AIG could colapse tomorrow - total disaster

[JBC77]

Tomorrow could be worse than today. AIG needed 40 billion today. I work in the financial services sector. People were trying to pull all AIG related assets out. The phone was busy a good portion of the morning at the fixed variable & fixed annuities service division. Their business is eroding by the minute.

Tomorrow they will need 60 to 80 billion. They lost a ton of business today.

This could be particularly nasty because a lot of banks do business with these guys and will be exposed. The global financial markets are tumbling, Nikkei is down 4.5% already.

The media is starting to really scare people with this, could cause panic if it hasn't already.

[MonkeyF0cker]

The fact that the government is bailing all of these companies out for their risky investments is the scarier part. Our tax money goes toward these companies that end up having absolutely no liability to take huge shots, while their CEO's are taking in $150 million a year. It's sickening. I really don't know how they can get away with it. This country is in a world of hurt. If things don't change soon, things are going to go beyond ugly...

[Brock Landers]

When are we going to see Black Monday, ala October 1987?

[JRS21386]

No theyre not, they are borrowing from their subsidiaries...

[ritehook]

Despite the govt's thumbs down on Lehman, you are I are the ultimate lender of last resort.

The shi!!y end of the stick always ends up in our hands. And will again. Either through loan guarantees or inflation - the latter is the way govt on behalf of their main clients (the filthy rich) sticks us with the bill.

It has nothing to do with the media encouraging questioning on the part of the masses. The questions are there for valid reasons.

That's like saying a sports reporter questioning of the competence of a head coach is the reason his team is going into the toilet.

The lightly regulated financial markets, with their bitch the federal govt, brought this mess upon themselves.

This time, it is devolves into depression, I hope the ruined peasants march on Washington with razor sharp pitchforks. And on the way pull a few corporate CEOs from their
teakwood=panelled offices and decorates the branches of oak trees with them.

[donjuan]

A bit of a panic to end the day. Even a conservative bank with decent numbers like Wells Fargo took a beating, although it came back a little after hours.

[The HG]

The fact that the government is bailing all of these companies out for their risky investments is the scarier part. Our tax money goes toward these companies that end up having absolutely no liability to take huge shots, while their CEO's are taking in $150 million a year. It's sickening. I really don't know how they can get away with it. This country is in a world of hurt. If things don't change soon, things are going to go beyond ugly...

Exactly.

[purecarnagge]

The best thing anyone can do that has policies with AIG is to initiate a 1035 transfer... Then to send a signed request in waiving any conservation period/requirements. Notorize the request. That way there is no delays and get your stuff out...

unless you want to gamble that AIG will be bailed out by the government... Why reward companies for taking excessive risk?

Move all policies/annuities out of AIG as fast as possible. Transfer the current mutal funds into other funds asap.

GL

[donjuan]

A good post I read over on 2p2

I was pondering today why so many banks took on too much risk and essentially failed when such a forseeable event like the credit/housing crisis occurred. Surely the CEO's and CFO's had to anticipate that something like this was a reasonable possibility. Hell, I heard about the housing bubble, 5 years ago and I'm just a poker player. So why then did we see so many banks essentially playing too high for their bankroll?

Here is my take. As a CFO or any financial manager for that matter, your success is determined solely by the profit your division brings in. How are you doing in relation to other banks? Is your stock making money? So to keep your job, you must keep up with others in your industry. And if one company is taking too much risk in a good market and doing well, it behooves your personal utility to attempt to keep up - even at the cost of grave financial risk to your company. Not only that, but those that make the most profit get rewarded the most handsomely. It's the chance takers that get the next big CEO opening. The Bluescouse's an Ashman's (to draw a bad poker analogy) in the financial markets become the head honcho's with 8 figure incomes eventhough they are not the highest EV financial officers.

So as an individual in finance you HAVE to gamble, not gambling would be silly. This distortion in EV/Utility curve of the individual running the company and the company are drastically different. I point to this as the reason so many banks failed. Am I right?

Basically there is a huge agency conflict for the CEOs and other high level officers at these large financial companies. I'd replace EV with EG in the quoted post, though as you can obviously make +EV investments and still be -EG if you don't diversify and they are high risk.

[jjgold]

If AIG goes down tomorrow the Dow will lose 1000 points

[SlickFazzer]

They will get the 75 billion.

[ryanXL977]

this is what happens when the foxes run the henhouse

long live the GOP

[reno cool]

decorating oak trees hook? exciting. unfortunately unrealistic.