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How many can government bail out?
I have to have life insurance because I have to be sure that I am worth more dead than alive so if anything ever happens to me, my wife and daughter won't have to worry about what I owe. So I don't depend on it as a money account but I have accumulated a little in my life insurance account. It wouldn't be much to a lot of folks but since it is mine, I think it is important. So I watched, horrified, Monday and Tuesday, as AIG's stock tumbled and the newscasters kept saying the company was likely going bankrupt. I had already checked and was assured that my little investment was protected but you still have to wonder. Lehman Brothers, a big financial institution on Wall Street, collapsed over the weekend and filed for bankruptcy protection Monday as the U.S. government vowed it couldn't bail it out. (By the way, did you know that Lehman Brothers started out as two Jewish brothers' general store and cotton broker business in Montgomery back in the 1840s?) Then Tuesday, as AIG teetered on the brink of collapse, the government again said, nope, it couldn't help. But in the end it did. The Federal Reserve said it would provide up to $85 billion in an emergency, two-year loan to save the company, agreeing that its collapse would have a disastrous impact on the economy. I have mixed feelings. Of course, I want to make sure my little bit of money is secure but at the same time, how far can the government go in bailing out these big shot companies that made bad investments in real estate mortgages and other areas. Would Uncle Sam come to the rescue of The South Alabamian if we faltered? Hardly. Just a week or so earlier, the government seized mortgage giants Fannie Mae and Freddie Mac. The U.S. Treasury Department said it was prepared to invest as much as $100 billion over time in each of the companies (that's $200 billion total) to keep them from going broke. The rationale was that the two government-backed but private mortgage companies hold roughly $1.5 trillion in direct debt, guarantees on what could be as large as $5 trillion and possibly off-balance sheet obligations that could reach $3 trillion. That's a lot of dough. I guess I understand the government's fear of a total collapse of the economy but Uncle Sam is hardly in any shape to be loaning money. The nation's deficit is huge and we owe our soul to the Chinese, among others. Just a few months ago, the war in Iraq looked like the major issue for this year's presidential campaign. Now, Iraq is way down the list and the economy is the big issue now as well it should be.
And what are John McCain and Barack Obama offering? They are mainly taking swipes at each other and at each other's political party without offering any serious remedies themselves. It reminds me of that bunch of musicians fiddling on the deck of the Titanic as it went down.
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