We’re All Communists Today

Fed to Loan A.I.G. $85 Billion in Rescue

Would any conservatives like to offer an explanation on this one? You can either defend the lack of regulation you lobbied for or argue why “big government” shouldn’t bailout the private insurer.

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3 thoughts on “We’re All Communists Today

  1. Ok. All things being equal I don’t think they should have bailed out AIG. But it was a bad decision where no good ones are available.

    Meanwhile, what does lack of regulation have to do with AIG’s problems? What was AIG doing that a conservative-cancelled/prevented regulation would have prevented? I mean, it sounds like they wrote a bunch of protection on bad mortgage bonds. Who on the left was lobbying for regulations making it harder to funnel money into mortgages for people with bad credit?

    Meanwhile the immediate trigger was that, according to rumors, they lost $550-600mm on the Fannie/Freddie takeovers. So you could say their mistake was also investing & trusting in the solidity of Fannie & Freddie. But this almost goes the opposite way that you wanted to go: after all, Fannie & Freddie were/are hardly free-market exemplars; they’re quasi-socialist organizations that, if conservatives had had their way, would never have existed in the first place. And by buying up worse and worse mortgages these organizations had a lot to do with the housing bubble in the first place. No bubble, no overinvestment, no collapse.

    So if AIG had to be rescued, it could just as readily (if not more so) be chalked up to the failure/collapse of socialist policies as to “lack of regulation”.

  2. I’m not defending this, or any other economic decision made by this administration, or touching any decision this administration makes with a ten foot pole.

  3. I’m providing the overall case for why failed conservative policies led to this crisis in a seperate post. The first of which you can see here:

    https://thechairman66.wordpress.com/2008/09/17/how-conservative-economic-policies-destroyed-the-economy-part-i-you-call-it-deregulation-i-call-it-oversight/

    But I’ll respond to a few of you’re specific arguments here below.

    Ok. All things being equal I don’t think they should have bailed out AIG. But it was a bad decision where no good ones are available.

    And what’s you’re alternative? Hell, what’s your argument against the bailout. Considering the fact that AIG is central player in multiple key markets both the domestic and international economy I’d prefer if they didn’t collapse.

    The NYT has a great op-ed here if you’d like more details:

    http://www.nytimes.com/2008/09/16/opinion/16lewitt.html?em

    Meanwhile, what does lack of regulation have to do with AIG’s problems? What was AIG doing that a conservative-cancelled/prevented regulation would have prevented? I mean, it sounds like they wrote a bunch of protection on bad mortgage bonds. Who on the left was lobbying for regulations making it harder to funnel money into mortgages for people with bad credit?

    A few responses.

    The most obvious answer is the housing bubble and ensuing subprime crisis that followed is the reason why there were bad mortgages in the first place. This isn’t a case of AIG investing in bad mortgages, this is a case of ALL mortgages being bad investments.

    Of course, the catalyst in all of this was the teaser rate mortgages that Phil Gramm and other conservative lobbyists lobbied against.

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