Federal Reserve lends $85 billion to AIG

lifterdead said:

Never. We're fucked.

Click to expand...

Duality said:

did you guys read the article? what would you have suggested the government done (consider the ramifications of AIG claiming bankruptcy in your response)?

Click to expand...

Braaq said:

What your seeing is the socialization of our housing and financial market with none of the perks that we should get along with it since we are footing the bill. All this is doing is increasing the deficit, putting us further in debt and ensuring that the CEO of AIG still makes him multimillion dollar bonus on us. They should just let them go under, the ramifications are going to be far worse in the long run than the short term. I thought the fed was finally thinking about the future and getting their heads on straight when they decided to not lower the interest rate yesterday, then they do this. JPMorgan already gave over $70 billion to AIG... not the gov gives them more!?

Click to expand...

Ironslave said:

f the fed, and f the duality

Click to expand...

Duality said:

i see what you're saying. i do think the fed though is doing somewhat better, i mean they did let lehman brothers go under (don't forget Behr Sterns last year) and had merrill lynch not merged with Bank of America i doubt they would have helped them either. not to mention as you said their decision to not lower interest rates. but AIG is such a massive (massive) corporation that had they gone belly up it would have worldwide ramifications. what you're saying about the future is completely true and we are just digging ourselves a bigger and bigger hole. but this is the largest insurer in the world, either way it's a bad situation if they go under or if they give them a loan to help them buy time to possibly remedy their current situation. can't totally fault the government to help them out imo.

Click to expand...

NEW YORK — The stock market plunged lower Wednesday as intensifying investor worries over the expanding credit crisis prompted them to dump stocks.

Jitters over the fragile state of financial markets increased dramatically after the Federal Reserve's decision late Tuesday to give troubled insurer AIG a two-year loan of up to $85 billion in exchange for a nearly 80% stake in the company, which lost billions in the risky business of insuring against bond defaults.

"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"

He said the anxiety gripping the markets reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter.

The Dow Jones industrial average tumbled 449.36, or 4.1%, to 10,609.66, giving it a shortfall of more than 800 so far this week. The blue chips have fallen more than 25% since reaching a record close of 14,164.53 on Oct. 9 last year.

Broader stock indicators also plunged. The Standard & Poor's 500 index dropped 57.21, or 4.7%, to 1,156.39, while the Nasdaq composite index fell 109.05, or 4.9%, to 2,098.85.

The market's losses were close to those seen in Monday's nosedive, which saw the largest drop in the Dow since the Sept. 11, 2001, terrorist attacks, as the venerable Wall Street giant Lehman Brothers filed for the biggest bankruptcy in U.S. history.

As investors fled stocks, they sought the safety of hard assets and government debt, sending gold, oil and short-term Treasurys soaring.

Gold prices exploded Wednesday — posting the biggest one-day gain ever in dollar terms. Gold for December delivery rose as much as $90.40, or 11.6%, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session.

Gold's previous single-day record was a $64 gain on Jan. 29, 1980. In percentage terms, it was gold's largest one-day advance since 1999.

Light, sweet crude for October delivery rose $6.01, or 6.59%, to settle at $97.16 a barrel on the New York Mercantile Exchange.

Todd Clark, a trader at Nollenberger Capital Partners, described the mood on U.S. stock trading desks as "somber."

Increasingly, investors are worried that the federal government's steps to stem the crisis may not be working as quickly as hoped. As a result, confidence in markets is deteriorating, Clark says.

"There is paralysis," says Clark. "Everyone is afraid that the credit crisis won't go away. It's like the financial sector has been in a serious car accident and the government is treating the patient with band aids instead of surgery."

The selling is starting to look irrational, he says, suggesting that people spooked by the crisis are getting out of stocks.

"For investors, the only near-term certainty is further volatility," said Paul Niven, Head of Asset Allocation at F&C Investments.

"While equities offer good value at current levels, we do not believe that investors are yet being compensated sufficiently for the risk which still remains, and the further failures and write-downs which will continue to emerge," he said.

"People are scared of further financial institution difficulty. Funding remains difficult and flows of risk-sensitive capital have slowed considerably," said Patrick Bennett, Asia foreign exchange and interest rates strategist with Societe Generale in Hong Kong.

Russian stock market trading was suspended as the markets watchdog asked the country's biggest exchanges to come up with proposals to calm plunging prices.

Click to expand...

Originally posted by Braaq
Well Chase bought out Behr Sterns, and also helped AIG the other day but still they would be fine if there were not paying their CEO's outrageous amounts.

Click to expand...

But your right about the shock wave it would have worldwide, but look how much the stocks plunged after the gov bailed them out today? It is one of the worst days in years! Very scary But the scary thing about Merryl Lynch means that now after this aquisition along with Countrywide B of A is now so large that if they go under they know they will be bailed out now as well... those sneaky bastards. lol

Click to expand...

Also, great job on keeping up with the economic events going on. Very impressive bro, you know more and make more sense than older people I hear or see discussing the situation.

Click to expand...

Duality said:

^

elaborate?

Click to expand...

Duality said:

^ oh i get it.


did you read my last post to you? Respond!!!

Click to expand...

Braaq said:

I didn't have anything to argue against, I repped you

Click to expand...