Financial Meltdown

2008- A turbulent year for America's financial markets, the Federal Reserve announced late Tuesday the details of an $85 billion bailout package for floundering insurance giant AIG. The fund package, which will give the government control of almost 80 percent of the company's future activities, comes after a $100 billion rescue of government-sponsored banks Fannie Mae and Freddie Mac and a $30 billion loan package offered to Bear Stearns.

With the financial industry's eyes on Washington and lawmakers' negotiations over a proposal to bail out the banks with economic relief of a $700 billion plan to rescue the nation's crippled financial industry. The House is expected to vote on the package Monday.

Wall Street's problems have captured the attention of Congress, the White House and the media. But on the country's Main Streets, worried workers, struggling small business owners and cash-strapped families are wondering if anyone is paying attention to them.






The proposal to bail out U.S. financial markets to the tune of up to $700 billion creates a lot of potential short-term winners, as well as some losers.Wall Street and the banking industry are perhaps the biggest winners. And for ordinary taxpayers; nothing that potentially adds $700 billion to the national debt -- already surging toward the $10 trillion mark -- can be considered a winner for those who foot the bills.

The taxpayers are already feeling the pain from being put in these loans in the first place, many of them losing their homes to foreclosure because they were in these loans. The taxpayers are really bearing the burden twice because of the initial failures of the market regulators. Corporation that got rich off bad bets with your money again.






Though AIG is an insurance company, its products include auto and life insurance - the root of its problem lies in the same mortgage crisis that wreak havoc on the health of investment bank Bear Stearn,
which shut down last spring, and Lehman Brother , which filed for bankruptcy protection this week.

While Lehman and Bear Stearn invested in mortgages,AIG sold insurance contract known as credit default swaps (CDS) to invesment banks to protect them from losses stemming from mortgages that fell into default. With home after home going into foreclosure and mortgage meltdown in full swing, AIG has had to make good on its insurance guarantees. That 's what has landed the company into hot water, the model that they used never were stress-tested for the scenario until now.

They said that if this bill didn't pass, we would experience turmoil and chaos, the implication being that if the bill did pass, we wouldn't have much trouble. That is an absurdity, the nouveau "economic patriots" in Congress see this plan as a chance to do what they do best, which is to throw some pork around. The bill has dozens of tax breaks for such important things as wooden arrows, owners of stock-car racetracks, Virgin Islands rum makers and so forth. These perks are not widespread, but I suspect there is more posturing and greasing of palms in Washington than there is genuine concern and understanding about what lies ahead.

The approval of $700 billions dollars into Wall Street does not guarantee crisis of this magnitude will not recur in future financial market; this injection of liquidity will not be felt immediately but mainly has the effect of restoring some confidences in present crisis; according to financial expert. It is going to be a long process say at least two to six months before the credit crisis subsides. Congress does need to strengthen financial market regulation and oversight especially on mortgage lending in the future; various creative financial products come out of lending institutions and insurance industry, to prevent foreseeable recurrence of present situation.

Late Night Quips:
"The federal government... announced a plan to spend, like, a trillion of taxpayer dollars to buy out bad mortgages and debt. Wall Street was surprisingly enthusiastic about the plan to save their (butts) with other peoples' money. It was either that, or Sarah Palin's idea to sell it all on eBay." --Bill Maher

"Financial experts are saying we are entering a new chapter in the American economy. I believe it's Chapter 11." --Jay Leno

"Yesterday, the federal government announced a massive plan to bail out a number of banking institutions. One expert said it might cost Americans more than a trillion dollars. To put that in perspective, ten Bill Gates and 35 Oprah still don't add up to a trillion dollars." --Jimmy Kimmel

"A top McCain policy adviser claimed this week that McCain's work in the Senate helped create the Black Berry, saying, 'You're looking at the miracle that John McCain helped create.' He then handed the Black Berry to McCain, who attempted to withdraw $20 from it." --Amy




"President Bush spoke about the Wall Street bailout yesterday, and he said, this is the quote, 'if the money isn't loosened up, this sucker could go down.' So folks, if we know nothing else at this point, at least we know that President Bush is writing his own speeches." --Conan O'Brien

"The nation's largest savings and loan, Washington Mutual, has become the biggest bank failure in history. See, the problem with the savings and loans? Not enough savings, too many stupid loans, okay In fact, they changed their name from WaMu to 'screw you.'" --Jay Leno

"Treasury Secretary Henry Paulson said that the proposed bailout plan will cost taxpayers $700 billion. To give you an idea how much money that is, I can't give you an idea of how much money that is." --Seth Meyers .

With all the bad news in financial market, here come the good news, the crime rate is down. Isn't that amazing? Less banks are being robbed. Well, sure. A, there's less banks. B, the banks don't have any money left. And C, nobody's got gas money for the getaway car. So, right there, crime is down!" --Jay Leno