JTF.ORG Forum
General Category => General Discussion => Topic started by: Americanhero1 on September 18, 2008, 03:07:59 PM
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The numbers are big. That much is certain.
The Federal Reserve has backstopped the purchase of Bear Stearns to the tune of $29 billion. It will loan $85 billion to insurer AIG. It's letting banks borrow up to $150 billion using risky mortgage-backed securities as collateral. And it's letting investment banks, which it doesn't regulate, get short-term loans using the central bank's discount window.
http://biz.yahoo.com/cnnm/080918/091808_bailout_tally_taxpayer.html?.&.pf=taxes
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So, when no one else wants it, just pass it to uncle Sam?
Do we see other countries behaving like this?
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There are big differences between AIG, Bear and Fannie / Freddie.
With AIG the government basically buys a good firm at a good price, most likely they will see a nice profit. If they let AIG fall then everyone will lose much more just from the hysteria that would result.
The case of Bear is a bad dill, because the government agreed to take all the bad risky assets of Bear and let JPM to by the leftovers of Bear for a cheap price with no risk attached.
Fannie and Freddie are sick puppies back they had a historic and 'implicit' government backing, so really there was no choice but to nationalize them.