Sep 16 2008
Another Day in the Financial Crisis of 2007-8
The Federal government has taken over AIG:
… the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points.
If AIG proves to be the firewall that stopped the crisis from spreading, then Messrs Bernanke and Paulson would likely be mentioned in the same breath as J. P. Morgan and Benjamin Strong in 1907.
The fact that we are repeating a panic happened one hundred year ago is a sad reminder that Leninism isn’t dead after all. There is something fundamentally wicked about Capitalism, namely, how to restrain Greed so that it doesn’t devour the system.
In the short run, if there is indeed a solid market rebound, I am sure Joe Sixpacks somewhere in Ohio will forget about all the scare and vote for their “conscience” again …
Update on 9.17: 狗日的，Dow dropped 450 points. WaMu is being auctioned off. Just pulled out of money market altogether. Ready to open other bank accounts. Is it that bad?!