~Sophia~ Posted September 17, 2008 Report Share Posted September 17, 2008 ahem... Not the same guys. Read closer. Lehman Brothers Holdings Inc. is the parent company that went bust. The investment-banking business is a child company of it. You can get much more precise info from Lehman's website. Quote Link to comment Share on other sites More sharing options...
KendallJ Posted September 17, 2008 Report Share Posted September 17, 2008 I was reacting to a coworker who said the government bailing out AIG was a good thing, because his mother in law is in retirement on a teachers' pension, and that those pensions get their money through AIG, and if AIG failed, those pensions would disappear. Is that not accurate? He also mentioned another relative whose pension disappeared when a company/bank failed. Does this happen in general - pensions resting on the fate of single companies/banks, or is a massive downturn of the market necessary for this to occur? If AIG manages a pension fund for another company, it is not clear that the pension would disappear with a Chapter 11 filing. This is what most people don't understand. Ch. 11 doesn't mean that the assets of the company are wiped out. It means the company has to be resturcture and some of its assets might have ot be sold to provide liquidity, and some of it's equity holders could be wiped out. In the case where the company through whom your pension is funded fails, that can be a different situation. Technically the pension fund is still an asset of hte company and can liquidated to pay off the companies liabilities. A pension does not represent your money. It represents an annuity promise by the company to pay, and such promise is conditional. People who think that a pension is an absolute guarantee should stop thinking that. Quote Link to comment Share on other sites More sharing options...
Zip Posted September 17, 2008 Report Share Posted September 17, 2008 How about "Patriotizing" Why is it that when the planet is warming a tiny bit, or hurricane XYZ is coming, or a bank collapses then the Media goes into full on panic fear-mongering but when the government is nationalizing companies or promising to "fix the economy" there is either silence or praise? Stop the planet, I want off! Quote Link to comment Share on other sites More sharing options...
DavidOdden Posted September 17, 2008 Report Share Posted September 17, 2008 I was reacting to a coworker who said the government bailing out AIG was a good thing, because his mother in law is in retirement on a teachers' pension, and that those pensions get their money through AIG, and if AIG failed, those pensions would disappear.VALIC (AIG Retirement) is somewhat independent of AIG, and VALIC would not be involved in an AIG meltdown. Texas law apparently requires this separateness of assets and obligations. I happen to be thankful for that feature. Quote Link to comment Share on other sites More sharing options...
KendallJ Posted September 17, 2008 Report Share Posted September 17, 2008 Stop the planet, I want off! Amen, brother. No one realizes what's happening here. It's going to get a lot worse before it gets better. Quote Link to comment Share on other sites More sharing options...
brian0918 Posted September 17, 2008 Report Share Posted September 17, 2008 (edited) VALIC (AIG Retirement) is somewhat independent of AIG, and VALIC would not be involved in an AIG meltdown. Texas law apparently requires this separateness of assets and obligations. I happen to be thankful for that feature. That's reassuring, but the retirement branch is still run by AIG, and if the company went bankrupt, the assets in that branch would be frozen until a buyer could be found, correct? So in the meantime (months? years?), the people expecting their checks will get nothing, right? Does that indicate a problem with bankruptcy in general - i.e. a government-backed shield from fulfilling existing contracts? Edited September 17, 2008 by brian0918 Quote Link to comment Share on other sites More sharing options...
01503 Posted September 17, 2008 Report Share Posted September 17, 2008 Amen, brother. No one realizes what's happening here. It's going to get a lot worse before it gets better. Like a druggie, we're going to hit rock bottom before we can get the least bit better. I've seen it happen with individuals, although it doesn't always happen. Sometimes they just accept rock bottom as reality, and the way things are. We're going to hit rock bottom. Maybe in my life time, maybe not. Most likely, though. Hopefully, we'll go into a revolution. Armed with reason and logic, fighting against faith and emotionalism. It's a nice thought. Quote Link to comment Share on other sites More sharing options...
DavidOdden Posted September 17, 2008 Report Share Posted September 17, 2008 That's reassuring, but the retirement branch is still run by AIG, and if the company went bankrupt, the assets in that branch would be frozen until a buyer could be found, correct?No, the point is, I believe, that AIG Retirement is a separate company. Ask a Texas insurance lawyer for details, but the claim is that the assets of AIG Retirement cannot be used in a liquidation of AIG. Quote Link to comment Share on other sites More sharing options...
KendallJ Posted September 17, 2008 Report Share Posted September 17, 2008 That's reassuring, but the retirement branch is still run by AIG, and if the company went bankrupt, the assets in that branch would be frozen until a buyer could be found, correct? So in the meantime (months? years?), the people expecting their checks will get nothing, right? Does that indicate a problem with bankruptcy in general - i.e. a government-backed shield from fulfilling existing contracts? It's not clear that all affiliates would be placed in a Chapter 11 protection. Under Ch. 11, assets are not frozen in the sense that business operations cease. The company cannot sell of any capital assets without athority of hte bankrupcy court. I believe this would mean that he pension fund could not be sold off in its entirety, but regular liquidations or payouts of fund equities as a part of ongoing operations would still be allowed to happen. THat means people keep getting their checks. The only issue might be if the pension fund itself is invested in distressed mortgage secrurities, in which case it wouldn't cause the ufnd to cease, but it may perform poorly enough to be in a position where it is "underfunded" (i.e. a position where it's current assets do not appear to be neough to pay out all of it's future commitments.) This is not a wipe out situation either. There are really very few selected contexts where the actual fund assets would get wiped out. Quote Link to comment Share on other sites More sharing options...
IchorFigure Posted September 19, 2008 Report Share Posted September 19, 2008 As expected, the government is doing their thing and preparing an investigation to put on a little show. http://wcbstv.com/business/wall.street.probe.2.820539.html "I want the short sellers to know today that I am watching. If it's proper and legal, they have nothing to worry about," Cuomo said. "It is illegal, however, when such shorting is combined with the spread of false information in order to bring a company down." Quote Link to comment Share on other sites More sharing options...
brian0918 Posted September 19, 2008 Report Share Posted September 19, 2008 the spread of false information in order to bring a company down. How about when a government says it will pump a bunch of money into a company if it drops below X amount, and the company's stock plummets in response. What is that called? Quote Link to comment Share on other sites More sharing options...
agrippa1 Posted September 19, 2008 Report Share Posted September 19, 2008 (edited) How about when a government says it will pump a bunch of money into a company if it drops below X amount, and the company's stock plummets in response. What is that called? Good intentions? What a strange response. Have you bothered to check before you responded? Yeah. I get WSJ market news and they never reported it, I also did a quick search and Wiki'd it. Nothing (at the time). I guess the purchase of remnants isn't newsworthy. Edited September 19, 2008 by agrippa1 Quote Link to comment Share on other sites More sharing options...
Thomas M. Miovas Jr. Posted September 19, 2008 Report Share Posted September 19, 2008 Here's the solution folks, keep the government out of the economy, and the Feds are doing just that -- eh hem.... "The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," SEC Chairman Christopher Cox said in a statement. "The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets." Not only does the bolded phrase contradict what they've already done, but it contradicts itself in the same sentence See the story here, though we won't know much of the details until Monday. Government caused the crisis, and to fix it they are making everyone in the country pay for it. This can't be good for the long run. Quote Link to comment Share on other sites More sharing options...
IchorFigure Posted September 19, 2008 Report Share Posted September 19, 2008 This entire catastrophic string of events has made me realize how well off the country has been for the past roughly 25 years or so. I grew up in the early 80's, and always wondered why the few previous decades, the 60's-70's, seemed like such a god awful mess. If I am understanding it right (correct me if I'm wrong) there was a resurgence of pro free-market economists from the very late 70's to the mid 90's. Yaron Brook pointed out in his talk at OCON that while they were greatly successful, it could only go so far without a moral argument before failing. If that's true, then could the past 13 years or so be viewed as the default philosophy of altruism returning to economics? In the same way Wall Street has to undergo a market correction, it seems like the US is undergoing a philosophic correction and defaulting to the pseudo-socialist type of economics. Hopefully I am not sounding too pretentious. I may be wrong, but it's the general idea I am getting out of this. It feels like we are about to take a weird surreal trip back in time to the 60's and 70's. Talk about retro... Quote Link to comment Share on other sites More sharing options...
gags Posted September 19, 2008 Report Share Posted September 19, 2008 We certainly seem to be headed in that direction. Many countries around the world are moving toward lower taxes and more economic freedom while we seem to be going for exactly the opposite. Unfortunately, big government programs have shown themselves to be very hard to reverse. It's difficult enough to lower taxes, but it may prove to be nearly impossible to free up industries like healthcare and financial services once the statists in the Republican and Democrat parties are through with them. Quote Link to comment Share on other sites More sharing options...
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