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Let me see if I'm getting this right: AIG, the huge insurance company, has so far gotten $173 billion worth of federal aid, because traders at one small division made bets on exotic securities that were so calamitous they threatened to bring down the whole company. So far, the amount of money the feds have pledged to this one firm equals nearly one-third of the nation's defense budget.
Yeah, it should be obvious to anybody who's pockets our politicians are in. The failure of AIG does represent more systemic risk than the failure of GM, but the failure of both would shock the system right now. Considering the autos are asking for less than 1/10 of what AIG has gotten yet..its pretty weird.
Again, with AIG, it was thought that as humanoid said, it would be a system-wide failure if they were allowed to go bottom-up. However, they need to be more closely scrutinized as they have thumbed their collective noses at the the taxpayer by flaunting their flagrant waste of funds. And quite frankly, if they continue to run their firm irresponsibly, I hope there is another that's able to pick up the pieces because I'm hoping at some point the money-tap will be shut off and we won't continue to reward their behavior.
Why the "rich" of course! All we need to do is tax those "greedy people" some more and all with be fine!
Of course the serious answer is:
We all will! Taxes will increase, inflation will increase, and our debt will take a higher and higher percentage of our budget and our GDP. As we've known for 40 years, Social Security is a fantasy, raided by Congresses and Presidents of both parties because they wouldn't face and address the problem. Taxes will have to go up...waaaaay up.
Now, as we enter the retirement years of the boomers, the government is going to be faced with many choices. We can become a European style tax and spend economy, with the government providing for your every need and taking 70% of your income, or we can get back on track and start finding ways to reverse from this self-destructive path we're on.
I was aginst the bailout of AIG alos. I reallty doubt that the bi9g three would ahve come up except for this. Before the bailout the big three were saying they were on track to recover. Now everyopne wants on the federal dole as they say.I also worry aboutt eh interest on the moeny the federal government has borrowed;which will cokme from txa dollars. In the 70's and the 80's recession we lower taxes( JFK did the same in the 60"s) to spur spending and cut governamnt spending.Now we seem to be increasing spending.
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