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Will this bail out help our economy or further delay its recovery?

Much is being written and said about the $700 Billion dollar bail out of our financial institutions. It is said that to let them fail will possibly cause a global economic meltdown. I am not so sure of this. Sure a few will fail but others will replace them and the industry will be stronger. After thinking about this for a few days I find myself wondering why we are going to the rescue of the very entities that helped create the mess we are in. The loose guidelines that the mortgage industry used created the investor driven housing boom. When property values started to fall, due to the overbuild, most of the investors had already made their money and pulled out of the market. This left the mortgage lenders that created this, by their loose lending practices, and the homeowner holding the bag. This scenario is no different than that of any other business or individuals that make bad decisions and has to pay the price. I do not believe a bailout is the answer. Let these people suffer the results of their bad decisions.

After this bail out will you be able to purchase a home or car and have a reasonable interest rate on a loan? Will your job be saved? Our economy is stagnant; will it encourage business to invest and create jobs? Just what is that $700 Billion Dollars going to do for us, the everyday working Jane & Joe? Is it going to create new jobs? I don't see how. Will my bank close, possibly? Will gas for my car cost less, probably not? The dollar will take a beating against other currencies and oil will go up on the global market.

If our government is going to spend this kind of money I want it to create something. Would it not make more sense to take that $700 Billion and finance industries to make this country more energy independent? This would create badly needed jobs and kick start our economy and would go a long way toward healing our sick financial industry.

 

You and I Own an Insurance Company

Tuesday night I went to bed, after my usual no money involved poker game, and when I woke up on Wednesday morning I found that I along with my fellow Americans owned an insurance company. Now I really like the idea of being a business owner but what puzzles me is when do I get my dividend payment? In other words what do I get for my money?

AIG is the largest insurance company in the world; it does business in 134 countries. Under its umbrella are different kinds of insurance companies, investment companies, retirement fund accounts etc. It has invested in real estate and is one of the larger insurers of PMI insurance for homes. The basic cause of its problem is the loss of value in the real estate market. This company is huge and if it was allowed to go bankrupt the loss in jobs, retirement accounts and investor's accounts could very well devastate the global economy.

So what do I get for my money? By investing in this company we have allowed ourselves to possibly escape a complete melt down of the global economy and difficult times that have not been seen since the great depression of the 1930s. We in this country enjoy a life style and standard of living that is the envy of the world. To keep our financial resources and freedom of choice that we enjoy so much, we occasionally have to do those things that we find repugnant.

AIG Bailout

On Tuesday 9/16/2008 the Federal Reserve Bank agreed to bail out AIG insurance. This is not the first time our government has bailed out an American based industry in order to preserve jobs and finances.
The first was Chrysler Corporation many years ago. Lee Iacocca secured financing guarantees from our government for Chrysler and brought the company back to a profitable enterprise.

The bail out of AIG consists of an 85 billion dollar loan to be paid back, with interest, over the next 4 years. The government received a 79.9 % interest in the equity of the company including all its subsidiaries.

This was a necessary thing due to the overall impact this company has on the insurance and finances of millions of people that are insured by the company or have their retirement funds invested with the company.

Protect your assets.

Americans are scared of losing their money, a fear being reinforced every day as banks are closed, stock prices fall and home equity shrinks.

In the midst of this chaos there seems to be no safe place for savings or retirement funds and forget the idea that money should be working to earn more money. People just hope to keep whatever they have left.

Where is your money and investments safe? You can bury it, but that makes no sense someone may find it. Hard assets like gold and precious stones need a secure place to be stored and appreciation is suspect.

Money in most banks, credit unions and brokerage accounts are insured by the Federal Deposit Insurance Corporation (FDIC), the National Credit Administration (NCUA) or the Securities Investor Protection Corporation (SIPC) depending on the placement. Each of these entities insures accounts up to a set limit.

FDIC and NCUA insure accounts up to $100,000 BUT the accounts must be dispersed correctly or you may lose some. Each depositor is insured up to $100,000, not each account. Example the total of a checking account plus a savings account in the same bank cannot exceed $100,000. The Insurance on Retirement accounts maxes out at $250,000.

SPIC insurance is different. It does not protect the stock holder if the value of stock drops. It is designed to cover securities and cash in the event that he brokerage firm goes out of business. The insurance has a limit of $500,000 of which $100,000 may be in cash.