Our financial system is crumbling this week.

[Gashouse]

We'll have to see if the loan to AIG keeps that company afloat.

Aren't we basically on the hook for it at this point? I assume that if the loan is insufficient the amount will be raised.

Well, the gov't (read: us) have an 80% stake in the company now. So, you can count on us giving AIG more if needed. Because of the gov't's stake in the company, it's possible that they will end up making a lot of money if everything goes well.

[Leroy]

We'll have to see if the loan to AIG keeps that company afloat.

Aren't we basically on the hook for it at this point? I assume that if the loan is insufficient the amount will be raised.

Well, the gov't (read: us) have an 80% stake in the company now. So, you can count on us giving AIG more if needed. Because of the gov't's stake in the company, it's possible that they will end up making a lot of money if everything goes well.

Of which our government has a long history.

[Gashouse]

I reiterate my question from earlier today:

Why is the fed using OUR money to bail out SOME financial institutions who made bad, risky investments, but lets others go down the toilet?

if I were a Lehman shareholder, I'd be livid/suicidal/throwing molotov cocktails at government buildings.

As far as Lehman, it simply came out of nowhere, it happened too fast to devise any sort of bail out plan.

There's likely going to be 2 more institutions to going down, we'll see what happens.

The gov't failed to regulate them the 1st time around, now to save the economy from further decline, they have to regulate them now thru asset stabilization.

I thought it was the opposite: Lehman had been showing cracks for months and teetering for a couple weeks, so there was time to work out a deal. It was the Bear bankruptcy that came on too quickly for anything but a bailout to avoid serious shockwaves.

[Gashouse]

We'll have to see if the loan to AIG keeps that company afloat.

Aren't we basically on the hook for it at this point? I assume that if the loan is insufficient the amount will be raised.

Well, the gov't (read: us) have an 80% stake in the company now. So, you can count on us giving AIG more if needed. Because of the gov't's stake in the company, it's possible that they will end up making a lot of money if everything goes well.

Of which our government has a long history.

Past results are not an indication of future returns.

[Leroy]

I guess what I read is that Lehman waited to long to alert the federal government, like only last Friday. Could be wrong.

[sighyoung]

We'll have to see if the loan to AIG keeps that company afloat.

Aren't we basically on the hook for it at this point? I assume that if the loan is insufficient the amount will be raised.

Good point. I suppose the question is how much money is enough money. If $85 billion is enough, then taxpayers may see most of their money back eventually, especially if someone liquidates AIG, and another company or set of companies takes over the insurance role that AIG formerly played.

If not, taxpayers will be on the hook for $85 billion (with a bunch of insurance policies as "collateral"), and the Fed will be left to figure out how much more money can or should be conceivably pumped into the company to prop up these insurance policies.

Additionally, if more money is needed, the tax bill will be enormous.

[Gashouse]

NPR was saying this morning that adding up all the loans and bailouts over the past year comes to nearly $1 trillion. Yikes.

[sighyoung]

This just in--money market funds aren't very safe either.

Here's one that's actually losing money. Why? It had invested in Lehman Brothers debt.

http://blogs.moneycentral.msn.com/topst ... -quot.aspx

[TimeForGuinness]

NPR was saying this morning that adding up all the loans and bailouts over the past year comes to nearly $1 trillion. Yikes.

That's like another Iraq war...

[Arthur Dent]

If not, taxpayers will be on the hook for $85 billion (with a bunch of insurance policies as "collateral"), and the Fed will be left to figure out how much more money can or should be conceivably pumped into the company to prop up these insurance policies.

Do these insurance policies provide any income after they are sold?

--------------

I think it would be very helpful if these large numbers were expressed in a more meaningful way. How many people know how much $85 billion really is? For reference, $85 billion is ~$280 per person or ~$760 per household. Of course, households do not all pay the same amount, and if the loan does get repaid, we won't be on the hook for the full amount.