AIG is just a side show, a diversion from the main event at Treasury this week. In plain daylight, under the eyes of Congress, just about a trillion dollars will be handed off to the banks and interested private parties. And, they have already figured out how to bring this one back to us for trillions more!
Whenever they want to transfer massive quantities of wealth from the Treasury, they give it a boring, bureaucratic name. This one has one too, a name that just rolls off the tongue: the Private-Public Investment Fund (PPIF) for the Term Asset-backed security Loan Facility (TALF). What they mean by partnership, it seems, is the public guarantees private gains.
The idea is a double whammy: pay the banks to give up their toxic assets, then pay private parties to take these self-same assets.
Lees said by e-mail that:reports suggested that the deal would have two subsidies: first to the investors to let the pay more for the assets that their current market prices, second, further capital contributions to the banks to allow them to take a haircut on their marks. That would allow for a deal to be done at prices somewhere between the banks' inflated marks and the current market prices.
The SEIU has something to say on this:
Each of these programs could cost taxpayers up to $1 trillion. If the private firms make a profit from the deal, they keep all of it. If they end up losing money, they are only on the hook for the nickel or two of equity they put in. The taxpayers would then assume the rest of the losses. Even worse, subsidizing the purchase up to 19-to-1 will drive up the price of the assets, which would be yet another gift to the same banks that caused this crisis while at the same time putting taxpayers at a much greater risk of bearing huge losses.
But hey, who listens to unions when blackmailerscome wearing suits:
I take this to mean that if a bunch of AIGFP managers quit because they didn't receive bonuses promised in their contracts, then France could, if it wanted, to appoint its own designee. And if that happened, then it would equate to a default and those contracts would kick in, at a cost to AIG the US government of at least tens of billions.
In other words, I take this to be a threat: "if you don't give us our bonuses, we'll trigger a default event that will cost AIG the US government tens of billions of dollars." It's just a polite way of saying, "Pay us the $100 million ransom or we start exploding the suicide bomber vests we're wearing."
And, as usual, the poor people pay:
Real median household income in the United States climbed 1.3 percent between 2006 and 2007, reaching $50,233, according to a report released today by the U.S. Census Bureau. This is the third annual increase in real median household income. Meanwhile, the nation’s official poverty rate in 2007 was 12.5 percent
It's the same old story with the same old ending.