quote:Originally posted by Chris Bridges: [goes off to buy mustard futures]
How do you have any capital for that?!
Word on Wall Street is that the entire condiments industry is tanking. Without ketchup, burger and hotdog institutions are finding demand scarce. People just don't want mustard without ketchup.
Relish, Mayo, and Miracle Whip are all effected, yet strangely BBQ sauce hasn't felt the pinch at all.
Posts: 14316 | Registered: Jul 2005
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I took a very very basic economics class many years ago, and the only example I can remember is that when people can't afford to buy shoes, that the market for shoelaces decreases also.
That didn't make much sense to me, since it seems to me that if one can't afford to buy new shoes, he'd be more likely to need shoelaces to make his old shoes last longer.
I decided to stay with my strengths (which is most decidedly NOT economics) and let those who have a head for such things worry about shoes and shoe laces.
And as for condiments, as long as I can get mustard and Franks sauce, I really don't care if ketchup becomes scarce.
Posts: 2069 | Registered: May 2001
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Man, I walk out of a thread for one day and all of a sudden I've got hives from mustard and am losing my house. Posts: 21182 | Registered: Sep 2004
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quote:Originally posted by ketchupqueen: Man, I walk out of a thread for one day and all of a sudden I've got hives from mustard and am losing my house.
And you owe me a thousand bucks. Pay up!
Posts: 10645 | Registered: Jul 2004
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It would be one thing if, in an otherwise stable financial time, a reasoned plan was devised to take a greater hand in control of markets where it was decided that a major downturn would be catastrophic to the private sector.
This feels more like smoke rising from our shoes as we drag our heels, desperately trying to stop a train before it goes off a cliff. The government is acting quickly and saying, "It will be all right, we can handle it"- mostly because, well, someone has to take care of it, and hope that things turn out for the best.
But our money is already losing value, we're already running under a massive deficit, and the average citizen has already been primed to believe he or she is getting shafted- any responsible actions to start digging out of this mess are going to fall on their shoulders, and they're probably going to scream bloody murder.
And... I have a bad feeling we haven't seen the last big warning sign, yet.
Jokes aside, I feel like we're being told "don't panic!" not because panic is an illegitimate reaction, but because those in the know recognize that panic will accelerate a freefall.
Posts: 3826 | Registered: May 2005
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The dollar losing value is a positive movement that helps deal with the situation, not a negative one (on the whole).
This is a pretty weird situation, economically. Many sectors of the economy are doing just fine (which is unusual when there are such large financial issues). Expect more problems, but overall this won't cause great problems in standard of living.
Posts: 15770 | Registered: Dec 2001
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According to NPR the reason AIG got into trouble, and the reason they are being bailed out, is that they got heavily into insuring Bonds--govt Bonds to be exact. But unlike regular insurance, that AIG is expert at, Bonds are all related in value. If they insure a house, and it burns down--the money from 20 houses in the same town cover the cost of the burned one. Rarely does a fire cover an entire city of houses, and in that rare case houses in cities across the country will cover that burned city.
Bonds, however, are linked in the minds of investors. If one bond does not pay out, it is likely that others won't, so people stop buying all of them. The payouts go out and nothing much comes in.
Since this is all kept hidden, nobody knows how much AIG has in Bond defaults. Suddenly the safe Bond market is dangerous, and the risk in lending money, even to other banks, is greater.
Once the banks stop loaning to banks, the system crashes.
Posts: 1941 | Registered: Feb 2003
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It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers. Oh sure, Detroit is in trouble, but then again that's been true for going on forty years now. It's even possible that the government might make quite a bit of money on the AIG buyout, since the loan terms are apparently not very generous and the problem seems to be liquidity rather than solvency. Who knows, this might be the place where the deficit turns around! Anyway, if credit gets tighter than it has been, I'm not convinced that's a bad thing. Just how many consumer loans and credit cards does the economy really need? Sure, it'll get harder to buy a house, or more accurately, to borrow money to do so. But no houses have been burned. They'll still be around in five years, maybe rented out for a while. A year or two of retrenchment is not a disaster.
Posts: 10645 | Registered: Jul 2004
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Retail expansion has basically vanished, and commercial and residential construction are both in trouble, but yes, there hasn't been significant spillover beyond the financial and construction areas.
Posts: 15770 | Registered: Dec 2001
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quote:It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
This doesn't appear true in my anecdotal experience. I know a lot of people who're doing a lot of belt-tightening.
Posts: 37449 | Registered: May 1999
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I agree with fugu, they were building a mall in my hometown, but due to lack of volume, the big names backed out(GAP, Abercrombie, etc). The whole project is half-built and on hold. That alone is pretty indicative that retail expansion is just not there right now. Elk Grove, CA was once one of the fastest growing cities in the United States. There now are loads of empty neighborhoods waiting to be built, foreclosures with dead lawns, and empty stores. Example Even at my job(mechanic), less cars come in for service every time things like this happen. When Lehman Bros. announced their bankruptcy, the whole week was crazy slow.
Getting kinda scary at this point. . . Posts: 4229 | Registered: Dec 2002
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Hum. In an economy consisting of a large number of sectors, one or two of them will always be contracting, no? I think you would want to demonstrate that there is more contraction either overall or in number of sectors than usual. And the GDP numbers do not appear to support this - true, they are not growing very fast, but I'd say they are within a sigma or two of the usual.
As for belt-tightening, how loose were the belts to start with? Anyone who was, say, running a largish credit-card balance would do well to tighten their belts quite independent of what the economy was doing; a crisis could simply be the signal that wakes them up to do so.
Posts: 10645 | Registered: Jul 2004
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quote:Anyone who was, say, running a largish credit-card balance would do well to tighten their belts quite independent of what the economy was doing; a crisis could simply be the signal that wakes them up to do so.
A huge percentage of the population is running a largish credit-card balance. Their belt-tightening will inevitably constrict the economy, even if it's a good idea for them personally.
Posts: 37449 | Registered: May 1999
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From anecdotes, it seems some small businesses could attribute their economic failures to less consumer spending.
Posts: 1261 | Registered: Apr 2004
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Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth. Credit can work to smooth out consumption, but you cannot - in the long run - consume what you do not produce. So to whatever extent this happens, that's the extent to which we've been living in a fool's paradise, and we'll be better off when we come down off that high.
Posts: 10645 | Registered: Jul 2004
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quote:Originally posted by fugu13: The dollar losing value is a positive movement that helps deal with the situation, not a negative one (on the whole).
This is a pretty weird situation, economically. Many sectors of the economy are doing just fine (which is unusual when there are such large financial issues). Expect more problems, but overall this won't cause great problems in standard of living.
Frankly, I disagree. The dollar is losing value, and consumer prices aren't rising at a similar level; as a New Yorker article mentioned, prices of identical consumer goods in Europe are often costing a good 30% more in Europe. Many companies are accepting lesser profits from the American marketplace in order to keep up volume and brand loyalty because American consumers have been such a rich source of capital in the past, but that's not an infinitely sustainable situation. Our current standard is also maintained to a significant degree by foreign debt, and while lowering the value of our own money may help us pay some immediate bills, it decreases the apparent value of the U.S. as an investment, imperilling our ability to continue on credit as we have in the future.
Honestly, I don't think the full brunt of the increased costs of shipping has even hit American consumers yet.
I agree that it's a weird situation, but it's a weird situation largely because it's an artificially suspended situation.
Or to put it another way: devaluing the dollar as a tactic can only be seen as a good thing if one believes it is a tactic, i.e. something the U.S. can reverse if it chooses when it chooses. That is increasingly not what the evidence suggests.
Posts: 3826 | Registered: May 2005
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quote:Originally posted by dabbler: From anecdotes, it seems some small businesses could attribute their economic failures to less consumer spending.
Again, you would want to get some actual numbers. Any number of small businesses fail every year; when the economy is bad, they blame it on that, when the economy is good, they blame it on phases of the Moon. The question is, are more businesses failing than usual?
Posts: 10645 | Registered: Jul 2004
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quote:It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
This doesn't appear true in my anecdotal experience. I know a lot of people who're doing a lot of belt-tightening.
That's not true for me either. My grocery bill has gone up by about 20% over the last year, our gas bill nearly doubled, our utilities are higher, clothes are higher, services are higher, and my husband's raise was a joke. We are having to seriously reprioratize soon. We're very fiscally responsible -- we have monthly budget meetings and an end of year where we reevaluate everything.
Last year, we tried to account for the rising costs of things but we were thinking way too small. Next year we're almost certainly going to have to cut our home improvement budget, our eating out budget (only $100 a month as it is so that would pretty much go away), and our entertainment budget.
Now, for us personally, that's annoying. We won't get to do some of the things we'd like to do although we can still afford everything we need and are not in debt. Trouble is, we're not the only ones who are cutting back on things like dining out, entertainment, and home improvement. Which means that our favorite local restaurants may suffer, home improvement businesses will suffer, etc.
Which in turn, makes the overall economy even worse and puts jobs at risk -- maybe my husband's. (We hope not but maybe.)
I have to admit, I'm nervous about the economic future of this entire country.
Posts: 2392 | Registered: Sep 2005
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posted
To add in my anecdote, my family and friend group is doing pretty awesome. In fact, GJP (Gross Jhai Product) has shot up dramatically in recent months, and there's good housing boom going on in my personal/familial economy.
Concluding from that the nation's economy as a whole is doing awesome is just as silly as concluding from negative personal anecdotes that the economy is doing poorly. Economics needs good data in order for conclusions to be drawn. No one here has listed any, and most of the data I'm seeing suggests that, as a whole, the economic future of this entire country is doing just fine.
Posts: 2409 | Registered: Sep 2003
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I didn't say in my brief comment that I thought it was something to extrapolate. Mainly it comes from hearing from one fellow poster on sake and feeling quite sad that he probably had the deck stacked against him more this year than another.
Posts: 1261 | Registered: Apr 2004
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dabbler, just so it's clear, I'm not trying to imply that you did at all. I just get nervous when people start using anecdotes to talk about any sort of national-level phenomenon - especially economics, since it seems to get that treatment more than most. Edit: I offer up this article (with data!) to put the thread back on track.
Posts: 2409 | Registered: Sep 2003
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For many of the people losing homes nowadays, that's probably better than them being saddled with the amount their mortgage was really for. Extremely painful and wrenching in the short term, but probably improving their long term economic situation.
I suspect the middle class families shopping at food pantries article is a sensationalist piece not reflecting any serious trend.
New construction is down, a lot. There's also a lot of new construction out there unoccupied. This will be painful for the construction industry, but probably won't have many ripple effects.
Consumer confidence is down in a vague sort of way, but it isn't having much significant impact. While retail expansion has vanished, retailers themselves are overall coping pretty well; the expansions were often predicated on ideas about the growth of residences in the area.
As Jhai said, overall the economy is looking in reasonable shape. My personal prediction is that there will be several more major financial company failures, but that these will ultimately be opportunities for the financial companies that are not as vulnerable, and that the economy will gradually regain momentum, perhaps after a short recession.
Posts: 15770 | Registered: Dec 2001
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quote:Originally posted by fugu13: New construction is down, a lot. There's also a lot of new construction out there unoccupied. This will be painful for the construction industry, but probably won't have many ripple effects.
Why?
[Edit--Why won't it have many ripple effects, I mean.]
Posts: 16059 | Registered: Aug 2000
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quote:Originally posted by Christine: Some stories we've seen on the news lately that go along with the crunch I'm feeling:
People losing their homes.
Middle class families shopping at food pantries.
New construction down.
Consumer confidence down.
...
News stories are more or less the definition of 'anecdote'. First, the journalist writes about what gets past his selection bias; and then you remember the stories that get past yours. By the time what's going on has been filtered through that many layers, there's not enough actual data in it to colour an opinion. Numbers! We want numbers! And what's more, we want numbers that haven't been cherry-picked to support whatever the story du jour is.
Posts: 10645 | Registered: Jul 2004
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Christine, if you look at the article I linked above, it addresses exactly the issue we've been talking about: how there isn't a recession, and yet people still feel unhappy about the economy and worry about their economic future.
Noeman, I'm not sure what answer fugu will give you, but my guess is that because the industry has already been in a decline for a year or so, there aren't going to be any sharp jerks in the industry - we're just going to continue to see a slow decline. Volatility (like what's happening in the financial sector) is normally a much more problematic issue than just decline. Combine that with the fact that construction is one of the more fluid job markets out there, and I don't think we'll be hearing about too many problems. That's not to say that it isn't a issue we should be concerned about: slowing growth in the construction industry will mean slower general economic growth, but it shouldn't create a cascading effect like we've seen in the various subsections of the financial markets.
Posts: 2409 | Registered: Sep 2003
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It is currently harder for students to get student loans than it has been for probably a decade. Even after Congress raised the annual maximums for Stafford loans, many students are finding it difficult or impossible to get enough funding to continue in school. Still anecdotes, but I personally know quite a few students who are putting off starting or continuing their degree (or shifting from full-time to part-time), and I hear similar stories from many of my colleagues.
Posts: 32919 | Registered: Mar 2003
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I don't know....economists seem to be in disagreement over the state of the economy and I'm not sure how you can sum up an entire country's financial situation with a single number. It's not an anecdote that inflation is staggering. It's not an anecdote that loans are harder to acquire. It's not an anecdote that the housing industry is in serious trouble.
As for the parts of what is being said that are anecdotes -- why can't we talk about them, exactly? Personally, the fact that my family is having to seriously rethink our budget due to inflation is a lot more relevant to me than the gross domestic product. I'm not an economist. I'm just a person trying to live my life.
Posts: 2392 | Registered: Sep 2005
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Personally, my family is doing well. We've paid off our CC debt, we've almost paid off our car loan (though we'll probably have to buy a new car next year, we're hoping to get the minimum loan and pay the rest up front), we're paying down my husband's student debt (he thankfully finished school last year, at least for the forseeable future; now he's going for professional accreditations-- is that a word? I'm tired-- instead of another degree, at least for now...), we're even starting to pay off some personal debt to family and friends we accumulated when we made our big life path change... It's a good time for us. We're hoping in a few years we'll be able to benefit from these lower house prices and start looking for a starter home. (If not, it won't bother us; as long as we can find a big enough place to rent, we're happy...) Our grocery bill is not significantly up, gas is up but we don't often do too much driving, and so, we're not doing that badly.
On the other hand, my sister-in-law and her husband both lost their jobs last year, within 6 weeks of each other, and have been unable to find work in that industry (they both worked for a big mortgage house-- you guessed it, their jobs don't exist any more, pretty much anywhere.) They got into a house loan that took all of one of their incomes and a little more to pay. Now, they're barely hanging on. I really don't know what would happen if they defaulted on their mortgage (they already did on their second car); she currently runs a home daycare and needs the space, not to mention if they had to get an apt. they would have to move to an area too far away for her current clients to want to make the trip for childcare, and her husband's income really isn't enough even now. Their kids are on Medicaid and they are using food stamps to get by-- and barely making it. Do I think they were irresponsible to get into their mortgage? Sure do, and we very hesitantly expressed that opinion at the time, but not wanting to be rude, did not push it. Do I think they made other irresponsible financial decisions? Yes, I do; they did not seem to read the writing on the wall and spent months looking for work in their prior field that could have been spent with at least something coming in, even if it's physical, boring labor like my brother-in-law is doing now. But they were deluded, like so many others, into thinking that it was a GREAT time to buy a house, that things were going to turn right around in the mortgage industry, etc., etc. (And to their credit, they knew enough not to get into one of the really bad types of loans-- just more house than they could reasonably afford if one of them lost their jobs, much less both.) Do we still help them out when we can? Yes we do, even when it causes us to do some juggling of things we'd rather pay off right away (they always pay us back ASAP; we're basically no-interest payday advance loans for them when they need it.) And when they need big things for their kids, like their eldest outgrowing her carseat and needing a new one, we are happy to tighten our belts a little in order to give them as birthday or holiday gifts. But, I can really see, through them, what the results are like for people who had a combination of bad choices and bad luck come crashing down on their heads.
So, I see both sides. In some sectors, things aren't that bad. (Some would add, "yet.") In others, the world is ending, at least as it had been known.
I'm of the opinion that that world ending isn't necessarily a bad thing, except as it unfortunately impacts individuals. Sadly, in a "correction" this massive, yes, there's going to be some human suffering as part of the cost. Personally I'll do what I can to alleviate that suffering in my own circle where I can, as has been done for me previously. But in the end, I guess we just have to slog through. Because it couldn't go on forever.
Posts: 21182 | Registered: Sep 2004
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posted
It probably won't have many ripple effects because, while it will hurt for the construction industry, the problems in the construction industry are due to people not wanting more construction. And if they do want more construction, there's lots of empty stuff available.
And no one is asking for a single number (the GDP is more of a media number, it isn't for nuanced comparisons), but lots of numbers (measures of the various things we're talking about -- and I can point at most of those if people are interested, though I'll mostly just be linking to bloggers that have already done the finding; I mostly haven't done it yet because I'm in Brazil at a conference). As for inflation, it isn't staggering in the least. It is slightly higher than we're used to, but we went through some incredibly low inflation, especially in low-end consumer goods (which are still doing pretty well, price-wise). Many countries with strong economies have inflation as high or higher than we're at currently, and ours will probably go down a little when the economy strengthens. In fact, growth in gas and food prices is relenting already, and that will probably lead to readjustments in prices over the next few montsh.
Loans are harder to acquire, but there are still plenty of loans available for people who are in sound financial situations. Housing is in trouble in some ways, but it is also much, much more affordable, now, to people with incomes that can support a reasonable home loan.
I don't think anyone here is saying there isn't short term pain in the economy for many. Remember, the argument is not that nobody will have problems, but that the economic situation overall will recover. No one is invalidating your experience, just arguing against projecting your experience as a harbinger of disaster for the whole economy.
Posts: 15770 | Registered: Dec 2001
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quote: It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
Over half of my friends have had their personal income drastically reduced, food prices and transportation prices have increased and now are more of a financial burden for everybody, I got a lotta buddies reduced to temp labor jobs.
And I live in a cushy, economically insulated portion of the united states. No place that has been sinking due to manufacturing flight or whatever.
The economy is not humming along as usual; it's just that what has hit the fan was not evenly distributed and seeing the effects in an anecdotal sense largely depends on where you live and who you know.
I'm fortunate. The most I have to bitch about is the emergency ban on short-selling.
Posts: 15421 | Registered: Aug 2005
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quote:Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth.
That is not exactly true. Borrowing is essentially a way of redistributing future wealth into the present. If by doing so, you can increase your future wealth, it is possible to increase overall (future and present) wealth just by borrowing.
For instance: If you borrow $1 from the future, and invest it in a way that pays off $5 in the future, that means that you now have $1 more in the present and $4 more in the future. So it is possible, in theory, to borrow your way to wealth. (And it is also possible in practice, since banks do exactly that.)
Posts: 8120 | Registered: Jul 2000
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posted
We have felt a crunch with the construction income that is no longer there, but instead my hubby is taking a different part-time job. His full-time job is secure - and as soon as I graduate in May and find something mine will be too. We still have a pretty major teacher shortage in secondary education, so I don't foresee any issues with finding and keeping a job for me.
There is something to be said for a dependable government job. Yes, his part-time income is struggling, but if all goes well he'll soon have a different part-time job - he's applied and is awaiting the final say-so from the employer and we think it looks good.
So we're going to be all right. I know a lot of people suffering a lot right now but that's because a high percentage of our friends were also employed by the construction industry.
Then again, I know people doing well - my brother just got a new job that doubled his previous salary and went out and bought a new car for his wife to celebrate. So, some people are doing okay.
Construction and mortgage industries are really hurting, and I feel for the people who've lost their jobs, I really do.
Posts: 14428 | Registered: Aug 2001
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quote:Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth.
That is not exactly true. Borrowing is essentially a way of redistributing future wealth into the present. If by doing so, you can increase your future wealth, it is possible to increase overall (future and present) wealth just by borrowing.
For instance: If you borrow $1 from the future, and invest it in a way that pays off $5 in the future, that means that you now have $1 more in the present and $4 more in the future. So it is possible, in theory, to borrow your way to wealth. (And it is also possible in practice, since banks do exactly that.)
You cannot borrow a dollar from the future. You can only borrow a dollar from someone living in the present. What you probably mean is that when someone lends you a dollar, he is foregoing the use of that dollar today, in exchange for 105 cents next year. This does not move wealth from future to today; it moves consumption from today to future. If done correctly, it will indeed increase future consumption above what was foregone. But it is not the borrowing that accomplishes this; it is the foregone consumption. This is clearer if you consider 'borrowing' from yourself by, say, going for a cheaper cut of meat and thus saving a dollar, or taking an extra job instead of relaxing in the evenings, or whatever. By not consuming today, you plant the seeds (perhaps literally!) of additional wealth tomorrow.
It is saving, not borrowing, that increases wealth. Sometimes borrowing is a necessary intermediate step, but borrowing for purposes of consumption builds nobody's wealth.
Posts: 10645 | Registered: Jul 2004
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quote: I'm not sure how you can sum up an entire country's financial situation with a single number.
And then you propose single anecdotes in an attempt at the same summing-up!
quote:It's not an anecdote that inflation is staggering.
Granted. Then again, it's also not true.
quote: It's not an anecdote that loans are harder to acquire.
No. But considering the sorts of loans that were handed out like candy and got us into this in the first place, I'm utterly unconvinced that this is a bad thing.
While we're on the subject of anecdotes, my bank recently increased my credit limit from 2000 to 10000. I thought I detected a rather plaintive note in their letter reminding me that I had one.
quote:It's not an anecdote that the housing industry is in serious trouble.
Yes it is, actually. As already mentioned, in an economy this size, one or another sector is always going to be in trouble. The car industry has been in trouble for forty years without anyone outside of Michigan much caring. What you want to determine is whether more sectors are in trouble than is usual. Until you've got some number to compare, it is indeed an anecdote. It's like saying "Of course I'm following my diet, today I ate three bowls of ice-cream!" Unless you happen to know that the usual consumption is five, this is meaningless.
Posts: 10645 | Registered: Jul 2004
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posted
I agree with almost everything you've said in that post (edit: about savings), but the last paragraph. I only agree that savings increases wealth insofar as a more expansive definition of savings is taken; most wealth is created by spending, not saving, in order to facilitate the provision of goods and services.
Posts: 15770 | Registered: Dec 2001
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The housing industry (by which I mean the home loan industry and the residential construction industry) is in rather a bit more trouble than troubled industries usually are. Institutions are taking losses in a day that are larger than Detroit has in years. The economy is only doing "okay" for the short term, and quite possibly will be in recession for a time. However, there isn't evidence of long term problems or any extreme short term problems.
Posts: 15770 | Registered: Dec 2001
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posted
Whenever I read this thread, this speech comes to mind:
quote: He did help a few people get out of your slums, Mr. Potter, and what's wrong with that? Why - here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers? You - you said - what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him.
quote:Originally posted by fugu13: I agree with almost everything you've said in that post (edit: about savings), but the last paragraph. I only agree that savings increases wealth insofar as a more expansive definition of savings is taken; most wealth is created by spending, not saving, in order to facilitate the provision of goods and services.
Um. I think perhaps what you are trying to say is that most wealth is created by exchange, which is usually a spending of money by one side in our economy. But in the long run, exchange has to be backed up by production. Perhaps a formulation we can all agree on is that no wealth is created without work.
Posts: 10645 | Registered: Jul 2004
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I read an article I think in USA Today the other day about how the government bailout of AIG was actually foreign governments using their leverage because so much of their money was invested in AIG, or actually, I think it was that their money was in government bonds, but that relates to AIG somehow. I can't remember the specifics, but the article suggested that this was the first time that the government's massive debt was used against it by foreign banks/nations to compel a specific action.
I'm curious as to what our more financially knowledged people think about that. I'll try to find the article I read and I'll link to it, cause I feel like I'm leaving out some details.
Posts: 21898 | Registered: Nov 2004
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I heard AIG backed bonds and sold them with other securities packages. Not sure of the veracity, though, but that's what I've heard along those lines.
I also heard the CEO (who was previously majority stockholder in AIG) didn't think this was necessary and it came as a surprise to him (and was done largely without his consent.) Not sure of the veracity of that, either. But as long as we're spreading rumors... Posts: 21182 | Registered: Sep 2004
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This is getting very scary.
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