shell game.

Tell me there’s no corporate greed. With the $85 billion AIG bailout, the $300 billion homeowner bailout, the $700 billion Wall Street bailout, and the $100+ billion in Senate sweeteners, why are stocks still falling? And why is the “clean side” of AIG getting another $35 billion loan from the Fed?

What kind of shell game is this and how long will we tolerate it? We should vote out all the incumbents because they obviously don’t have the people’s interests at heart.

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3 Comments

  1. It’s not a shell game.

    All the Fed loans so far are for the prpose of settling triggered CDS.

    See response 35 at the related Naked Capitalism post or see a more elaborate but homespun version at http://www.newcombat.net

    Comment by Krakpotkin — Thu, 09 Oct 2008 @ 5:18 am

  2. hey buddy. you should really read or get the CD of Jerkl island about the federal reserve. it would answer a lot of your questions.

    -fn
    http://financeninja.wordpress.com

    Comment by //\\//\\ e [+_+] — Thu, 09 Oct 2008 @ 5:24 pm

  3. @Krakpotkin:
    CDO, CLO, CMO, or CDS—credit default swap—the very name seems to infer questionable financial dealings. Why does the Fed have to settle them at all? What’s wrong with letting those who made the deals reap the outcome?

    To me, credit derivatives are a shell game. I used the term, however, to refer to AIG’s separation of finance and insurance groups and the effort to duck criticism on the luxury resort trip.

    At that time, there had been some support for AIG’s insurance group as not the part being bailed out. The shell game continues, however, since the “good” side now needs Fed help as well.

    Another intent behind using the term shell game is who’s responsible now? First private industry was. Then the government picked it up, but in reality that means taxpayers.

    Comment by cynicalsynapse — Thu, 09 Oct 2008 @ 9:13 pm


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