What would happen if we let them fail?

[Andy823]

Now I am as mad as the next person about what AIG has been doing, along with CITI group, BOA, and all the others, and I have vented on the board many times, but I do know that although I would love to see these corporations fall, the results would not fair well for the country, the people, or for that matter the world as a whole. I found some info that explained it better than I could here:

http://www.msnbc.msn.com/id/29762648/

I really do think that our president knows what he is doing, and although the republicans are trying to slam him for what is happening, even they know letting these companies fall would be disaster, not only for the world, but for their political career as well. They can talk a good talk but when it comes down to reality, they have no better plans than president Obama, and they know it. This country can, and will come back. It will take time. Bush took 8 years to screw things up, and he did a bang up job of it. It will take time to get our feet back on the ground and unravel the mess Bush left the country in, but I have faith that it will happen. I may not agree with everything our president does, but at least I know that things are already changing, maybe not as fast as some think it should, but there is change. If we give the president a chance I think that we will see new regulations in the financial sector, tougher regulations that will help us go forward not stay in the past, and a new way of doing things in D.C. I too wish it could happen overnight, but that just isn't reality.

[Mike 03]

1. It would be fucking disaster the likes of which we've never seen before.

You are right to think we are doing the right thing.

I understand that people just don't "get it." I'm trying to have understanding and compassion for them.

But if they think things are bad now, they should see what will happen if we allow AIG, Citi or BAC to fail.

I can't even begin to explain how bad that would be.

Thanks for your post.

[onethatcares]

2. mike, they already got the money they originally got invested.

we gave them billions more, what's the bright side?

[Mike 03]

6. I'm not sure there is a bright side. I'm not sure I get your point, but I think you are feeling

the frustration and despair most of us are feeling. (?)

You are absolutely right. We are sinking money and the only thing we get in return is that our worst nightmare won't come true.

Does that make sense?

[Mike 03]

7. I don't think I disagree with you. It is bleak all around.

It's just: I come down on the side of saying we have to try to NOT allow the worst case scenario to happen.

Even if that means pulling out all the stops right now. That's just my opinion, though.

Reasonable people definitely disagree on this issue, and I welcome opposing arguments!

[Andy823]

11. You make sense to me.

Things are bad now, but as you stated, it could be worse. Something has to be done and Bush sure as hell wasn't helping things, the president has little choice if he doesn't want the country to tank, and he is doing all he can, and it's what needs to be done no matter how ticked off we get at the people getting the bailouts.

[RJ Connors]

10. And while I agree with you,

I am pretty certain the time is soon at hand in which we will not have any choice in that this whole mess will ultimately spin out of control and be beyond fixing.

This isn't you run of the mill economic problem. In fact, this is an economic problem that I don't think has ever happen before at this scale.

[sendero]

16. I just don't agree..

... the fact that we are going to have to print trillions of dollars is not exactly a sunny day scenario.

I don't think anyone has put much effort into any other solution than printing dollars and bailing out the very people who SHOULD be in jail.

I would much prefer a solution that involves bailing out the innocent and letting the crooked fail.

[Andy823]

23. Yes, I too would love it

If we could do things differently, but it just isn't going to happen. The system we have is not meant to help the innocent, but to help the greedy people at the top. That can change, and I really do think that when this is all over things will be different, not perfect, but much better than they have been. This mess that Bush and the republicans handed over to president Obama was designed to stop him from making the changes we need in this country, and to prevent the rich people from going bankrupt. With the help of those in congress who really want to see things change, Obama can not only get us out of this mess, and yes it will be expensive, but he can put regulations and laws on the books that will prevent this from happening. They can also go after those who really caused this at the same time. There needs to be investigations, as are being done in NY, at the federal level. Those who are found to have committed crimes of any kind can be taken to court. It will take some time for the investigation, but it can be done and still not hurt the recovery efforts.

The thing I fear most is that if we don't do what I am sure we all hate doing, the bailouts, things will be even worse and millions more people will suffer and end up without jobs, with no savings or retirement accounts, and then the whole country collapses. I have faith that our president is doing what will work, even though at times I may disagree with his plan or the people he has helping him. I will stand behind him because I know it could be much worse. While I want to see those who caused this mess go down big time, I also don't want anymore damage done to the innocent ones who will suffer the most if we don't get out of this.

[Mike 03]

3. Also, it is ridiculous to slam Obama, because Paulson and Bernanke, appointed by Bush, are

saying the damned same thing.

We cannot allow some of these insitutions to fail. That is an absolute.

If we do, we will see a domino-effect collapse of all major banks all over the world. Pension funds, 401ks, mutual funds, ETFs, hedge funds, and just about everything, including state budgets will evaporate.

We would see runs on banks.

You would be unable to get cash.

And on and on...

[Andy823]

12. The blame game

Is all the republicans have right now. They have no plan of their own, they just have to attack the president to make him look bad. They also know that what is being done has to be done, but they aren't going to admit it. They don't care about the country, only about getting back in control no matter what cost to the people, the country, or the world!

[JDPriestly]

4. It's not about whether we let the financial industry fail.

It's about whether Obama chose the right team to clean up and regulate the financial industry. It appears that Obama's appointees do not, shall we say, have the distance from the wrongdoing that they need in order to clean it up. Obama's appointees are part of the problem. And they aren't really doing much to provide the solution that is needed.

Bush's team was worse, far worse, as was Clinton's. We need people to come in and clean up the financial industry. People who have enriched themselves at the trough of the financial industry, who have friends and maybe even family in the financial industry, cannot do the job.

Obama needs to fire his financial team and hire new ones. He went outside the CIA to hire Panetta. He needs to go outside the financial professionals to get someone to clean up the financial industry. If a non-professional can't understand what is going on, it should not be allowed. That is particularly true of any practice that could possibly put the money of non-professionals in jeopardy. This may sound extreme, but it should be a basic principle that, if non-professionals are being allowed to invest in financial instruments or securities, non-professionals have to be able to understand those instruments or securities. Anything that a graduate of the ninth grade can't understand should not be sold. The alternative is to replace the 401(K) system that forces ordinary people to invest their life savings with a much more effective government pension plan.

[Andy823]

13. I agree.

And I think that Obama will make the right choices when the time comes. We have to clean it up one way or another.

[sendero]

17. Exactly..

... even if what we are doing now IS the right course, who could believe it with the likes of Geithner and Summers running the show. These guys and people like them ARE the problem and they cannot be part of the solution.

[HiFructosePronSyrup]

5. It'd be like when Lehman bros. was allowed to fail.

Only bigger and worse.

[bridgit]

8. Dunno, they say AIG bundled so many policies & Fi-products they out stripped...

their ability to pay out on them even from a reasoned risk assessment cause it was all about volume & the bottom-line. Well, now there is no bottom-line so there went that. Lloyd's of London seems to work within a more conservative business model but not American Corporatism. Maybe enter their paper, bust up the risk into more manageable groups; like MaBell, you could prolly start-up dozens of other insurance firms from what AIG is currently losing their ass over...wait a minute,

They're losing our ass too :rant:

[Andy823]

14. It was all about greed!

Greed got us where we are, and tougher regulations is a must if we want to prevent this from ever happening again. From what I have read most of the big leaders around the world are ready to put tougher regulations on the financial institutions, and also go after the tax dodgers who have billions in offshore bank accounts. Things are so bad now that the Swiss are working with these countries to "help" them get back the tax dollars that are owed, and this is a good sign. The only way that we can prevent this is on a world wide basis, and I think that is what will happen.

[bridgit]

24. Correct. The wealth of a nation clearly no loner resides in the 'crown jewels' yada-yada especially

in a nation THAT HAS NO CROWN JEWELS Hello!!!! -- neither is the *invisible hand* invisible any longer in that it is right there in your face; the thrust of whatever Adam Smith & Alexander Hamilton ever thought they had access to was greeeeeed pure & simple human greed all along believe it!! Here, from my journal:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4779172&mesg_id=4795111

[Laelth]

9. Foreign banks would refuse to lend us money and the Federal Government would collapse.

Isn't that a sufficient reason to keep propping up AIG and the financial sector? Nobody likes it, but there's an excellent argument for continuing to do it.

:dem:

-Laelth

[kentuck]

15. I'm not sure it won't collapse anyway...

And might even be worse than letting them file bankruptcy?

[sendero]

18. Do you think..

... that foreign governments are going to keep buying Treasuries when the gov't is printing dollars like a newspaper?

Do you think there is any other way to finance a $2 trillion deficit without printing?

The problem with all of the rescue schemes is that in the end it is a zero sum game and all we are doing is kicking the can down the road.

[Laelth]

20. I hear you, and I don't know what foreign banks will do.

But the logic behind the TARP is that failure to stabilize our financial sector will cause an erosion of global confidence and cut off our access to foreign money ... something we desperately need right now to finance our enormous deficit (the one Bush left us) and to finance additional government spending that's necessary to lessen the impact of the recession.

Clinton left us with a surplus in 2000, and our national debt (as a percentage of GDP) is still lower than it was during WWII. We can pay off this debt. We just can't pay it off right now ... not in the middle of this recession. For the moment, we must borrow from foreign banks, and we are bailing out AIG and our own failing banks to create confidence in the American financial sector and to keep our line of credit open.

Whether it will work is another question, but there is a good argument for doing it, and both parties are in agreement about it (regardless of the posturing we see in the corporate media).

:dem:

-Laelth

[annabanana]

19. When can we actually NATIONALIZE them?

What kind of straites must we reach before this becomes the. thing. to. do.?

[Fire1]

21. AIG would not fail. As KO put it, it just needs to be 'de-clawed.'

IOW, AIG needs to stick to insurance operations and get out of the financial instruments/products business. Period.

[Andy823]

22. Yep, I heard that from Keith.

I agree, all big corporations need to be "de-clawed"! I know Keith will do a good job on his comment!:thumbsup: