Friday, September 19, 2008

AIG in Chinese means "opportunity"

A brief thought on what's happening in the financial world. Atrios has some of the best coverage from a political angle. Basically, millions of Americans were given money, when it was fairly obvious that many of them wouldn't be able to pay it back. However, if they paid it back, the loanholder would gain a great deal of money as the payback process was very expensive. So everyone had a grand time borrowing yet more money on the promise that money would be coming in from people unable to pay it back. Now that it's become obvious enough for Wall Street to notice they aren't paying it back, the whole house of cards has collapsed.

So, fervent believers that in capitalism that they are, the Bush White House basically wants to pay all those companies back with my money, and yours in the form of federal cash. Of course, the United States government doesn't have cash either.

But we know where to get it -- the Chinese. We'll get the $500 billion by sending out more IOUs to the Chinese, particularly the People's Liberation Army, the business/military complex that controls the largest dictatorship in the world.

So, this is where we end up:

Old debtors: Reg'lar Americans. Old debt-holders: American financial businesses
New debtors: American government New debt-holders: Chinese government

It's raising the stakes to an incredible level. Whereas earlier we were dealing with financial businesses such as AIG and WaMu were hoping that they'd be considered "too big to fail", now we're hoping the Chinese government feels that way about the American government.

But the suits in charge of those companies will be okay, so I guess that's the important thing.

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