Postponing The World's Biggest Garage Sale Posted from
http://www.saneramblings.com with permission
This AIG story is so bizarre, you may not believe it. But it is true.
On the verge of collapse yet again, AIG just got another $30 billion of U.S. taxpayer money. This is its forth bailout since September and it now has a staggering $182 billion of taxpayer funds.
Yet the stock market had so little confidence in AIG, that even after receiving the money its stock price closed at 45 cents a share. You could actually buy a share with the change in your pocket.
The U.S. Treasury and the Fed which bailed them out again had so little confidence they said saving AIG "will take time and possibly further government support." They did not say how much time or how much money.
In September, when these AIG bailouts began, the government's position was a collapse of AIG, because of its massive size could endanger the U.S. and global financial system. But they've never explained who they rescued by spending all this money nor how that rescue is now secure.
Alternatively, Hank Greenberg the Chairman and CEO of AIG from 1968 to 2005 said in September the firm would fare better filing for bankruptcy then to receive a government bailout. He and others wanted to raise private capital to save the company. But instead the government rushed in with $85 billion of taxpayer money.
Had AIG gone bankrupt in September, and had no viable plan to resurrect itself as is apparent today, the court would have identified and valued its assets and sold them off to the highest bidders to pay off its creditors. It would have been the world's biggest garage sale.
Now AIG is on life-support with no clear direction, no acountability for what's happened to the money and seeking easier, cheaper terms for the money they've already received.
How can this be? AIG has the leverage because it has already pocketed the $152 billion. Politicians can't afford the embarrassment of having them now go broke.
But if AIG continues to fail and the government stops funding them, either in the courts or in a massive private auction, you will see the world's biggest garage sale. Everything must go, all sales final.
However, the government may be on the hook to the buyers, with open ended guarantees of portfolio or subsidiary values.
As the situation grows more desperate and values rapidly decline, as they've done since September and are continuing to do, shareholders, lenders and other creditors such as you and me may receive pennies on the dollars we invested. So might their millions of policy holders.
To avoid this calamity, thus far the government has no plan, other than to shovel them more money, as it throws away good money after bad.
As if this isn't bizarre enough, it gets even stranger. AIG just sued the government trying to avoid paying $306-million in taxes, interest and penalties the government claims they owe. They're using our bailout money to pay their lawyers.
In pondering this strange situation, one possible solution could be for the government to just deduct the $306-million from the latest $30-billion, and stop the lawyers from running up their bills at our expense.
Meanwhile, as this grab of billions of taxpayer dollars is going on, last weekend the Los Angeles Dodgers announced they would hire more janitors and security guards for the coming baseball season.
Thousands of people arrived to interview for a handfull of seasonal, part-time jobs that will pay about $10 an hour. When asked why, person after person standing in long lines awaiting their interviews spoke of their need for the job to buy food for their families and to pay their bills, such as their electricity and gas.
This is the real world. Working people in crisis while giant companies use lobbyists to make campaign contributions and grab huge sums of money from these working people.
But there is hope. When people have had enough of these trillion dollar bailouts for those who so grossly mis-managed their firms, they will unite and raise their voices so loudly, even Congress will hear them.
It will take much more however. Our system is broken and we need to fix it. Representative government must represent all of the people and not simply those who lobby it, while spreading money around. These bailouts of the rich, while families in crisis suffer, have shown us what a farce our system now is.
But these problems can be solved.
We need a new Constitutional Convention, one where we devise a system like most democracies use, a parliament in which we can call for a vote of no confidence and replace our representatives. This would also encourage many political parties to participate, rather than the two party monopoly we have now.
And as most other democracies do, election time would be kept brief, perhaps 30-days, rather than our current endless process. This will slash the costs, which should be paid for by the public, not lobbyists.
If you think the current system of private political donations has saved us money, just look at the cost of the bailouts and stimulus plans, as our nation heads for financial collapse.
But for these changes to happen, you must raise your voice. We need to hear it for your voice matters. If you stay silent, you're going to get more of what you've gotten because those in power don't reform themselves. And if you think change is impossible, watch what happens when our economy collapses.
Think of AIG and please raise your voice now in the name of fiscal sanity and in the name of compassion for the rapidly growing list of people in need.
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