Tag Archives: government owned entities

I forgot how this thing works. Since I’ve last written, I took the CFA exam again, we’ve had fiscal cliffs, an election, and all sorts of other stuff. I meant to write a post called “All I want for Christmas is not to go over the fiscal cliff…” but alas, holiday season intervened.

Regardless, there’s some news that came out earlier this week that the former CEO of AIG, Maurice Greenberg, was going to sue the Federal Government for parts of the bailout. Among them were the was a high 14% interest rate that they had to pay on funds and the fact that the previous shares were diluted when the government provided the funds.

Thankfully, AIG has decided not to partake in the lawsuit.

The complexities in this case can not all be explained in the space I have here. One thing I do want to say is that I’ve been against bailouts in general. I don’t see why taxpayers should have to front the bill for bad business practices, no matter how bad the economy will go down if a corporation goes bankrupt.

That being said, AIG’s bailout was good for both the firm itself, government, and to an extent, taxpayers! How is it good for government and taxpayers? Very simple. They made a profit. Our government is still heavily in debt and I see us approaching another debt ceiling before we actually get our ducks in a row, but this at least helps. Additionally, the country (and the world) does not have to endure the economic pains of a major financial institution going under.

For AIG, they still exist. They did not file bankruptcy. Share prices are not only higher than they were back in 2008, but the company itself is in another position. I’d considering actually owning this stock now. I mean, PE at under 3 for that big of a firm?

And now the former CEO is complaining that he didn’t get enough. Yay America.


I read an article today about Amtrak saying that instead of asking money from taxpayers so keep afloat, it would ask for far beyond its means. I couldn’t help but think of a quote from High Fidelity:

It was like trying to borrow a dollar, getting turned down, and asking for 50 grand instead. 

Now, where I grew up in South Florida, trains aren’t exactly used all that often. Everything is so spread out that it just doesn’t make any sense to use rail. But I’ve lived in DC and by far the easiest way to get to New York is to take a train. Many people act like they need to fly, but trains are easier when it comes to travel between these two cities. Why? EWR, LGA, and JFK are all a good distance away from Manhattan. Amtrak on the other hand is right in the middle of the city, under Madison Square Garden.

Union Station also is smack in the middle of downtown Washington, walking distance from the Capitol. Compare this to DCA, IAD, or BWI. Simply put, it’s just easier to get around that way. I only mention this for those who think rail transit is passe.

Obama had tried to get Congress to plug a bunch of money into Amtrak to put bullet trains across the US in some feeble attempt to get votes. I try to stay as neutral as possible when it comes to politics (trust me, I have many complaints about the W era), but you’d probably be better off using those Benjamins as toilet paper. It’d be more useful.

Why? Other than in the Northeast, specifically between Washington, DC and Boston, MA, the need for rail is just not there. So why spend money on it? Even in between these routes it may not even be feasible.

Consider this, if I wanted to book a ticket tomorrow from New York to Boston, it would cost me about 130 for a three and a half hour ride on the Acela Express, the quickest train Amtrak offers on this route. Compare this to 200 for a flight from Newark to Boston or 192 for JFK to Boston, both less than an hour and a half flight time. Add two hours (getting to the airport), and its a wash. But for something like NY to Chicago? NY to Miami? Have fun on a 12 hour train ride.

I’ll have had a nice steak with a good wine by the time you get there. And a couple other meals too.