US lends 85 billions dollars to AIG!

US lends 85 billions dollars to AIG!
Sep 17, 2008 04:03
FRANKENSTEIN Points: Join Date: Nov 29, 2004 Status: offline	Lehman Brothers’ bankruptcy is not the end. AIG seems to be in trouble too. The Federal Reserve said that it would lend 85 billion dollars to AIG as emergency funds in order to protect this giant insurer. If AIG goes bankrupt, it will cause another earthquake in global financial system. In return, the government will take 79.9 per cent shares and gain the effective control of this company. This is the US government’s second intervention to combat the global credit crisis. As the news says, the government will appoint new executives to take control of this company. On the other hand, the government has the veto power over major decisions at the company. Although the financial crisis seems to rage in global markets, the US government didn’t change interest rates. Yesterday, it was 2 percent. However, the central banks in other countries have started to inject money in the market to relieve liquidity. The central bank of China had announced to cut the interest by 27 points. However, Shanghai stock market was not encouraged by this move. Yesterday, it plunged below 2000 points, 4.5 percent down. In Hong Kong, the Hang Seng index slumped 5.4 percent. As some economists foresee, global economy has entered its downturn period. When will it be over?

Sep 17, 2008 04:03

FRANKENSTEIN
Points:
Join Date: Nov 29, 2004
Status: offline

Lehman Brothers’ bankruptcy is not the end. AIG seems to be in trouble too. The Federal Reserve said that it would lend 85 billion dollars to AIG as emergency funds in order to protect this giant insurer. If AIG goes bankrupt, it will cause another earthquake in global financial system. In return, the government will take 79.9 per cent shares and gain the effective control of this company.

This is the US government’s second intervention to combat the global credit crisis. As the news says, the government will appoint new executives to take control of this company. On the other hand, the government has the veto power over major decisions at the company.

Although the financial crisis seems to rage in global markets, the US government didn’t change interest rates. Yesterday, it was 2 percent. However, the central banks in other countries have started to inject money in the market to relieve liquidity.

The central bank of China had announced to cut the interest by 27 points. However, Shanghai stock market was not encouraged by this move. Yesterday, it plunged below 2000 points, 4.5 percent down. In Hong Kong, the Hang Seng index slumped 5.4 percent.

As some economists foresee, global economy has entered its downturn period. When will it be over?

Sep 17, 2008 07:16

APAULT
Points:
Join Date: Mar 11, 2006
Status: Offline

The US is dying a slow death. It has been living on borrowed money for decades - this was fine as long as the economy could keep paying the interest. No more, they have stuffed up with misguided military adventurism, economic protectionism for critical voting groups, and simple greed.

Unfortunately all nations are affected, some more than others. Personally I doubt that we are facing a world recession. One thing is different in this era: there are emerging economies ready to drive the world economy. China and the rest of the 'BRIC' should see the world through. Most importanly China has 3 trillion dollars reserves and countries like Australia have the natural resources. One shortage in China is skilled (really word class) technical and professional people. But if the US goes into recession there will be a big pool of specialists available form there - just done hire bankers and mortgage providers!

Sep 18, 2008 22:50	#2
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	Who will be next? Soros predicts that UK will be next because they have the same problem as US in real estates. Due to the financial hurricane in US, some countries have closed their stock markets. You see, the impact is too huge.

Sep 20, 2008 15:28

MARRIE
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Join Date: Jan 7, 2008
Status: Offline

China Sovereign funds are absorbing stocks of major wallstreet firms and bank of america. heard it's initiated by a chinese high ranked fin. officer with one of the best minds graduated from Harvard. It's said several years ago that China will be Americanized and Westernized coz it had been sending lots of elites in various industries to UK and US for studying and rebuilding China and at the same time introducing western texts and teachers in colleges and universties.

<<One thing is different in this era: there are emerging economies ready to drive the world economy. >>

I agree with Paul. Global economy is featured by multi-poles drivers. US fin crisis has an impact on the world but has not as muchsignificance as it did before. Short selling (it is legal strategic speculation) is just one of the elements that trigue plunge and i think this crisis should be weighed much more on US political enviroment - presidential campaine. Economy and Politics are twin brothers. Personally, I prefer conservative then liberal (surely, if i am getting old and less competitive, i could vote for liberal or US communist party???) But I am afraid if McCaine can win the race. He seems lack something that a lead must have. Maybe he is too old, has shortage of thriving energy, or his brain used to be hurt in Vietnam War...and the joke is he points a running mate who was surprised by her nominee. BTW, i support more women involed in political affairs.

Sep 20, 2008 15:35	#4
MARRIE Points: Join Date: Jan 7, 2008 Status: Offline	AIG is final resort and is used to set playing enviroments where business failure and success are free market driven. If the platform's gone, the whole fin system would collaps.

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