Local experts weigh in on AIG bailout

March 2, 2009 7:45:40 PM PST
The federal government stepped in overnight for a fourth time to rescue one of the world's largest insurance giants AIG, just one of the factors contributing to this bad market.

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The markets know buyers are not about to return anytime soon. Legendary billionaire Warren Buffett has been forced to sell some of his investments. He predicted the economy would be in shambles for 2009.

That is one of the things that sent the markets tumbling Monday.

AIG also reported it lost $61 billion in the fourth quarter. AIG will now get an additional $30 billion in government aid on top of the $150 billion the insurance and financial services organization received last November.

"We have the opportunity to pay back to the U.S. taxpayer every penny," said AIG's CEO Edward Liddy.

But, AIG also said it may need more money down the road. And, that is what is keeping this market down.

"What the stock market really likes is some certainty. Doesn't matter how bad the news is if we know that's the last one," said Alistair Barr with Marketwatch.

Aaron Edlin is an economics professor at Cal. He says U.S. taxpayers do not feel they are getting anything from these bailouts.

"They wouldn't necessarily be more confident if they owned the banks. However, they would be more confident that someone wasn't going to make a lot of money off of them," he told ABC7.

Investors are still looking for signs the market has reached bottom and is beginning to stabilize. All indications are that we are not there yet.

"I'm not investing more but I am staying the state," said Dana Ullman of Berkeley.

"I suspect it's going to be a long time coming to get a recovery," added Robert Breuer, also of Berkeley.

There has also been a decline in the amount of money coming into the markets from 401 (k) plans, since so many people have lost their jobs. Plus, some companies have also trimmed their 401 (k) contributions for employees because they want to hold on to cash.

For the market to go up you have to have more money coming in and right now that is not happening.

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