The Government to the Rescue....AGAIN!

Well its out and everyone saw the writing on the wall; AIG (the huge insurance giant with over $1 trillion in assets) was rescued or in other terms bought out by the government. The U.S. government gets a 79.9% stake in the company and in return will lend $85 billion over two years at 8.5% over the LIBOR. This was something that needed to be done however, I'm not a big fan of the terms although the details have yet to be released.

Let's rehash what exactly has transpired over the last several months. There is no specific order to these events and I am recalling strictly from memory but you will hopefully get my point. First, let's start out with The Federal Reserve and U.S. Treasury Department initiating, negotiating, and backing the Bear Sterns buyout by JP Morgan Chase. Let's move on to once again The Federal Reserve opening its discount window to other outside sources besides commercial banks to help free up liquidity. This means these huge companies could simply walk up to "the window" and borrower billions of dollars at 2% interest for a short term (30 days) which they later increased to ninety. Oh, let's not forget the take over of Fannie Mae and Freddie Mac where it's been rumored that they will have to contribute over $100 billion to each company to keep them solvent. It almost slipped my mind but the government also holds coupon/liquidity auctions worth billions for banks and other large commercial institutions to once again have access to money they would otherwise not have. I'm not quite sure but employees and executives at Lehman Brothers must be bathing in the sun right now as the government decided not to help facilitate their buy-out or take over even though they had been around 158 years and were larger and more diverse than Bear Sterns. How is our U.S. government deciding who to save and who to let fail?

What has the government done for the average Joe? Oh, they have given us $300-$600 "gift" to go out an by gas with for three weeks. We have seen lending standards slashed across the board as the banks hoard the cash that the government has given them to improve their own balance sheets, what about our balance sheets? You have HUGE companies failing left and right over 117 banks on the "watch-list" and that number is grossly under estimated and some how I am very surprised that they have yet to figure out that the citizens of this great country do not have access to these funds, mergers or acquisitions. Many are seeing their jobs cut or downsizing continue (just look at the unemployment numbers and unemployment rate). What is in store for the general public, what is their master plan, do they have one, or are we "causalities of war".

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