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Government Bailout of AIG - Who Really Pays the Bill?


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It's unbelievable. . . the US government bails out the largest bank and insurance business in the world. The plan is to use a $700 billion-dollar bank plan to bailout AIG for a 79.9% stake. The US government who struggles and can't even get it right, to properly run disaster and relief efforts, administrations, schools, and hospitals, think that they are now going to step in and run the world's largest bank and insurance company. How scary is that!

This plan led to the increased anxiety on Wall Street which led to the Exodus of global investors who were worried that the bailout plan would suffer the economy even further. They were afraid this would assault an already injured economy by driving up inflation, increasing the national deficit, costing too much, and raising prices. What really has investors worried is that they still do not know how the Bush administration intends to deal with and pay for the bailout. They do not know how the process will work, who is going to head it, or what the Democratic controlled Congress is going to ask for in return to approve the plan.

Oil prices have already increased $25 a barrel after the news hit, and then leveled out at an increase of over $16 a barrel. You thought that things were tough (hard) now. . . just wait! Oil prices are going to get even higher. Out-of-control health-care costs are going to rise, along with educational costs. With the government's hand in the cookie jar, this just begs the question. What's next? How much control is the government going to have? How much worse is the economy going to get and who is going to get taxed to pay for this bill? My bet is, it will be the average working American. And let's speak about retirements, as bad as they may presently be, are about to get even worse. So sit back and get ready for a rough ride, because somebody's got to pay that $700 billion-dollar bailout bill.

This would be a good time to have an alternative method to retirement planning (self-directed Roth IRA), versus conventional methods of investing like stocks, mutual funds, CDs, bonds, etc. . . . Conventional methods of investing pay an average of 4% to 9% return that were taxable. The self-directed Roth IRA's can produce over a 30% return on investment of tax-deferred profit. With a self-directed Roth IRA an individual could also avoid paying capital gains taxes if the entire profit were to be rolled back into the IRA. So there is some hope for retirement planning if the government doesn't step in and interfere with that. But in essence how dare they, it is very apparent they will not be able to take care of the elderly in the future. They cannot do it even now.

Colleen K. Rich has a variety of backgrounds and is also a real estate investor. She is very aware of how the changing economy affects future investing for retirements. You can find more articles written by Colleen related to this and other topics online.


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