November 20, 2008
The Facts
We learn on September 18, 2008 that we-the-taxpayers were now in the insurance business. Our government appointed money handlers, Ben Bernanke and Henry Paulson, had bailed out AIG just days after Paulson declared there would be no more bailouts. The two issued AIG their first of what has so far become three infusions of money, with the latest coming on the 11th of this month. AIG came with a $441 billion debt. As one report said, “among the many risks this creates is that traders can essentially stampede government into bailing out one company after another”.
Of all the companies that have stood in line to get a taxpayer bailout, AIG will most likely be the first to declare bankruptcy. As of today $152 billion of taxpayer money has been either issued or committed to AIG. As reported in various articles, AIG has used the bailout money for everything except what they were supposed to use it for such as setting aside hundreds of millions for bonuses, billions more for stockholders, hundreds of thousands for parties, etc., etc., etc. And to top it all off they are also setting aside billions for future acquisitions. But a group of financial experts think the bailout will not work and AIG will go bankrupt.
My View
This bailout thing has been a thorn in my side since the day it was proposed, and I have written several posts on the subject. No matter how the money is issued or under what guise, the bulk of the money will never be used the way it was sold to the public. Not one single report or one single bit of evidence has been presented to show that any of the money has been used to relieve the crisis. Hell, it took a ton of publicity for anyone to start making loans, and when they did it was mostly a symbolic gesture. Credit is still very hard to come by, and only those who have plenty of money are getting loans. And you can’t point to Henry Paulson as keeping us informed, or that he has presented any proof the situation is getting any better. All he’s done is show up on television every couple of weeks and read off more of the same “justification” for why this is the right thing to do and how it’s going to pay off in the long run. It’s the “long run” that he and many others are counting on; that is to say, in the long run the money and those who stole it will be “long gone”, as will Paulson, and us middle income taxpayers will be stuck once again. I have no doubt AIG will go bankrupt, and the absolute proof lies in the way they are conducting business with the taxpayer money.
There are several indicators that point to AIG’s belief that they won’t survive. I’ve already addressed one point in this post where I said their lavish parties were one of those indicators. Now they are setting aside $503 million for employee bonuses; early pay-out bonuses. They sneaked that small, “insignificant” detail through with a two-sentence paragraph in their quarterly financial report filed with the SEC. So if AIG believes they will survive, why is it necessary to pay out deferred bonuses in advance; a bonus program that’s designed to keep people from leaving the company early. Yet AIG is saying they are paying out these bonuses “to keep the employees from leaving”. That doesn’t make any sense! Naturally, AIG isn’t giving out the names of the people who are scheduled to get bonuses. But as the article hyperlinked above said, it sounds like Enron all over again.
Now, two months after the initial bailout, AIG is struggling. They had a $24.5 billion dollar loss in the last quarter. And there is absolutely nothing that indicates they won’t continue to loose money. They have to borrow money from another government agency just to make the interest payments on the bailout money. So it’s not to hard to understand how they will soon declare bankruptcy, and we taxpayers will be stuck with a $152 billion loss. But what can one expect. Wall Street has produced a number of crooks over the past several years, just as this article, a con game in pin strips, points out. When one crook is fired from one company, another immediately picks them up paying them big bucks, thus joining the “reward & reward” group rather than the “reward & punishment” group.
AIG’s Final Curtain Call – Failure Is Near | (The) COMMON PEOPLES SOURCE for NEWS // Mar 6, 2009 at 9:56 AM
[...] is history. But this comes as no surprise. As I pointed out in this post last November, there were plenty of experts who recognized that. The only problem at that time was that there [...]