I assume the same reason we are spending hundreds of billions rescuing domestic banks at 100 cents on the dollar: Stupidity.

People need to read their history books. In 1924 as a result of the Dawes Plan, the US bailed out German banks and loaned them money to stop inflation. It worked for 5 years and then in 1929, the worst economic crisis to ever occur did. This is very scary.

That’s what happens when you have a credit dependent economy. Somebody has to buy the trillions of dollars worth of bonds and a large percentage of bonds from the U.S. are bought outside the U.S. If the government shuts off those investors, that leaves less credit for the U.S. So the government has to keep those investors happy by bailing them out.

The ironic thing is, those investors are probably buying the T-bills that gave the U.S. government the money to bail out those same investors. In otherwords, the investors are probably funding their own bailout.

Welcome to the global interconnected economy, the child of Washington Consensus and Breton Woods policy…

So, whats your point? Those banks are hurting just as much as ours are (what, you thought we were a financial troubles island all alone? I guess you were napping through the whole globalization thing, right?), not to mention, that for the rest of the world, these are pretty heady financial institutions. If they fail, then we had better get ready for a long time of living in soup lines off of canned beans. Also, we’re simply paying off their investments in AIG, as Greg pointed out, they’re funding their own bailout.

Hopefully the World Bank and the IMF will be able to scrounge up the funds to help these banks, and allow us to fully keep AIG afloat, but liquidity is increasingly rare nowadays…but hey, lets keep spending like no tomorrow!

The reason UBS was bailed out is that Obama owes Robert Wolf, CEO of UBS a favor. Wolf was his number one fund raiser in the US. Obama put him on Volcker’s team as payback. UBS now has the money to pay him his 20,000,000 bonus.

UBS got the bailout money because Obama owes Wolf the UBS CEO for being his number one fundraiser. Now Wolf who was put on Volkers team can collect his 20 mill plus bonus . UBS has a direct line to Obama. Things don’t change.
Mr. Dickinsen followup please

Tim, not only are people caring about the flow of capital to bailout foreign entities, there have been those of us warning about this before it even happened. The last bailout specifically had vague provisions kept in that allowed the money to go to foreign sources.

The very people warning about this and other events that have come true with respect to this economic nonsense have been called fringe and such by MSM and you yourself. Please don’t act surprised that most people would be unaware of this mess. You yourself have been advocating it.

Jed Clampett

How does it feel to realize that the extreme amounts of cash we pay for our home insurance, auto insurance and health insurance was going to pay millionaire salaries to those who invented new and improved ways of stealing the value of our possessions?
How does it feel now that our tax money and the money of our progenitors prosperity is going to make whole contracts drawn up by imbeciles who will be handsomely compensated which pay off those who had no exposure in the CDSs they had taken out on contracts they don’t own?
We are told that these contracts must be honored, regardless of how dishonestly or criminally negligent they were drawn up(reminiscent of oil contracts that give up government claims to royalties). This from the same government that found it easy to turn it’s back on the obligations assumed by contract with the native peoples, or the people of color, or our responsibilities to international treaties such as the Geneva Conventions or International Criminal Court.
That entire group at AIG should be awaiting trial in prison, not claiming additional compensation for pushing the ‘creative products’ that caused the destruction of our economy and distrust of the Investment Market system.

And we were told that Madoff was the biggest crook to come down the pike, ever!! Just look inside the beltway and you will find 400+ that make him look like a rank amateur. They’ve taken the concept of a “ponzi scheme” to a new level, with tax payers money, no less!

Understanding, Rolling Stone will never say anything bad about our most philosophically magnificent enlightened appointed dictat — I mean president Barack Obama.

Did anyone notice that UBS has hired a new board member? Former Northern Rock CFO, Ann Godbehere is now a board member for the Swiss bank. I’m not saying this is definitely cronyism – who knows, she might have learned something from the mistakes that led to her former employer’s nationalization – but it sure stinks of it.

Call it HEY PAL….GO ROTATE.

Jed Clampett

Yes, it is a very disturbing development. It signifies that the collusion and corruption has reached a global scale, they have shed their loyalties to any flag and decided to just idolize the money, all else be damned.

It’s quite amusing to watch the histrionics in congress over the AIG retention bonuses(something they allowed by voting out of fear on a $700Billion program drawn up in 3…no, make that, 400+ pages.what a phuking joke), while in the meantime they ignore the BILLIONS going out the back door to foreign banks and investors that had lost nothing.
All their bets were made whole even though the payoffs weren’t due yet, at most they should have got their initial investment back, not the winnings on their bets. CDSs screwed the pooch and that issue has not been addressed properly yet.
A few million go to people who had to work their assess off to close out the bad contracts… probably giving our money away to foreign entities… yet the billions going away to Switzerland, a country that helps tax evaders hide their money, and Scotland, whose RBS was just found to be in a huge mess themselves due to this fiasco and whose CEO retired with a million dollar a year pension at 52, hardly deserve a second look from the guys in charge of the nations purse.

They need millions to pursue happiness, the rest of us have to make due with peanuts.

John Nichols reported on Jon Weiner’s show on KPFK (you can hear it at kpfk.com 3/18) that at the time of the first TARP, Bush said he would veto the bill if it disallowed money going to foreign banks (which Dodd draft did). Why was this when it was so urgent it be signed immediately? Because the Carlyle Group (Poppy Bush’s piggy bank) has interests in foreign banks. Dunno.

The true reason Bush said he would veto any law unless it allows money for foreign banks is that former Rep. Senator phil gramm is the vice-chairman of UBS who recieved 5 billion. Phil gramm is the idiot who also fought hard for banking deregulation and was rewarded with a job at UBS.

The reason why foreign banks are being bailed out is because they have significant investment in AIG. If the government is going to ensure AIGs long term survival it needs to guarantee that its investors can continue to invest. To let the foreign companies flounder would be like giving money to a store that’s going to lose all of its customers. It wouldn’t be viable and it wouldn’t make sense. Welcome to a mixed economy.

The whole reason AIG needed money was because it lost the bets it made with other banks and now had to cough up the money. If you lose your bets at a casino do you think they will just let you walk out the door without paying? We gave them money to pay their gambling debts and that’s what they are doing.

Now we need to get the laws in place to make sure banks can’t gamble like that ever again.

Maybe the reason they had to give all that money out to foreign banks was to shore up their off shore accounts because they would have had to have been idiots to invest in the U.S. markets knowing what they had done. It truly is a remarkable thing when only the hard working people are forced to lose. Grab your pitch forks

ive been wondering when this would be reveiled.

bad idea bad plan.

Hey TD(Dum- Dum),

When is everyone going to become outraged over the meatheads that are running the show (Geithner, Dodd,Frank, Shumer, Pelosi, Reid). And it’s hilarious how all the lefties that write in here continue to defend them. The rest of us are sitting out here laughing our asses off at these clowns who we all knew were losers from the get go. Geithner, Dodd, Frank, Obama…they all knew these bonusues to AIG were coming. They included them in the original bailout package!!!! Geithner and Dodd are the new Alphonse and Gaston. Pelosi, Reid and Frank…Dumb,Dumber,Dumbest.

This is the new integrity Pelosi and the Democrats were bringing
to Washington. These guys would sell their mothers if they thought they could benefit from it!!!!

But we know…the lefty meatheads and the mainstream media will continue to drink the Kool-Aid and tell us these guys are the real deal!!!!

Spare me…gotta go…I’m in pain from laughing at these incompetent lying a-holes.

Hey TD….keep missing the point and towing the mag line…you can be one of the Four Stooges with Pelosi, Dodd,and Frank!!!!!

Then you’ve got yer AIG Bank of Russia, ZAO AIG Russia, SK AIG Russia, AIG in China, Indonesia and yes, even Pakistan. Even Obama’s point man in Pakistan, Richard Holbrook, worked for AIG. Obama was the biggest recipient of AIG money. Hank Greenberg of AIG worked at the NY Fed with Lil Timmy… We are all working for AIG now, and will be into future generations.

There’s a restauraunt called
3 Ladder Al’s Commissary. The bigshots from governments all around the world, democrat and republican, along with the biggest shots from the financial world, all eat there. The free, all you can eat salad buffet is filled with the freshest green herbs donated by the good folks over at Federal’s Mint Farm who, by some odd coincidence, all eat there too! Track down who’s on Al’s customer list and what they do for a living, and the mystery about the choreography of this little global financial fiasco just kinda evaporates. There’s been no mistake about it.

Why are we spending billions on Euro Banks? I had it saved but my husband completely changed my programs. I’m not going to take any chances on revealing this mess about Angela Merkel and the Bushes. I will wait for Sy Hersh and anyone with enough money to protect themselves.

Jed– sorry to be a bit late, but your post a couple down was spot on…

Pay off the Euro guys whom AIG owes money to, have the govt hold the more toxic of its assets, and sell off the rest. AIG in one big chunk may be to big to fail, but if you sell in pieces, at least then we can stop wasting tax payer money (the 30 Bil, not the drop in the bucket bonuses).

AIG ran the risk, and went bust…stop propping up a dying corpse and attempting to postpone the inevitable…

tat little over 600 acres in London is why….

Referring to the payments as “bailouts” is ignorant and provocative. They are, of course, payouts on policies sold by an American insurance company.

You might like the idea of telling all those foreign banks who trusted the largest US insurance company with their policies to go jump in a lake, but do you really think it is in the USA’s best long-term interest to utterly ruin its international financial credibility by allowing a compnay it had assured Europe it was regulating to default on its obligations? To the tune of $50b? No-one would ever do business with the US again and you could basically kiss New York goodbye as a financial centre.

I suppose the anti-foreigner sentiment is nothing new but geeze Americans, at least consider your own interests.

Jed Clampett

Wow, I’m sitting here watching Edward Liddy testify before congress and something seems totally out of kilter to me.

20 guys sitting in an AIG office in London were able to draw up contracts that where so poorly written and thought out that they brought down the world economy in a matter of a couple of months. The contracts they drew up were so convoluted and deceptive that it took over three thousand analysts almost a year to clear off the books and offload the mortgage backed securities into Fannie and Freddie, the reason for the $165 million in bonuses.
Yet, faced with the biggest bank heist in world history, the congress is intent on chasing fractions of pennies on the dollar exposed by these bonuses and retainment guarantees. Amazing, the level of sleight of hand would make Harry Houdini sit up and take notice.

This kind of theft, of heist is incredible, it actually steals from the children of our children for several generations. Effectively making us slaves of the banks that were able to write up such sweet contracts insuring stuff they didn’t even own because of deregulation of the markets. Removal of regulation that had been put there in order to protect the market from unscrupulous individuals is the direct and prevailing cause of the economic collapse of 2008.

Loading up the supreme court so your political party can install a president regardless of how people voted? $1.5 million

Allowing an installed president to invade a sovereign nation as a distraction to raiding the treasury? $1.7 Trillion

Gutting laws and deregulating the system so that your cronies can steal tens of Trillions of dollars in value from the markets… Priceless!!!
Republicans, can’t steal a GDP without them.

Anonymous,

The world is laughing behind your back….it’s amazing in all the horsesh_t that you write you never include how the Democrats were pressuring these financial institutions to write these suck a_ _ mortgages. You also conveniently leave out how they also told everybody Freddie and Fannie were doing great while Franklin Raines was raping the company. And we all know why…..coz they all had their hands in Freddie and Fannie’s pockets (Dodd, Frank, Obama, Shumer). But then again it seems like you lefties continue to, and will always have a problem with “Selective Amnesia”.

Gotta go….Chris Dodd is here…got him a good deal on a case of Twinkies!!!! The guy just can’t resist!!!!!

Jed Clampett

Man you guys on the right sure are out of touch.
No one is laughing except the elites behind Bush and Cheney, everyone else is either apoplectic or in despair. The others are pretty much unfazed by things they don’t pay attention to and hope there are others more intelligent than them taking care of.

If you can provide links or some other evidence showing how it was Democrats ‘forcing’ institutions to make bad loans, please include them, I have no problems placing blame where it should be. If anything, democrats should have sounded the alarm and had their faces on the news warning us of what was going on everyday… I imagine they would have been ignored however(considering the wealthy contribute about equally to both sides of the aisle, I’m sure the collusion and conspiracy involved both sides, not just one). The media is used like a tool by those intent on sending this country on the path to totalitarianism and fascism. Had the story of George Bush refusing to appear before Congress without Cheney holding his hand been repeated over and over again ad infinitum like the Edwards scream, I doubt we would have had a second term. That is how a medium is used to actually affect an election or protect a favorite son.

We can keep trying to avoid the real issues by making it a ‘us vs them’ pissing contest with a huge lake full of urine as a prize for the winner, there are many of us that understand this is too important to keep allowing partisan squabbles to detract from the real issues. We must understand how we came to this juncture and punish those that brought us here without regard for our safety or economic stability, otherwise it will keep happening, preventing us from making the advances that should be made.

How did those who were supposed to be protecting us actually turn on us and served us up on a silver platter to the soulless?

Jed-
The Dems. involvement with F&F is well-documented and common knowledge. There is endless CSPAN coverage of it. Conservatives have been complaining about this for years. The Dems. who were in bed with them and are now claiming to be voices of reason are full of shtt. Hell, Barnie Frank, chairman of the House Banking Cmte. used to regularly take former Fannie CEO’s dick up his ass (or was it the other way around?). You don’t think that might be a conflict of interest!? Dems. were instrumental in changing the HUD’s ‘affordable housing’ goals (circa 2000). These goals, though, seemingly beneficent have now done more to wreck the neighborhoods and families they were designed to help than the supposedly overly-restrictive lending practices they replaced. These changes channeled flow from Wallstreet into a very loosely regulated market, ultimately resulting in the collapse of the system.

For the same reason that Chase bank was given WaMu by the Bush economics geniuses, after WaMu refused to accept Chases’ offer.
BOTH PARTIES are run by insiders who represent the money that elected them. HA! And you thought is was their ‘constituents’ who elected them.

Warn your friends about J.P. Morgan Chase. Here’s what Europe says about them and the WaMu deal:

“The WaMu deal is the latest move by JPMorgan Chase to profit from the global financial crisis, after buying Bear Sterns, the investment bank, in March.”

Monstrous necrophiliacs, all.

Hazmaq-
You’re right, of course, both parties are run by insiders who betray the interests of their supposed constituents. Still, the political game has sides to it, which amounts to little more than different brands of manipulation, but definitely represents some sort of dividing line. As a result, the two parties who stand on one side of this line or another make different kinds of mistakes and are uniquely accountable for the results of their particular pet policies.

Jed Clampett

I believe the main problem is that they are uniquely UNACCOUNTABLE for their political misdeeds and policies. They control everything, therefore can hide anything, including their own collusion in the erosion of our values and ideals; or the involvement of higher politicians and businessmen in a coup plot; or the murder of a sitting president in a city full of Military Industrial Complex companies.

Why would the world be laughing behind USA’s back? They’ve been dragged into this mess forcefully by Worldbank and IMF’s “open your market” lending clause. So, despite having regulation on their financial world, they’re suffering.

Anonymous…the world is laughing behind YOUR back….you have everyone laughing with your comment that the Democrats should have been telling everyone when things were going wrong!!!! It was the Republicans telling the Democrats about Freddie and Fannie and their informed reply was …”Franklin Raines is doing a great job” !!! Yeah right!!! Doing a great job running Fannie in to the ground while filling his pockets with $90,000,000 and many Democrats re-election campaigns with contributions.

It’s documented… look it up and try to listen once in a while instead of writing this bloated miscreant drivel!!!!!

What happens to a country when it goes bankrupt? Does everything just shut down? Will we go back to bartering for goods? Could this be planned and Is this all part of the New World Order? We might as well admit we are bankrupt, $11 trillion can never be paid, and get on with it, God help us all.

GTH-
I hear you, $11 Trillion doesn’t even take into consideration unfunded future liabilities like entitlement programs. The growing debt is unsustainable. Check out the wikis on the Argentine Economic Crisis and 1998 Russian financial crisis.

It’s important to note that the US economy is fundamentally in much better shape than both Argentina and Russia were going into their crises, so I wouldn’t count on total economic collapse just yet. Still, it’s worth understanding what happens in instances of sovereign default from historical examples. The bottom line is that the world keeps turning. A more likely scenario is that the US will see its credit rating reduced before it defaults. Economic stagnation like what we are currently seeing would be prolonged. Everyday folks would be hard-pressed to finance spending and businesses would be stifled by higher capital costs. On the upside, savers will be rewarded and in fact, a higher savings rate would eventually free up capital for investment capable of reviving the economy. In addition, the cost of imports would possibly go up as exporters who currently purchase US debt diversify out of US Treasuries. This might revive some struggling industries. All in all, it would be preferable to avoid default / a reduced rating, but in the long-run, events such as these might lead to a more sustainable equilibrium. In any case, Ja will provide.

Most things in life are transparent to the average citizen: thee and me.

We read about disasters and/or see them on TV but few of us suffer.

As Ole says, the world will continue to turn. More and more will lose jobs and scarcity of products and services will be the most notable result. And everything will cost more, if you can get it.

The ‘Ins’ will council patience and optimism and the ‘Outs’ will hurls stones and invectives.

A lot more gardens will spring up in back yards and a lot of farms will either go under or plow under their crops.

Cities won’t be lit up at night.

Crime will increase as discontent mounts.

Radical elements will rise in popularity.

Trust will be sacrificed to suspicion.

Professional athletes won’t be paid as much (not EVERYTHING is bad).

Oh, and we won’t be spending as much time online waxing superfluous.

There’ll still be a Super Bowl, but the commercials will suck. Like product displays at Home Shows.

I’m preaching optimism. There will be no Hoovervilles. The resilient US economy is paramount.

I’m hoping you’re right Obi.

I’m just pondering pensive.

It may be time to accept the truth, the U.S. may be heading towards the end of its success. Great civilizations have risen and fallen. You can look at the Egyptians, the Minoyans, the Greeks, the Romans and the Central and South American native tribes and realize that there is always an end. In the time of those civilizations change came a lot slower so it took longer to come to an end. But there have been empires that have ended much more quickly in the not so distant past such as the Portugese, the Spanish, and several other Euro empires. With emerging (if not already surpassed) empires such as China and India looking to take over the throne, it must be digested that we may have reached our zenith and it is now the beginning of the end for another in a long list of great empires that have succumb to the sands of time.

Empires rise and fall. Perspectives fade in and out of fashion. Some people struggle for attainment while other people wallow in their undeserved wealth. It goes round and round and ever-fukking rounder. Against all odds, emerging from the infinite zero-sum, is the shining aspirations of the individual to find fulfilment and meaning in his existence.

If Bush was still in office, this article would have been filled with – “Bush giving bonuses to his rich friends” themed comments. Take the gloves off Rolling Stone. It’s okay to criticize your beloved Obama.

What can the average Joe do about this mess?
It seems like most people are too stupid to realize the dire predicament that the US is in.

why not….the dang nincompoops and turnips in D. C. spent $200 million on how to get a Spotted owl out of a tree.