Bailouts are simply a waste of time & resources. Leave them alone!
The quintessential definition of insanity is to repeat the same mistake and expect different results, everytime. And the US treasury apparently seems to have mastered the economics of ‘insanity’, running behind the much-abused oxymoron – bail-out! And we begin with the beleaguered insurance giant, AIG, which truly exemplifies a new version of desperate times – the government. Even after pumping-in a most precious $174 billion in the past one year, the Senate issued another gargantuan $30 billion in fresh issuance on March 2, 2009. Indeed very merciful; so much so, that Edward Liddy, CEO, AIG has had absolutely no headaches even after a writedown of $11 billion in 2008 alone, and another hip-breaking $107 billion in Mcap loss in the past 12 months! And if you thought the rogue bourses are to be totally blamed for its misfortune, here’s a revelation to ponder over. Aren’t bailouts meant to help a corporation get back on it’s feet? And even after a year of help, isn’t a company really supposed to show signs of improvements? But wait, here’s the real pill from the daddy of the financial world (read the US government) whose love for AIG would beat any mother’s grace to the grave! And if you claim that the AIG bailout worked, here’s the real deal – in just the past year, AIG announced a loss of $100 billion (and $62 billion in Q4, 2008, alone), the highest ever in the history of mankind! For the records, this total loss is close to the GDP of oil-rich Kuwait and has nullified all of AIG’s profits earned since 1990! Now argue!
We’re not against God. We’re not against AIG too! But we’re against window-dressing and false projection of the tantalising situation at hand, by this huge ‘government-owned’ American institution! Picture this – disregarding sanity, in the wake of such gargantuan losses, AIG is offering $165 million as bonuses to its executives (alas the same heads who got it into a mess). Really, America is a land of opportunities. You make a mess & get bonuses in return!
So as outrageous as it sounds (and even Timothy Geithner, US Treasury Secretary is not expressionless about it), Edward Liddy, CEO, AIG, still had the ‘spheres’ to say this, “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.” The complete annihilation of the investment banking industry (thanks to the collapse of Lehman Brothers & Merrill Lynch) and the failure of Washington Mutual, Fannie Mae & Freddie Mac prove exactly why Americans should stop paying taxes if they dislike someone misusing their incomes! For a fact, the bailout given to Freddie and Fannie totalled a monstrous $200 billion (twice the GDP of oil-rich Kuwait, if we please). And what do we have left in the name of value today? A stinking $730 million in accumulated market value as on March 17, 2009. But that shouldn’t be any reason for the Senate to mourn over, for they still have 0.36% of the bailout given left in value! A toast to that! [Did someone say that bailouts work?]
Next we come to US’ second largest bank (of course, the largest being China) – Citi, and it’s much-worshipped hero Vikram Pandit, its CEO. Citi, till date has received $45 billion in bailout package from the US Treasury. And today, what is left of the company is just a fast dwindling $9.7 billion in market value! (For the records, since the past year, Citigroup shares have tumbled by 95% on NYSE!) And about losses? Oh! It’s not much. Just a blinding $26.78 billion during the past year. We’re proud of you Viki, and you must be proud of the Fed!
The quintessential definition of insanity is to repeat the same mistake and expect different results, everytime. And the US treasury apparently seems to have mastered the economics of ‘insanity’, running behind the much-abused oxymoron – bail-out! And we begin with the beleaguered insurance giant, AIG, which truly exemplifies a new version of desperate times – the government. Even after pumping-in a most precious $174 billion in the past one year, the Senate issued another gargantuan $30 billion in fresh issuance on March 2, 2009. Indeed very merciful; so much so, that Edward Liddy, CEO, AIG has had absolutely no headaches even after a writedown of $11 billion in 2008 alone, and another hip-breaking $107 billion in Mcap loss in the past 12 months! And if you thought the rogue bourses are to be totally blamed for its misfortune, here’s a revelation to ponder over. Aren’t bailouts meant to help a corporation get back on it’s feet? And even after a year of help, isn’t a company really supposed to show signs of improvements? But wait, here’s the real pill from the daddy of the financial world (read the US government) whose love for AIG would beat any mother’s grace to the grave! And if you claim that the AIG bailout worked, here’s the real deal – in just the past year, AIG announced a loss of $100 billion (and $62 billion in Q4, 2008, alone), the highest ever in the history of mankind! For the records, this total loss is close to the GDP of oil-rich Kuwait and has nullified all of AIG’s profits earned since 1990! Now argue!
We’re not against God. We’re not against AIG too! But we’re against window-dressing and false projection of the tantalising situation at hand, by this huge ‘government-owned’ American institution! Picture this – disregarding sanity, in the wake of such gargantuan losses, AIG is offering $165 million as bonuses to its executives (alas the same heads who got it into a mess). Really, America is a land of opportunities. You make a mess & get bonuses in return!
So as outrageous as it sounds (and even Timothy Geithner, US Treasury Secretary is not expressionless about it), Edward Liddy, CEO, AIG, still had the ‘spheres’ to say this, “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.” The complete annihilation of the investment banking industry (thanks to the collapse of Lehman Brothers & Merrill Lynch) and the failure of Washington Mutual, Fannie Mae & Freddie Mac prove exactly why Americans should stop paying taxes if they dislike someone misusing their incomes! For a fact, the bailout given to Freddie and Fannie totalled a monstrous $200 billion (twice the GDP of oil-rich Kuwait, if we please). And what do we have left in the name of value today? A stinking $730 million in accumulated market value as on March 17, 2009. But that shouldn’t be any reason for the Senate to mourn over, for they still have 0.36% of the bailout given left in value! A toast to that! [Did someone say that bailouts work?]
Next we come to US’ second largest bank (of course, the largest being China) – Citi, and it’s much-worshipped hero Vikram Pandit, its CEO. Citi, till date has received $45 billion in bailout package from the US Treasury. And today, what is left of the company is just a fast dwindling $9.7 billion in market value! (For the records, since the past year, Citigroup shares have tumbled by 95% on NYSE!) And about losses? Oh! It’s not much. Just a blinding $26.78 billion during the past year. We’re proud of you Viki, and you must be proud of the Fed!
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