Posts Tagged ‘aig’

Spitzer’s Real Scandal at AIG

March 19, 2009

Eliot Spitzer, former Governor of New York state, has written an interesting piece about the real scandal at AIG:

Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

He suggests that AIG’s counterparties – ie. Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, etc. received an enormous, hidden, second round of cash via the AIG bailout.

Spitzer demands answers to a handful of questions at the end of the article, but I want to know when people are going to wake up and realize how much money Henry Paulson has stolen from them to pass on to his Wall Street buddies.

Update 24 March 2009:  Following the link in the first comment below led me to this interesting video.

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Give 85,000,000,000 To The American People!

October 5, 2008

The Misanthropic Mailbag recently received a message forwarded from a relative suggesting that rather than having the U.S. Government engage in the 85 billion dollar (yes, $85,000,000,000.00) AIG bailout, it should distribute the money to the adult American citizenry.  The text of the message follows:

“Subject:  BailOutPlan

Now here’s a bail out plan that will really work!

I’m against the $85,000,000,000.00 bailout of AIG.

Instead, I’m in favor of giving $85,000,000,000 to America in “We Deserve It Dividend”.
To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.

Our population is about 301,000,000 ± counting every man, woman and child.
So 200,000,000 might be a fair stab at adults 18 and up.
So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every citizen, 18+ as a “We Deserve It Dividend”.

Of course, it would NOT be tax free.

So let’s assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads.
Put away money for college – it’ll be there.
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs.
Invest in the market – capital drives growth.
Pay for your parent’s medical insurance – health care improves.

Remember this is for every adult U S Citizen 18+ including the folks who
lost their jobs at Lehman Brothers and every other company that is cutting
back. And of course, for those serving in our Armed Forces.
If we’re going to re-distribute wealth let’s really do it…instead of
trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is
being proposed by one of our candidates for President.

If we’re going to do an $85 billion bailout, let’s bail out every adult US Citizen 18+!

As for AIG – liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.

Here’s my rationale. We deserve it and AIG doesn’t.

Sure it’s a crazy idea that can “never work.”

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion “We
Deserve It Dividend” more than the geniuses at AIG or in Washington DC .
And remember, this plan only really costs $59.5 Billion because
$25.5 Billion is returned instantly in taxes to Uncle Sam.

There will not be any more foreclosures, or bankruptcies. Credit card debt will disappear and when the cash hits the street the taxable new business will likely pay off the remaining $59.500,000,000 because the money will be re-spent many times.

Merry Christmas!”

Admittedly, when the Misanthrope read this message the first time, eyes glazed over and the money was mentally spent several times over.  It didn’t take long, though to realize that something did not add up.

A quick trip to the old Google calculator confirmed that 85 billion divided by 200 million equals only $425 per person (click here to see for yourself:  85,000,000,000 divided by 200,000,000 equals 425.)

This also doesn’t take into account the fact that the U.S. Government is not giving AIG 85 billion dollars, it’s a loan authorization to loan up to 85 billion dollars and that guarantees the government (ie. the U.S. taxpayer) 79.9 percent of the company.  The terms of the deal stipulate that the company has to pay an interest rate of about 12 percent (8.5 percent over the 90 day LIBOR – as of today that’s just over 12.5 percent:  LIBOR definition; Current LIBOR rates).

It’s fair to say that very few Americans would be willing to sell the U.S. government 80% of their profit making ability for a loan of $425 accruing interest at a rate of 12.5 percent.  In this light, despite the fact that the Misanthrope is a rabid believer in the free market, it seems that the government has made a wise move this time.