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Bankrolling the Incontinent Subcontinent

February 17, 2010
Gary North
2/17/2010

Whenever we hear “bailout,” we should follow the money. Where does the money wind up? Who is the final beneficiary?

The Federal Reserve System and the Treasury bailed out AIG in 2008. Who were the beneficiaries? AIG was helped; this kept it from a well-deserved bankruptcy. But AIG did not keep most of the money. Who got the money? The banks that were owed billions of dollars by AIG because of AIG’s issuing of derivatives. The bailout money was pure profit for the recipient banks, which were paid off at face value for their preposterously high-risk leveraged investments. The losers are the rest of us.

The story continues …..

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