AIG

Introduction

Recently, the pace of writedowns major money center bank has increased. UBS announced today he wrote a $ 19 billion. Deutsche Bank announced today he wrote a $ 4 billion. Lehman Brothers was forced to raise more than $ 4 billion in equity capital. Merrill Lynch and Citigroup, is expected to write down tens of billions as well. These are massive amounts (Li Shin 816-30). The question becomes, when investors will stop propping these banks and refuse to buy a new capital, they were after the issuance of the housing bubble started this horrendous writedowns? One may assume that these banks can not continue to go to the market to receive infusions of capital in an attempt to strengthen their balance sheets. At some point, investors will say "enough." (Rosas 175-90)

American International Group

As taxpayers have been forced to rescue AIG ($ 163 billion and growing), but in reality they have been bailing out of a massive hedge fund. AIG operates a huge gap in the regulatory system, there is no control over the financial-products division, it was mainly hedge fund, which was connected to a large and stable insurance company. AIG built a murky, unregulated insurance business issuing mortgage securities and other debt held by banks(www.aig.com). When the housing bubble popped and the securities went bad, AIG had been left on the hook for billions of dollars in claims, he could not pay. Therefore, by engaging in AIG, the state is essentially bailing out of these and other financial institutions, whose fate depends on the survival of AIG. Rental AIG would all die, that insurance useless. Banks around the world will be forced to take massive losses. Some might collapse, unnerving markets, driving up unemployment and, possibly, a recession turning into depression. (Faccio, Masulis, McConnell 2597-2635)

Government policy has so far consisted of indecision was elevated to the level of strategy. The Minister hopes to muddle through. He plans to use the National Pension Reserve Fund to extend the banks just enough government help to keep them going. In addition to nationalising the Anglo Irish Bank in a panic, this is what happens. This strategy will not help the taxpayer. (Rosas 175-90)During the time the taxpayer becomes more and more share of the core set of bankrupt companies. This strategy will not help shareholders. Their assets have fallen to pennies on the stock. This strategy will not help borrowers. Banks are still lumbered with the toxic assets and are reluctant to lend. (Rosas 175-91)

The only group that benefits the banks of bonds, the major creditor of cash in the bank. A "zombie" Bank does not have a lifeforce, but only enough energy to mail checks to the interest of its bonds and to roll over old debt by issuing new bonds. By guaranteeing the bonds and keeping the banks alive barely flirting with the government a decade of depression. (Maldiga 89-90)

Who will take a hit? Unfortunately, until now that the Government put the taxpayer on the ...