AIG Rescue at Hand: Government to Take 80% Stake in Exchange for $85 Billion

By and | September 16, 2008

  • September 16, 2008 at 8:41 am
    Ed says:
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    Even though I work for a competitor, and always hoped that AIG would fall flat on its face….I never in a million years I would ever see the day that it happened..

    I feel bad for the workers there…not the higher ups. Never a good time.

  • September 16, 2008 at 8:48 am
    gabe says:
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    I thought I heard on NPR from some analyst that the bond insurance/investments operation might be spun off to protect the Life/P&C side of the company… Would anyone please speculate? Should auto policyholders be concerned or worried?

  • September 17, 2008 at 2:23 am
    Mark says:
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    I cannot believe they are getting a bailout for being irresponsible! They screwed up and now are going to screw many of us out of more money in the form of $85,000,000,000 – that is what $85 Billion looks like… not so nice when you write it with all the zeros, eh?

    They have been buying business in my State (Texas) on the P&C side with total disregard for their loss ratios and in effect making it VERY difficult for companies who are trying to improve their loss ratios to win business – but I guess they don’t have to worry because the government will just bail them out… total B.S.!

    They should be allowed to go the way of the dinosaur and let companies that ARE responsible earn their book as it disintigrates… why would we “bail out” a company which has proven that it only knows how to mishandle the funds that have been entrusted to it… I totally don’t buy the, “They’re too big to fail.” balony! Nobody and NOTHING is too big to fail… they fail if they deserve to, ESPECIALLY if they have done the things that this company has chosen to do!

  • September 17, 2008 at 4:29 am
    Jane says:
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    I’ve always thought the insurance industry would destroy the American economy now it appears I was right…

  • September 17, 2008 at 4:37 am
    Bob says:
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    And we were worried about National Health Care. Now, we have National P & C. Socialism at its finest. And during a Republican Administration. If the guys at the top of AIG don’t get skewered for their mismanagement of the company, then this country is in trouble. They should be jailed and have their nads removed.

  • September 17, 2008 at 4:58 am
    2lanelover says:
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    I agree with Mark: all this government is doing is rewarding bad behavior; and in this situation, even certain illegal activities. Hank Greenburg is having one final last laugh at the expense of the rest of us fools who allow our government to play patsy to these New York elistist thieves!
    If we don’t allow our capitalist system to naturally weed out those that deserve to die on the vine, then all we will have left is another version of the Chinese Method of running our economy.

  • September 17, 2008 at 5:14 am
    Eddie says:
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    Do you want to live in a dictatorship, or in a free society, such as that envisioned by our founding fathers? The definition of Socialism IS Dictatorship! This is a very bad omen.

  • September 17, 2008 at 7:05 am
    general lee says:
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    Where have rating agencies AM Bests; Moodey’s; S&P & Fitch been before yesterday – while executives and large stockholders drain false wealth????

    Why was collateralized debt securities not reviewed?
    (All while real assets went to mergers, dividends and bonuses.)

    Now, follow the money. See who gets a taste and where part of it vaporizes.

    Greed wins the day…and again.

    general lee

  • September 17, 2008 at 7:09 am
    an old AIG Employee says:
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    Amen Chuck! And General Lee you hit the nail on the head and drove it through!

  • September 17, 2008 at 7:13 am
    an old AIG employee says:
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    Mongoose, you are really hank greenberg posing as someone else aren’t you?

  • September 17, 2008 at 7:16 am
    David says:
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    All this about an AIG bankruptcy filing and Fed bailout, and the carrier still gets an “A” rating from Best! What financials are they reviewing?

  • September 17, 2008 at 7:20 am
    Mark says:
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    We are all in awe of your intellect, and envious of your ability to alienate.
    You are, undoubtedly, an insurance executive. In fact, I think I know you.
    Signed,
    The Janitor.

  • September 17, 2008 at 7:50 am
    VA says:
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    Do people really think this is all about “auto insurance”.
    AIG holdings is so much bigger than piddly little personal lines risks.
    They are not only the backbone of the ENTIRE insurance industry. They are a cornerstone of the US economy..

  • September 17, 2008 at 7:55 am
    Free Market says:
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    Mike it is sad to me you have the beaurocrats hopeless view of the world. Your island story has two sides. Yes the beaurocrat sees a limited amount of resources and only he is the best to determine who receives what and how much. The entrepreneur sees things differently. He sees a problem with the limited resource and asks, how can I increase it, ie. have fish grow larger, have them reproduce more quickly, find an alternative to eating fish etc? Please do not put your faith in goverment, I beleive from the bottom of my heart, you will be diappointed.

  • September 17, 2008 at 8:07 am
    Bob says:
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    And perhaps you should use spell check before you post.

    Mr. Executive.

  • September 17, 2008 at 8:09 am
    Bob says:
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    That was meant for Mongoose.

  • September 17, 2008 at 8:09 am
    Jean says:
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    Think about the innocent employees, all of them who had nothing to do with it. The fall of the mortgage finance industry was at fault. The government could stand to make money in the end, and you don’t have thousands of people out of work. Let’s think about the little guy here, and be happy for those who will not be out of work.

  • September 17, 2008 at 8:51 am
    LG says:
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    HMMM. the gov’t comes in – raises hell -fines and people are charged with crimes – it all falls down – THEN the gov’t returns and bails it out with our money. I am not sure but somewhere in there somebody is a bigger criminal than the original company exec

  • September 17, 2008 at 8:54 am
    matt says:
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    “bails it out with our money.”

    How is it our money? The Fed is not a public entity. It’s THEIR money, and we are supposed to play by THEIR rules. Such is the nature of a FIAT CURRENCY.

  • September 17, 2008 at 8:58 am
    All Powerful Zeus says:
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    The reason for all this is simple: we do not operate in a free enterprise system because there is a monopoly on the creation of money. That is why the dollar is falling and why it has 5% of the purchasing power that it did in 1913. There actually have been times when there were competing private monies (oh my God! You mean people actually did not die by the millions when the “government” wasn’t controlling the money supply?) and people did just fine. If you want to see the real truth about economics and finance, start by visiting the web sites http://www.mises.org and http://www.lewrockwell.com Please don’t for a second think that you’re going to find anything even approaching the truth in the mainstream media, although you might find some fascinating stories on Jessica Simpson’s toenails.

  • September 17, 2008 at 9:07 am
    Average Man on the Street says:
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    LG,

    You have all but said what would get you thrown in jail, and possibly killed, in ages past: the government is the biggest crook of all. The government is nothing but a collection of individual men and women who do business with guns and other weaponry. But try telling that to anyone anesthetized by what passes for education and you’ll be called every name in the book: “oh, you’re just an anarchist!;” “you just want to see people starve in the streets!” “what would happen if the government didn’t run ___________ (fill in the blank with whatever you want: old age pensions; health care; the economy; “defense,” ad nauseam)

  • September 17, 2008 at 9:17 am
    Wants to know says:
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    Can anyone tell me who makes the decision to spend this $85 billion to bail out AIG? Congress? Senate? President? I didn’t vote on it.

  • September 17, 2008 at 9:19 am
    Henry says:
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    The federal reserve board. But they did not do it without first discussing the matter extensively with all of the institutions you mentioned.

  • September 17, 2008 at 9:19 am
    The Answer Man says:
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    Wants to Know,

    The simplest answer to your question is this: the decision is made by that group of people that is able to wield violence on a large scale most effectively. That’s not what you were told in school for the simple reason that it is true.

  • September 17, 2008 at 9:35 am
    Capitalist says:
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    Ok, all you smart guys, tell me this, Why is the US government (me and you the taxpayer) bailing out AIG, an international insurer? Where is the all worshipped United Nations?

    And, prosecute the bums that mismanaged the company, make a law retroactive if you must to do this. Stop paying MILLIONS to executives who are only looking out for themselves.

  • September 17, 2008 at 9:42 am
    Katherine says:
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    Since AIG screwed up well beyond any reasonable measure, they should suspend writing new business until the government debt is repaid. Renewals okay, new business, not so okay.

  • September 17, 2008 at 9:43 am
    FOWIF says:
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    Has anyone blamed the President yet? I guess they’re still too busy blaming him for Katrina and possibly now Ike.
    BTW: Bush 7, Terrorists 0.
    Frankly, everyone (even the small employees of AIG) must look out for themselves and prepare accordingly.
    We have the greedy corporate elite’s of NY (as one of you said) fouling up this huge hunk of money and now our “well equipped” government bureaucracy entering the mix….good grief. Does this fall under FEMA’s control?
    Time to move your policies elsewhere.
    Perhaps we should let the hard working janitors of the world take a turn at running things…..us eensurance perfessionals soor aren’t dooing veery goooood.
    We all had better be praying for our kids and grandkids who will be cleaning up not only our own fecal matter someday but our financial crap as well.

  • September 17, 2008 at 9:48 am
    cletus says:
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    I’ve spent a good part of the past 30 years of my life competing against insurers like AIG trying to earn business working through independent insurance agents and brokers. The world is in a very different place now. My only advice to hard-working Americans like me would be to (1) get your financial house in order as quickly as you can and as best you can (2) develop a good prayer life. There are no trustworthy institutions run by men and women in our country any more….

  • September 17, 2008 at 9:50 am
    Mike says:
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    The republicans got what they wanted – No Regulation, no oversight – Now look whats happened. Oh, now what are they gonna do?

    So yea, I will blame Bush and the Republicans, look at all that has happened on his watch.

  • September 17, 2008 at 10:03 am
    Capitalist says:
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    Mike, the Demon-crates have been running Congress. Blame them.

  • September 17, 2008 at 10:05 am
    Joe Mama says:
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    Granted, I don’t know that much about economics, but if it’s The Fed’s money, how does it exactly affect the taxpayer? Seems like it’s still OUR money. This can’t be good for the federal deficit.

    Also, what happens if AIG DOESN’T pay back the fed in 2 years?

    Finally, I saw that AIG has over $1 trillion in assets in equity. Why then do they need a bailout? If I get really in debt, I just sell either my house or car and downsize. Why can’t they?

    I must be missing something really obvious here…please pardon my ignorance.

  • September 17, 2008 at 10:12 am
    Some Ol' Hick says:
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    Gollly! I’m shor feeling better now that them thar Harverd gradeeates are running things! As I write this, the Dow is down 258 points. Guess us here normal folks don’t know nothing do we?

  • September 17, 2008 at 10:26 am
    Scoobeedoobeedo says:
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    It really didn’t help him run the country very well, did it…

  • September 17, 2008 at 10:33 am
    Olstallcleaner says:
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    I had an old accountant tell me that . . .”7 cents is a lot if you only have 5 cents”. . . That is to say a trillion dollars in assets that are “otherwise encumbered” does not make AIG any bigger than a drop-shipper on e-bay. The rest of the world (and AIG writes in 130 countries) has not made a peep. . .why? Because the big “tit” of the world is stupid enough to jump in and drown in this pool of red ink.

    This is going to get even uglier before we see any daylight. We can’t “print paper” our way out of this one. We have to let capitalism work or we will only have socialism left. Ain’t good.

  • September 17, 2008 at 10:43 am
    Gut45 says:
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    We are on a slippery slope toward Socialism. I expect Wells Fargo or some other huge mortgage company to be the next financial giant to go under and then get bailed out by the Fed. Let’s see, if Wells Fargo goes under and the Fed saves them, do I then start making my mortgage payment to the Fed? What a frightening idea, the government owns all the land and houses and the next thing you know, they are giving me a bowl of rice per day for my 12 hours of hard work, and telling me how lucky I should be that the government provides me with a place to live.

  • September 17, 2008 at 10:44 am
    RayGunZap says:
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    Does anyone remember this Chicago agency named “Near North”? I’m wondering where the owner might be now? If anyone knows, your information would be very helpful!! (Ha,Ha)

  • September 17, 2008 at 10:49 am
    an old AIG employee says:
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    i see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war- abraham lincoln.

    a good friend e-mailed that quote to me, thought it was worth sharing with you all.

  • September 17, 2008 at 10:49 am
    Peon Agent says:
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    Mongoose …I may be a peon agent, but I am an agency owner, and more importantly, I am an individual that believes in the American Dream and way of life. Far too many folks have been brainwashed to believe that there are some things that are “too big” for the little people to overcome.

    Isn’t that nice that we have a few benevolent babysitters to watch over us? Golly Gee, thanks.

    In case you didn’t know it, that’s how Socialism breeds. That’s how dictators seize power. And, anyone that doesn’t believe that our government is spinning out of control and heading for just such a scenario, simply must not have “put a little bit of thought” (yeah, I covered your “b”) into what the real ramifications are for the American way of life.

    Nobody ever said it was EASY to be FREE. But good men and women suffered tremendously and died so that we could be just that. Maybe you should pull your nose out of the balance sheets just once in a while and study a little history. Is this the best that your frat-boy education could allow?

    As a side note, I do not believe that the government is intentionally heading towards Socialism, but I absolutely believe the Hank Greenberg’s and George Soros’ of the world ARE manipulating our increasingly ignorant elected officials that mainly have their eyes focused on winning thier next election. So easily misguided, and manipulated to the point when one of those bozo mega-business types can step in and “save” us from the “enormity of the situation”, they happily accept thier “insight”.

    Our Treasury Department head, Henry Paulson, who was not elected, but appointed, is just that type. Look where he came from. The doofus that appointed him (who I am increasingly regretting my vote for him), has probably been beguiled by Paulson’s ability to grasp the “enormity” of such a situation, and beguiled by his flowery words and “wisdom”. But that snake is changing the American landscape for the worse, and the chickes are going to come home to roost eventually. We’re just prining more money to give a facade of stability, and the longer that happens, the higher we keep climbing the paper ladder, the harder and more crushing the fall.

    I would like to ask a question, Mr. Mongoose. Why is the government purchasing a stake in the business that has such enormous control over our entire society. This is more than a simple bailout. Does that give you even a little pause??? It doesn’t concern you that a potential Big Brother has control of such a vital piece of our enormous economy?

    One more question. The Reinsurance market is open, correct? Why is it automatically assumed that if AIG vacated their position, that nobody would be interested in competing (and even, breaking up into smaller more manageable pieces) for the business. Yes, most certainly, it would mean some increased prices. But, unless I’m so stupid that I can’t figure out such enormity, the reason AIG is in financial trouble is because they didn’t make enough money. Right?

    Finally, let me offer this observation and prediction. If the Gov-mint contols the mortgage business and now the financial services business …and, if they soon take over the healthcare industry, what is left before an individual, or small group of people will have such enormous control over everything that their power can NOT be stopped? That, folks, is where we are headed if somebody doesn’t inject some common sence into the American Public and pressure is placed on our elected officials to get back to the business that’s authorized in the Constitution, and nothing more.

    I don’t see that happening, though. We are increasingly becoming a people that feed at the public trough. Sheep, waiting for our slaughter for the feasts of the kings in charge of the “enormous”.

    I could go on and on. But, I have some non-enormous work for which to attend (spoken with my finest highbrow, snob voice and my pinky extended from the handle of my dainty tea cup, freshly filled from my Sterling Grande Baroque Tea Set, purchased from a quaint little shoppe – where the “e” in shoppe means we can handle the “enormity” of situations that the er…commonfolk cannot.

    Good day, sir,

  • September 17, 2008 at 10:53 am
    case says:
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    anyone remember the primaries and Ron Paul warning us about the Fed?

  • September 17, 2008 at 10:54 am
    Disgusted American says:
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    Thanks, Mr. McCain. A Blue Ribbon Commission is just the thing to help us navigate these troubled waters.

    Anyone hear lately from the 9-11 Commission?

  • September 17, 2008 at 10:55 am
    Dwolf says:
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    Catching Wild Pigs

    A chemistry professor in a large college had some
    exchange students in the class. One day while the class was in the lab the Professor noticed one young man (exchange student) who kept rubbing his back, and stretching as if his back hurt.

    The professor asked the young man what was the matter. The student told him he had a bullet lodged in his back. He had been shot while fighting communists in his native country who were trying to overthrow his country’s government and install a new communist government.

    In the midst of his story he looked at the professor and asked a strange question. He asked, ‘Do you know how to catch wild pigs?’

    The professor thought it was a joke and asked for the punch line. The young man said this was no joke. ‘You catch wild pigs by finding a suitable place in the woods and putting corn on the ground. The pigs find it and begin to come everyday to eat the free corn. When they are used to coming every day, you put a
    fence down one side of the place where they are used to coming.

    When they get used to the fence, they begin to eat the corn again and you put up another side of the fence. They get used to that and start to eat again. You continue until you have all four sides of the fence up with a gate in The last side. The pigs, who are used to the free corn, start to come through the gate to eat, you slam the gate on them and catch the whole herd.

    Suddenly the wild pigs have lost their freedom. They run around and around inside the fence, but they are caught. Soon they go back to eating the free corn. They are so used to it that they have forgotten how to forage in the woods for themselves, so they accept their captivity.

    The young man then told the professor that is exactly what he sees happening to America. The government keeps pushing us toward socialism and keeps spreading the free corn out in programs such as supplemental income, tax credit for unearned income, tobacco subsidies, dairy subsidies, payments not to plant crops (CRP), welfare, medicine, drugs, etc.. While we
    continually lose our freedoms — just a little at a time.

    One should always remember: There is no such thing as a free lunch! Also, a politician will never provide a service for you cheaper than you can do it yourself.

    Also, if you see that all of this wonderful government
    ‘help’ is a problem confronting the future of democracy in America, you might want to send this on to your friends. If you think the free ride is essential to your way of life then you will probably delete this email, but God help you when the gate “slams shut”

    In this ‘very important’ election year, listen closely to
    what the candidates are promising you !!

    Just maybe you will be able to tell who is about to slam the gate on America.

    ‘A government big enough to give you everything you want, is big enough to take away everything you have.’ – Thomas Jefferson

  • September 17, 2008 at 11:19 am
    No More Bush says:
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    A few astute comments have been made about the current situation, adding that they regret voting for Bush. Im glad people are starting to wake up. But it may be too late.

    We tried to warn you. You should have smelled the coffee when they came out with the patriot act if you were really concerned about your freedom.

    Im all for Republican principles, but your elected official don’t live up to them, so why bother? Why believe the lies? You have to vote third party.

  • September 17, 2008 at 11:22 am
    Johnny O. says:
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    Thanks Mongoose for having a brain and USING it. Mark, Eddie, 2lanelover – do you kids even work in insurance? Do you even understand the implications if AIG were to go bankrupt? You sound like retarded children fighting over a toy. Not a big fan of AIG (ex-ee) but to not have this bailout would have most likely destroyed the US economy and affected many other countries. Take off your blinders people.

  • September 17, 2008 at 11:23 am
    Dwolf says:
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    I disagree with your politics NMB but want EVERYONE to Vote. Don’t let me make your decisions for you!!!Register NOW

  • September 17, 2008 at 11:43 am
    Sanford Plumlee says:
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    I think everyone is getting a bit off point and getting political (ugh!)- It’s time for a little late night reading (Atlas Shrugged for example)- The type of bail-outs are starting to spiral and “we” keep trying to figure out how to stave off the payday from “everyone getting what they want”. . . from the poor victim of the storms (“I didn’t get to watch Oprah today” at the shelter”)…to the bail-out of the next giant complex of companies that we just can’t live without. Pay day is looming and the sooner we realize that the sooner we can start to pick up the pieces and start letting the doers and movers start to rebuild this nation that thinks it is the greatest because we can print our way out of anything.

  • September 17, 2008 at 11:53 am
    Mongoose says:
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    I guess nobody remembered how the gov’t saved Chrysler and NYC in the 70’s.

    A bit of personal history , being a former Naval officer who holds the Navy Cross don’t ever question what I did for my country. I did not die for it but I did loose body parts.

    Sorry for the fact I actually do have an education and am able to make a living by having and using that education.

    The big point is that I did get a lot of you to think and to rattle the cage. That is what makes this country great. The ability to disagree with someone without being killed or put into jail for it.

    As far as bieng M. Greenberg, I just lost my lunch. He is the one of the main people that put AIG into that situation. That is why he is still enbattled in legal matters over his taking parts of AIG and profitable business that belonged to AIG and putting it into C V Starr.

    Don’t forget that all of us beiing tax payers makes us one of the owners of AIG. So if they do go back to what they were and their profits return then our taxes should reflect the income that will go to the gov’t.

  • September 17, 2008 at 12:00 pm
    Curious says:
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    Any management names out of a job yet?

  • September 17, 2008 at 12:03 pm
    Mongoose says:
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    The orignal report is Willumstadt. But then he did negotiate a rather seperation package shoould he be fired. I think it was around $10 mill. Not bad for a few months work.

  • September 17, 2008 at 12:08 pm
    glenn says:
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    mike. go back to the 90’s during the clinton years and see what the community reinvestment act & the gutting of the glass stegll act has now manifested itself into today’s problems.don’t blame the republicans, the democrats are just as culpable (more so) than the republicans.

  • September 17, 2008 at 12:14 pm
    an old AIG employee says:
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    Mongoose,

    Thank you for what you did for our contry and any sacrifices you have to endure. You have my deepest respect. So does anyone else who has been or is currently serving.

    The whole thing about the taxes reflecting the profit returns? Come on, Oil was at its lowest the other day $97 a barrell. Did you gas prices go down?

  • September 17, 2008 at 12:21 pm
    Tom Harvey says:
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    …designed to allow for an orderly sale of assets.

  • September 17, 2008 at 12:25 pm
    SFOInsuranceLady says:
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    Although I wouldn’t be the first person to claim that a government bailout wouldn’t be the way to go, to quote from PIA’s bulletin this morning:

    “AIG has $1.1 trillion in assets ($1,100,000,000,000 – now, how does THAT look in zeros) and it has 74 milllion clients in 130 countries around the world”.

    As always, I am the skeptic….but I am sure that once we get rid of the current administration, things will start to turn around….but can we hold out until November???????

  • September 17, 2008 at 12:32 pm
    Mongoose says:
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    Actually gas in my area has been steadily declining. Me personally I walk to work to keep the pound down and the legs working.

    My personal up-take is that at the end of 2 years AIG will pay back the loan in exchange for return of the ownership in them. That way they actually got a bail out without actually being a bailout since the original agreement gave the gov’t a majority of the company.

    One thing I did learn in the service is that no matter what task or assignment is given to you they will never give you all the facts. In some way there is always some darkness around every mission they give you. Even though you have proven your ability and loyalty your next assignment you are still not given all the facts.

    So basically the gov’t treats everyone like a mushroom, they keep you in the dark and feed you a lot of SH_ _.

    Gen Collin Powell resigned from service to his gov’t due to the fact that he was not given all the facts and actually some half truths to get the U.N. to approve our invasion of Iraq. He is a great American who deserved better. Further proof that no matter who we are we are all in the dark. That is and has been wether a republican or a democrat.

    Our job is to get all facts on all those running for office and try and pick the best candidate no matter what party they belongs to. Our vote is the most precious liberty that our foundiing fathers has given us. Be sure to exercise your right. VOTE.

  • September 17, 2008 at 12:32 pm
    Jones says:
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    If we get the same administration, may as well start passing the koolaid…

  • September 17, 2008 at 12:44 pm
    Bang says:
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    Remember these names.
    These infamous AIG board members who steered the largest insurance co to the brink of insolvency and gave the government 80% of the firm for a line of credit at 12%.

    Stephen F. Bollenbach
    Former Co-Chairman and Chief Executive Officer
    Hilton Hotels Corporation

    Martin S. Feldstein
    Professor of Economics
    Harvard University
    President Emeritus
    National Bureau of Economic Research

    Fred H. Langhammer
    Chairman, Global Affairs
    Former Chief Executive Officer
    The Estée Lauder Companies Inc.

    George L. Miles, Jr.
    President and Chief Executive Officer
    WQED Multimedia

    Suzanne Nora Johnson
    Senior Director
    Former Vice Chairman
    The Goldman Sachs Group, Inc.

    Morris W. Offit
    Chairman
    Offit Capital Advisors LLC
    Founder and Former
    Chief Executive Officer OFFITBANK

    James F. Orr III
    Chairman of the Board of Trustees
    The Rockefeller Foundation

    Virginia M. Rometty
    Senior Vice President
    Global Business Services
    IBM Corporation

    Michael H. Sutton
    Consultant
    Former Chief Accountant of the United States Securities and
    Exchange Commission

    Edmund S. W. Tse
    Senior Vice Chairman, Life Insurance
    American International Group, Inc.

    Robert B. Willumstad
    Chairman and Chief Executive Officer
    American International Group, Inc.

  • September 17, 2008 at 1:52 am
    Aussies are safe says:
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    This, on the heels of the announcments by Cincinnati and EMC this past week. Who else is heading for trouble with their investment portfolio?

    ……Australian insurers QBE Insurance Group, IAG and Suncorp-Metway say they have no direct exposure to troubled US insurance giant, American International Group.

    QBE said it had no direct exposure to global investment banks Lehman Brothers and Merrill Lynch or to insurer American International Group through its investment portfolio.

    IAG advised the group had no material exposure to AIG, while Suncorp-Metway said it had no material exposure to either AIG or Lehman Brothers.

    Over the past few days, Lehman Brothers has filed for bankruptcy, swamped by mortgage losses, Merrill Lynch has been taken over by Bank of America and the US government has agreed to rescue AIG with an $107 billion state loan.

  • September 17, 2008 at 1:54 am
    ..... says:
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    Some thing is going on behind the scenes.

  • September 17, 2008 at 2:19 am
    Liberal says:
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    Hasnt Frank held that position for only 2 years? I haven’t heard any where else that he was at fault. Could you enlighten me? send me some links that say Barney is at fault for this….Thanks,

    liberal

  • September 17, 2008 at 2:32 am
    Pirk Pigler says:
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    The idiots of the world have united:

    Blame Bush, blame Clinton, blame Hank, blame Republicans, blame Democrats, Ron Paul was right, vote 3rd party, send them to jail, they are evil, they are greedy, fire them, don’t let them write any new business and my personal favorite “I never voted for the bailout”.

    What will the next ignoramus have to say?

  • September 17, 2008 at 2:48 am
    susp says:
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    Let’s vote Mongoose for president.

    As for the Illuminati comment – hey it could be the Bilderberger connection.

  • September 17, 2008 at 2:53 am
    case says:
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    They have an Insurance Company in place to handle the new national health insurance program

  • September 17, 2008 at 3:02 am
    Joe Mama says:
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    I’ll be that ignoramus, Pirk. None of you jerks answered my last post anyway.

  • September 17, 2008 at 3:14 am
    RayGunZap says:
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    I don’t think I’ve ever read ALL comments on a topic as serious as this and as many replies as this. But I did now, and yes my time, as well as anyone’s is valuable. I’m not going to share my experience in the industry which would be impossible to validate, as well as Mongoose’s standing there on his soapbox with all the imaginary medals and commendations, which are meaningless to the matter at hand. First, I thought Greenberg was a maverick in creating, marketing, developing and making AIG profitable. Then, Spitzer brought him down. Is this too simple? Now, with new management, after Greenberg left, AIG fell apart. Also, I thought Greenberg CANNOT solicit any AIG customers via court order. Am I wrong on that? Of course, the issue here is yes or no should the government bail out AIG, and if so, they have 2-years to pay them back. My opinion, even though I’m a little left of center Democrat, let them fall by the wayside. I feel that enough is enough. And, who can tell what the world/USA/AIG will be in 2-years. It’s a lot different then it was over 30-years ago when Carter was president and I’m not expecting any Lee Iococca’s coming in to save the sinking ship. Where the USA economically is right now, or at least by the end of the year when the new administration comes into office, we’re at rock-bottom, and there’s nowhere else to go but up. I do agree on Mongoose that yes, we MUST vote especially in the upcoming election, and that Collin Powell was boldly disrespected. One more thing is that AIG falling, on a positive side, to tell my P&C customers to keep their policies in force because if they’re cancelled and have to be re-written, the rate will probably go up!!

  • September 17, 2008 at 3:34 am
    Peon Agent says:
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    Look, I don’t think anyone questioned your pedigreed patriotism. There are lots of patriots in China. But, their patriotism is misdirected. Now, I’m not saying you’re as bad as a chinese patriot, but I think you know what I’m saying.

    Just because the gov’mint bailed out Chysler and NYC, doesn’t make it right either. Otherwise, you could use that argument for slavery. You know, slavery was sanctioned by the government, but that didn’t make it right. Or, do you think it did?

    The country has never been perfect …just a better system than others.

    I’m glad you served our nation, and I truly do thank you. But, lot’s of blue-blooded Brits served their country. That doesn’t make their snobbery any less offensive. I would bet in person, you wouldn’t be so judgemental, and you might even discover an equal education/service level in those with which you disagree. As you correctly say, we can disagree, and not be ready to kill each other.

    Degrees don’t guarantee anything except an ability to get something accomplished. Now, that accomplishment could have come by hook or by crook. If so, it doesn’t mean anything in reality. Very pretty paper, though.

    As to the rationalization that we just all hit the jackpot, because as a taxpayer, we own part of the AIG enterprise, you must have picked up the ability to smoke something in your Navy days.

    You can’t really be serious can you? Just so you know how the big picture really works, any real profits are going to be paid to other “legitimate” businesses that worked with/or for AIG. Executive bonuses will continue & multiply, and that’s not to mention just all-out fraud.

    Please don’t kid yourself. You only need to look at the states that have passed lotteries. They promote them as a method to fund schools and such. I know my taxes didn’t go down at all. My schools have not been improved in any substantial manner.

    Where is the money? General fund. What was it spent on? Stuff.

    Our Uncle Sam is NOT going to share any windfall profits they get from “ownership” of AIG, I can assure you of that.

  • September 17, 2008 at 3:58 am
    Mike says:
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    The financial meltdown on Wall Street is more than a cyclic correction brought on by a mismanaged business cycle. It is emblematic of a problem at the very foundation of the right wing economic philosophy that became conventional wisdom during the Bush years — and would be continued in a McCain presidency.

    The zealots of unfettered “free markets” cast aside the critical lesson that the world learned during the Great Depression: left to their own devices, unregulated financial markets do not necessarily function to benefit the society as a whole — or, in the end, even many individual market participants.

    The fundamental premise of right-wing economics is the incorrect view that if every market actor pursues his own economic interest, the “invisible hand” of the market place will assure that the “common good” results. But of course, common sense tells us that is not always true. Two quick examples:

    The first is referred to as the “tragedy of the commons.” Suppose an island nation depends on the fishing harvests from the surrounding sea for its livelihood. It would obviously be in the interest of the community never to take more fish from the sea than can be replenished through the reproduction of fish. That way, everyone on the island will continue to have fish for the long haul.

    But it is in the interest of each individual fisherman to catch as many fish as he can. This is especially true if the fish stocks grow scarcer. To continue to have enough fish for himself and his family, each fisherman competes more and more vigorously for the remaining fish. In the end, this behavior will assure that the fish supply is depleted, and that no one has any fish.

    In this situation, if everyone pursues his own individual interest, the common good is not served. But if everyone looks out for each other, and recognizes that all have a common group interest, they will manage the fish resource to assure a self-sustaining fish supply that can feed everyone for years to come.

    The other example is the classic case of economic recession. In a recession, it is in each economic actor’s self-interest to increase his savings and cut spending, since the recession threatens his income. But by each pursuing his own individual interest, all of the actors together reduce the economy’s overall spending. And that deepens the recession. If, on the other hand, the entire group of economic actors works through its government to increase national spending and reduce overall savings, it will stimulate the economy and the recession will end — benefiting everyone.

    The American mortgage market now provides us with another clear example of how this fundamental premise of right-wing economic thought is dead wrong.

  • September 17, 2008 at 4:29 am
    Pirk Pigler says:
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    Thanks for taking the title of NEXT ignoramus Joe Mama but Mike takes the title of BIGGEST ignoramus with his childish, biased rant.

  • September 17, 2008 at 4:41 am
    DDD says:
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    Mike,

    I thought that your post was the very well thought out and a great recall of economics 101 and common sense…thanks.

    I think the ignoramus is Pirk.

  • September 17, 2008 at 4:54 am
    Pirk Pigler says:
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    Mike – Do you really believe the nonsense that Garrett Hardin wrote??? By posting his writings verbatim and not listing him as a resource reference you are guilty of plagiarism. At least change the wording when pawning someone else’s ideas off as your own. How much are the dues for the Garrett Hardin Society??

  • September 17, 2008 at 4:57 am
    Pirlk Pigler says:
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    Hey ignoramus #3 – Mike’s posting was very well thought out……By Garrett Hardin.

  • September 17, 2008 at 5:11 am
    Vlad says:
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    ..upon the markets have caused this problem.
    Freddie, fannie, VHA, and FHA have caused this problem.
    Prior to their existence, the formula for obtaining a mortgage was pretty simple. 20% down and no more than 25% of your gross income to go towards principal and interest. No Gov’t involvement was necessary as this formula proved to the banking industry to be a sound basis of underwriting.
    Lets fast forward to today. No money down, no verification of income, no payments of principal and an adjustable rate to fit your “monthly” budget. Now why would an industry stray from sound underwriting? Mr. Banker, don’t worry about that part, we at the Federal Gov’t will secure those loans. So a quasi gov’t agency like freddy and fannie, went from the lender of last resort, to the dominant lender in the market with 50% of the loans.
    Why? Because home ownership became a right. But I can’t live in that little 1,200 sqft bungalow, I need 3,200, and just because I only make 50,000 a year doesn’t mean you can deny me my rights to the home I want.
    Folks, the bill is now due… it just arrived a few years before anyone expected.

  • September 17, 2008 at 5:34 am
    Cincy Agent says:
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    AIG might be saved, but Cincy has money invested all over the place. Fifth Third Bank? Lehman Brothers? AIG? and Freddie Mac & Fannie Mae?

    T-H-E-Y A-R-E S-T-E-W-E-D ?!!?! Or can they pull out? I’ve directed our producers to hold – no more new biz until we find out if they’ll survive all of this.

  • September 17, 2008 at 6:21 am
    Jane Logan says:
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    Hank Greenberg was just on Good Morning America – he looks a lot like the Grinch who stole Christmas… I wish I was artistic, I’d draw a picture of Grinch Greenberg with the global economy in sack over his shoulder sneaking out town…

    Hank said he lost his whole net worth, all I have to say about that is good.

  • September 17, 2008 at 6:21 am
    Peon Agent says:
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    Ok …right. So, we ARE going to get the money back? I won’t even ask anyone to follow up on this in 2010. It will be long forgotten, and long forgiven/hidden.

    But, I did hear that the tooth fairy really does exist, and she’s increasing her payouts by 100%. She must be getting in on some of the tax advantages we are all going to feel as we reap the benefits of ownership in AIG.

    Yaaawwwwn,

  • September 17, 2008 at 6:27 am
    Peon Agent says:
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    Well, I’ll pass on the political rhetoric because there’s enough blame for many shoulders, but the trillion looks really good on paper.

    Hooray! We just bought 80% of a trillion for only 85 Billion.

    But, who valued those assets? The same folks that valued the properties that were improperly mortgaged, causing the mac disaster among many others?

    I wonder why nobody else jumped in, quick as a fox, on this pennies for dollars investment?

    The fox is watching the henhouse, and the hens are fast asleep.

    Hmmm…

  • September 17, 2008 at 6:42 am
    Peon Agent - Smiling says:
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    Now that was funny …I don’t care who you are!

  • September 17, 2008 at 6:44 am
    Peon Agent - Again says:
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    Ok, I’ve got to go home now. But, that was even funnier!!!

    Way to bust a poser.

  • September 17, 2008 at 6:51 am
    Mongoose says:
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    All P & C policies are safe to those who asked.

    Mark, if you “WORK” in the insurance industry you know if AIG did fail the ramifications on all other companies would be negative and HUGE. Ever look into how much reinsurance they write? Perhaps it maybe your company or one you write for.

    Do yourself a favor take a good look at their extended finacials. If AIG goes down in some way we will all be brought down. Wether by major increases in premium for companies that we work for or deal with and some smaller companies could actually go under due to their loss of reinsurance and just a extremly tightening of markets.

    Look at the history of Chrysler under Lee Iacocca and NYC back in the 70’s BOTH had a bailout by the Federal Gov’t.

    I do wonder though about some of the people who put posting on this site. Do they actually have any idea as to the enormities and complexities of this industry?

    Perhaps some of us should actually but a little bit of thought before putting a post on this site. It is indended for those who want to remain an informed insurance professional regardless of what job in this business we have. I guess even the janitor can post on it.

  • September 17, 2008 at 6:53 am
    an old AIG employee says:
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    I agree with you all. I used to sell auto insurance for AIG. I always had trouble hitting goal because i would, hold on are you ready, underwriter my accounts. I wouldn’t ignore it if someone told me they had a claim like some other reps who where hitting the highest goals and raking in the cash. $3K-$4K extra EVERY MONTH!

    If they want to run this like a capitalist society they should let the weak ones die. AIG may have an impact globally, but guess what, there’s other companies out there.

  • September 17, 2008 at 6:56 am
    Chuck says:
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    These folks lived by the sword and should die by the sword.

  • September 18, 2008 at 7:00 am
    Sorry Peon... says:
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    Jesus was definitely a liberal!

  • September 18, 2008 at 7:46 am
    Mike says:
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    So free market – You think we should get rid of the FDA and the FAA?

    And you believe monopolies should be legal?

    You dont even understand our own system.

    I think pure capitalism can work. But only if there is a bloody uprising by the workers every 20 years when they realise how they are getting screwed by the rich and powerful who control the FREE MARKET.

    Pure Capitalism is brutal, and we can use govt as a tool to soften the blow. We just need a more open, honest, and dependable govt. We dont have that because of corruption.

    So I vote 3rd party.

  • September 18, 2008 at 8:00 am
    Joe Mama says:
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    Mike–

    I’m a complete moron and even I realize that if you vote 3rd party, you’re throwing away your vote. You might as well write in Mickey Mouse.

    Please–can you give me an example of when a 3rd party has ever gathered more than 5% in a national election?

  • September 18, 2008 at 8:09 am
    Mike says:
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    Thanks “complete moron” for your comment. First of all understand that with the electoral college the winner of each state takes all the delegates. So if McCain is projected to win your state by 10% in the polls, then indeed it is your vote that is wasted, not mine.

    On the other hand if a third party candidate can get a lot of votes, they can influence the policies of the mainstream candidates.

    The reason third party candidates don’t get more votes is because of morons like you who dont think it will make a difference.

    If more people got off their but and actually did something like me, and actually understood the system, then things would change, and third party candidates would get more votes, and thus gain more power.

    Its people like you who are part of the problem and who enable the corruption that we see.

  • September 18, 2008 at 8:25 am
    Joe Mama says:
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    apparently I struck a nerve, Mike, which was not exactly my intention. I see your point, though you still weren’t able to answer my question.

    Why not try to influence either of the two candidates AS they’re running, that way they hear your voice during the campaign and not afterward?

  • September 18, 2008 at 9:37 am
    Peon... says:
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    Wow …way to make your case. I guess your statement settles it, huh?

  • September 18, 2008 at 9:39 am
    FOWIF says:
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    I’m sorry I started the “political” blame for this since it simply brought in all of the usual rhetoric of Dems v. Reps.
    From Googling “Who’s to Blame for the Subprime Crisis”, here is a brief list I found:
    Hedge Fund investors, homebuilders, post 9/11 agenda’s, homebuyers, investment bankers, Sen Phil Gramm’s Commodity Futures Modernization Act 12/2000; Michael Greenberger of the CFTC, Sen Christopher Dodd (Senate Banking Comm Chair with ties to Countrywide Financial), Rep Barney Frank (House Financial Svcs Comm Chair, who in 2003 rejected Bush’s 2003 regulatory effort to bring F Mac & Mae under Treasury Dep’t control), and the 4 different Treasury Secretary’s since 2000(Henry Paulson now appears to be trying to do something).
    There are plenty of Dems and Reps in this mix to blame.
    The greedy simply took advantage of those who were asleep at the wheel – homebuyers, lazy bankers & investors and yes, politicians and regulators. AIG benefited until it caught up with them.
    Most of us probably profited with our mutual funds if we are blessed enough to have some extra $.
    The bottomline – government can’t regulate ethics as long as the greedy and prideful are among us. Don’t be so naive to think that any President can cure this or prevent it from happening in the future.
    Congress can’t either, which proves my point that government, especially bigger government, is not the answer.
    The snowball of gov’t bailouts is possibly too large now to stop or control.
    And perhaps insurance companies should stick to what they do know how to do – insurance.

    “We can draw lessons from the past, but we cannot live in it”
    Lyndon B. Johnson, December 13, 1963

  • September 18, 2008 at 10:47 am
    Peon Agent says:
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    Well, we have definitely veered from the topic …but, since we’re on a roll, I’d like to add my 2 cents.

    Both of you have legitimate points …isn’t that very democratic of me?

    Let me state for the record, I would like to vote for the most Conservative candidate in any election. On the National level, and on an “electable” basis, that has been a Republican as long as I’ve been able to vote. On a local level, there is an occasional deviation from that ticket, and I’m not a party staight-ticket kind of guy.

    I would LOVE to do better, however. If only there was a 3rd Party candidate that didn’t deserve a straight jacket. Ross Perot nearly fit that bill …until near the end when he did two things that changed my mind. He chose his VP, and I thought it did that hero a severe disservice to throw him ignorantly into that vicious arena with an apparent lack of preperation. Second, he started babbling like a crack-ho. What happened to his wisdom at the end, I still can’t explain.

    Prior to, and ever since, I have seen no option besides the Pachyderm and the Donkey. I can only wish for the day that will change, though. The Repubs have gone down the toilet since they tasted power and became corrupted. It’s easy to do, and the outside power-brokering influences have a game plan that rarely fails. I will definitely sign up for that 3rd Party candidate if he/she every arrives again!

    That brings us to the problem that both Mike and Joe Mama’s last postings demonstrate. Both of you are right!

    There’s a chicken and egg situation that’s very nearly impossible to solve …and the 2 parties know it. The only thing that’s going to give a 3rd Party candidate any chance is an intelligent and vibrant candidate. But, unfortunately, that takes years of focused grooming. Until then, all this theory is for naught. And, who’s going to do the grooming? There’s no legitimate organization to lead it. Ron Paul? As a fellow Texan, I think I have the right to say, yeah right.

    So, Mike, are you truly going to risk the highest National position, to such a liberal unknown as BO, in your zeal to have a 3rd party garner about 5 points? This is just my opinion, but a Liberal Congress, and a Liberal President, is NOT going to be influenced in the slightest by those kind of numbers. What more conservative folks need to realize is that for a majority of liberals, that is their religion. So, even if they are in a severe minority, they will do what they force their opinion of what is best on anyone possible. With that Congress and the President in their stable, the American peoples will is unimportant. In proof, all you need to look at is the drill for oil situation (and, I hope we don’t veer into whether that’s right or wrong because that’s not the point).

    Anyway, if the two parties don’t get back to the Constitution, there are limited options for us. Revolt or acceptance of an increasingly Socialist government and eventually a Dictatorship.

    Sad…

  • September 18, 2008 at 10:50 am
    Peon Agent says:
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    That’s about the size of it.

  • September 18, 2008 at 10:57 am
    Mike says:
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    Peon said:

    “What more conservative folks need to realize is that for a majority of liberals, that is their religion”

    Remember Jesus Christ was a bleeding heart liberal. Love your neighbour. The war in Iraq is unnecessary and wrong. Jesus would not approve. Polluting the environment is bad.

    Don’t drill for more oil, the price of gas wont come down much anyway, and that is a long way off, so lets put the environment first and find some alternatives that are cleaner and more sustainable. Jesus and buddha would support that…….

    Look at what’s going on in Congress right now. We’re in an energy crisis, and the burgeoning solar and wind power business is on the edge of shutting down—because Republicans are blocking the tax incentives they count on. Yet they’ll fight to the death for huge oil industry subsidies.

  • September 18, 2008 at 12:40 pm
    Joe Mama says:
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    Sheesh, Mike…

    The war in Iraq. Yep, it sux, but instead of harping on “woulda, shoulda, coulda”, we should be focusing on doing what we can to WIN and bring our troops home SAFELY. It’s not the fault of the war that got us into this financial mess. Note: I’m not sure, but I don’t think AIG has a Baghdad office, so this is a moot point on this forum.

    Drilling for oil: ok, let’s not drill. Meanwhile, other countries will drill right off our coast for what we could get ourselves. Yes, other countries with lesser environmental standards than we have. Why not use our resources to drill here, drill now (SAFELY), and in the meantime work on making more fuel efficient cars?

    I’m done.

  • September 18, 2008 at 3:46 am
    Peon... says:
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    Mike,

    Wow …this has really turned the topic.

    But, I’ll play. FYI, Jesus was a Conservative.

    There’s nothing un-conservative about loving thy neighbor. There are lots of other examples of Conservatives loving their neighbor, but I’m sure they would not help. Suffice it to say, there is a big difference between hating the sin, and hating the sinner. The person should be loved, but the sin should always be denounced …even when you are guilty of the same sin. We ALL fall short, thus the reason for Jesus’s crucifixion.

    Jesus was a Conservative, point #2. He said, there is NO way to the Father, but by me. It’s not “whatever feels good”. It’s not happy works, like my cutting neighbors trees that were downed in Hurricane Ike. It’s not a “let’s all sing happy songs, and it will all turn out ok” way. There is only ONE right way …like it or now.

    Nuff about that. I’m sure this will start a flame war …but I still love you.

    :)

    As far as oil goes, Joe M basically summed it up. I agree we need to do anything we can, to stop sending our American money going to countries that want to destroy us and our way of life. Wind, Solar, Nuclear, Electric, harmonic mumbling, I don’t care. If it will cause motion, we should be using it.

    But, you need to look at who’s stopping ANY movement. It’s a Democratic Congress Leadership with the queen of facelift at the helm. She will stop at nothing to make GB look bad, whether you will admit it, or not. At the same time, Republicans did nothing when they had the majority either. It was all get-along, go-along politics.

    Tax incentives? Well, maybe. I don’t have all the answers. But, I do think if the Government can require AM/FM radios to be installed in all autos (in order to get emergency broadcasts), there are certainly some equally inexpensive features they could require to also be on all Autos manufactured that allow them to run on alternative fuels. Take your pick between flex-fuel or natural gas. Both are inexpensive and would open the ability for the free market to invest the capital necessary to alter current gas stations so they could provide those fuels. As it stands, we are at another chicken and egg scenario, and no businessman is going to be able to fiscally justify the investment to their stations.

    Out…

  • September 18, 2008 at 3:57 am
    Mike says:
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    Peon, its a waste of time arguing with you – You actually make sense and seem like a pretty smart good natured guy. Im sure our core differences are actually very minimal.

    If we all were more like this, liberals and conservatives would get a long great and we wouldnt be going through many of these problems.

  • September 18, 2008 at 5:30 am
    Peon... says:
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    Ok, we agree. I’m going to close this post. Never had one that kept me so busy.

    :)

    Let’s go get a beer now.

  • September 19, 2008 at 3:52 am
    Free Market says:
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    So Mike I see you did not dispute my comment about YOUR example about the island. When you can answer that, then I will address your other comments.

  • September 19, 2008 at 4:27 am
    Free Market says:
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    So Mike I see you did not dispute my comment about YOUR example about the island. When you can answer that, then I will address your other comments.

  • September 22, 2008 at 9:18 am
    Mike says:
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    Free Market, I guess we disagree on what govt is. I think govt should be run by the people, for the people. Therefore on a small island, it would really equate to simple “cooperation.”

    Thats it, people just working together for the greater good.

    Govt doesn’t have to be bad. Its just that what you equate with “govt,” is really corruption caused by evil powerful people.

    That’s why communism and socialism don’t work. Conceptually they are great, but we don’t have the morality at this point in our evolution to give so much power to a central entity.

  • September 22, 2008 at 11:08 am
    Free Market says:
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    …that socialism and communism do not work. No matter the size of the problem or the solution to that problem, I would prefer an entrepenuer over a beaurocrat any day.



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