Our financial system is crumbling this week.

[ghostrunner]

[/youtube]

[TheoSqua]

hey, I have a loan with AIG. Wonder what happens to that if they go bankrupt. I hope they can't start demanding money up front.

[planet planet]

Now the federal government's bailing out AIG with an $85 billion loan. The hits just keep on comin'.

[Hungary Jack]

News services all over reporting that the Fed has reversed course and had decided to bail out another financial giant that got overextended in mortgage backed securities and other crappy investments.

This blows, IMO. Anybody else feel a sense of outrage about this?

[heyzeus]

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.

[planet planet]

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.

Or what if you were a person losing their home?

[Arthur Dent]

News services all over reporting that the Fed has reversed course and had decided to bail out another financial giant that got overextended in mortgage backed securities and other crappy investments.

This blows, IMO. Anybody else feel a sense of outrage about this?

We are told that allowing these institutions to fail poses a significant risk of causing a chain reaction of financial failure as the troubled companies have deals with so many others. If that causes the availability of credit to the rest of the economy to freeze up, it would mean major harm to the rest of us who didn't make bad real estate deals. If bailouts are needed to prevent that, then it is the best of bad choices. They should be structured as much as possible to clean out responsible parties (executives, shareholders), and the industry clearly needs more regulation to prevent the finance industry from periodically holding the taxpayers hostage with their ever more expensive boom/bust cycle.

I don't know why this logic wouldn't apply to Lehman Brothers. Do they have a different sort of business?

[Arthur Dent]

Basically, there's been some dismal 5 and 10 year stretches along the way, but over time there's no reason to think the market won't recover from something like this. I don't know if investors had any wool pulled over their eyes so much as they didn't do enough homework to begin with. I know I didn't when I first started putting money away.

The stock market is not the economy, and I certainly hope the goal of these actions is not to protect investors. I'm sure that there will be be a recovery, but in the mean time there will be plenty of pain for people who did not make these bad investments and rely primarily on labor income (the majority).

[Freed Roger]

I'm fresh out of beaver pelts.

thats what she said.

(plagiarism is ok)

[TheoSqua]

Now the federal government's bailing out AIG with an $85 billion loan. The hits just keep on comin'.

federal reserve official job responsibilities:

To address the problem of banking panics
To serve as the central bank for the United States
To strike a balance between private interests of banks and the centralized responsibility of government
To manage the nation's money supply through monetary policy
Maintain the stability of the financial system and containing systemic risk in financial markets
Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
Strengthen U.S. standing in the world economy