Brand new story on WashingtonPost.com this morning, on more aid to AIG (emphasis added):
The federal government will invest $40 billion directly into American International Group as part of an expanded bailout plan announced early this morning as the insurance giant disclosed massive losses over the last three months.
The new $150 billion effort to prop up AIG was crafted after officials recognized that an original bid to help the company was in fact weighing down the insurance giant by requiring quick repayment and a high interest rate on government loans…
The enhanced bailout plan — nearly double the original $85 billion loan extended to the company in September — comes with restrictions on how much AIG corporate executives get paid…
The new plan [for] AIG may make it more likely that the Treasury will have to ask Congress for more funds if the financial system continues to suffer and other companies near collapse. The $40 billion stock purchase will be paid for out of a $100 billion fund set aside under the TARP to react to crises like the one that hit AIG. With much of that fund now committed, one Treasury officials said of any future problems, “we can hope they would be few and far between.”
Well, isn’t that reassuring…
And from the front page of the print edition of today’s Washington Post, in the “you know it’s bad when” camp (which includes Marty Feldstein calling for more government infrastructure spending), we learn that China–which Warren Buffett affectionately labeled “Thriftsville” in the movie I.O.U.S.A.–is apparently now pursuing more than half a trillion dollars in fiscal stimulus (emphasis added):
China on Sunday night announced an aggressive $586 billion economic stimulus package, the largest in the country’s history, at a time when it is struggling with increasing social unrest due to factory closings and rising unemployment.
In a wide-ranging plan that economists are comparing to the New Deal, the government said it would ease credit restrictions, expand social welfare services and launch an infrastructure spending program that would include the construction of new railways, roads and airports…
President Hu Jintao is expected to join other world leaders in Washington on Saturday to discuss joint efforts at preventing a deep and prolonged global recession. China’s leaders have been saying for months that the best way China can help is to keep its own economy on track.
The stimulus funds, to be used through 2010, represent roughly 15 percent of China’s yearly GDP. China last year accounted for 27 percent of global growth, more than any other nation.
The head of China’s central bank, Zhou Xiaochuan, said at the Brazil meeting that by increasing domestic consumption, China could help international markets.
So the question on my mind is: if “Thriftsville” is going to stop saving so much and start consuming more, then who will keep investing in U.S. Treasuries–i.e., lending money to “Squanderville”?
This article has 2 comments:
Our government is willing to bailout or reward the failure of large corporations.
But when it comes to supporting their own citizens who are losing their jobs by the millions by stopping the offshoring and importing of labor, and whose loss of job's will directly affect the amount of tax revenue that our government will receive, they do nothing.
I put out a nice article on my web site recently titled "Davy Crockett" about how he made a speech that he couldnt spend the governments money because it wasnt his to spend.
Sounds to me that more of our politicians and corporate leaders should go to www.KeepAmericaAtWork.... and read that article.
Virgil
www.KeepAmericaAtWork....
Why, the taxpayer of course! I don't believe we will be seeing a "New Friendlier IRS" like the late 1990's.