Pathetic.
Posted on 10/03/2008 8:12:37 PM PDT by reaganaut1
The American International Group said on Friday that it had already drawn down $61 billion of the $85 billion emergency bridge loan it received from the Federal Reserve two weeks ago, an announcement that startled credit ratings agencies.
The emergency loan was supposed to buy the company time to sell its troubled assets in an orderly manner. But the sell-off has not yet begun, and now the insurer faces the additional pressure of trying to sell the businesses at a time when potential buyers are having trouble borrowing money.
Moody’s downgraded A.I.G.’s senior unsecured debt on Friday and said it might downgrade other types of the company’s debt, which could make it more expensive for A.I.G. to borrow money and do business.
A.I.G.’s chief executive, Edward M. Liddy, told securities analysts on Friday that $53 billion to $54 billion of the Fed’s loan had gone to shore up A.I.G.’s troubled structured-finance unit and its securities lending business. Another big block of the Fed’s money has been used to support A.I.G.’s daily operations, Mr. Liddy said in a conference call, because the company’s sources of commercial paper have dried up as a result of the worldwide credit crisis.
After the conference call, Standard & Poor’s said it had changed A.I.G.’s credit watch status to negative, expressing concern about whether A.I.G. would be able to restructure with the help of the Fed, as planned. The change indicated that a downgrade could be coming.
(Excerpt) Read more at nytimes.com ...
geessh! slow down there fella’s,your gonna spend it all up and be out in the cold in no time at this rate!
61 billion here, 61 billion there... pretty soon this going to add up to real money.
It all went to Europe.
Good thing they’re “too big to fail”, or I’d be worried.
This bill today is just the first small step in this process. Now that the gates are open, we are going to be dumping trillions into failed businesses and growing federal government for ‘oversight’. This is a day we will all look back to in 10 years are a turning point in government spinning further out of control.
Apparently the AIG execs are living it up at a 5 star resort in CA courtesy of the taxpayers. The theft started even before the bill was passed.
They know we (the US taxpayer) can be rolled. They’ll be back for more soon. I’m sure Paulson will at least have the decency to wait till AFTER election day to ask for more ‘cause the current funding is too little (don’t ya know?)
The looting of the public treasury begins. Rome met her last days this way, too.
No problemo. There’s more money where the first batch came from.
“He said that in addition to using the $85 billion Fed loan, A.I.G. would be able to participate in the $700 billion bailout program signed into law by President Bush on Friday. The additional help from the Treasury might ease some of its financial burdens, Mr. Liddy said.”
How do you spend 61 billion dollars in 2 weeks? where is this money going?
Pathetic.
I sure hope they have enough money to get their poor little company back in shape. If not, I sure the government can print up a few hundred billion more.
Weren’t last December’s bonuses about $8 billion? Or do I remember that incorrectly? How do you pay that much in bonuses and 9 months later need to borrow $61 billion? Make good friends with the likes of Barney Frank I guess.
The fact that they were startled is hardly a surprise. The don't seem to catch on too quick. Lately a AAA rating from these guys is worth about as much as the prize from a box of Cracker Jack.
Wow! $54 billion already spent to pay off credit default swaps. OUCH! At this rate, the Fed will be out $85 billion as an insolvent AIG gets broken up at the insolvency firesale anyway. I’m a little shocked this unraveled so fast. AIG hasn’t had time to sell a single one of its assets yet.
If this is any guide, the $700 billion bailout is going to be a complete waste of money that only slows bank insolvencies for a month or two, ending in exactly the same capital destruction and debt destruction that would have occurred without the bailout.
This doesn’t bode well for the future. Not at all.
Thank you for passing on this information. AIG’s fate will be very telling, especially if they are downgraded yet again.
This stock has been all over the map in the 3-4.95 range. This, along with other names, has a combined volume and volatility that is mind-boggling. I honestly don’t understand what moves it - it is like block traders are just hitting popping discretionary limit orders in and chasing stocks down as a race to see who can tank it the most.
Sheer drops of 15% in a few minutes are popping up all over the lower-priced financials - one trader friend suggested that some program trading entities which fade very fast moves in stocks with no news are not running their systems, due to the fact they cannot short (financials) - it would account for the amazing sheer moves in a whole list of stocks I have seen over the last 2 weeks intraday - WB FRE FNM AIG SOV NCC MS and whatever else I have missed and/or forgotten.
If any folks with insight have any, i am certainly interested - I have been daytrading stocks for 12 years and have not seen this degree of volume/volatility which is creating spike moves intraday in a whole slew of names ever. The volatility in late 99/early 2000 was similar in a way, but usually on smaller mkt-cap names, or on net stocks with 200+$ stock prices, but neither were listed fortune500 companies.
some examples using 5-min bars today
FRE the 13:20 bar
AIG the 13:25 and 13:30 bars
WB the 14:25-30 bars - there was no new commentary on the legal issues with C during this time frame in any public venue - 20% drop, all recovered within 30 min
SOV 13:40 - this stock has acted as a possessed entity over the last few days, 10% spikes in 2 minutes either way.
notable arca quotes went late in the ~1420ish area, 20 sec lag, I assume I was not the only trader caught by this on something.
no news on any of the above names in the time frames in question.
there are more, this is what just happened to be on screens tonight as I posted.
“Apparently the AIG execs are living it up at a 5 star resort in CA courtesy of the taxpayers. The theft started even before the bill was passed.”
There is another side to this.
Where should they stay?
They are making 9-digit and larger decisions and negotiations impacting a publicly traded property (79.9% owned by the fed).
If you were a direct shareholder (or if you are), would you want them sleeping in a place conducive to comfort so they make sound business decisions with potential impact to the company of billions of dollars, versus sleeping in a hotel with noise, hard beds, etc?
Seriously, I want them to have their brains cleared of any unavoidable clutter and ready to deal with the issues at hand. Staying at motel 6 will not help this.
It doesn’t sell on the class-warfare angle, but then again, should the president sleep at a fortified best western rather than a non-hereditary palace (the white house)?
what exactly did these folks at aig do to deserve jail?
Um, I thought today's looting, er, bailout was supposed to ease the problems businesses had in borrowing money? So how soon before they come back for another $700 billion? This will get ugly.
In just a few weeks time AIG will have burned through the equivalent of 12% of the dollar amount authorized for the bailout and it doesn’t sound like it’s gonna do the trick for just them alone. I’d like to see Paulson’s math on how $700 bill gets it done for banks, insurers, fundies etc.
I'm OK with the comfy chair scenario.
So long as all that money supports a servant, 24/7, standing behind the exec and whispering in is or her ear that;
"All glory is fleeting, you are not a god and not even royalty, you work for the shareholders."
We expect good nine digit decisions from you and we will never again tolerate anything else, if you fail - it's Hotel 6 on the good days Sparkey!
agreed, I have read the ‘you too are mortal’ reference somewhere to coronations.
It’s an imperfect system. We need. to give them the comfy chairs, and some degree of abuse is unavoidable.
And word has it, China! Why are the US tax payers bailing out an adversary, potentially enemy for it's bad business decisions.
Unreal.
And word has it, China! Why are the US tax payers bailing out an adversary, potentially enemy for it's bad business decisions.
Unreal.
Just spend the whole $85 bil. GWB and the dem/repub congress will give you all you need.
Please remember that when the $85 billion deal was cut, the Fed Chairman, Paulson, Liddy, and the CEO of Goldman Sacs were in the room. Recall that Goldman received $20 billion of the 85. If I do my math correctly, Goldman still has $4 billion dollars to burn through.
DERIVITIVE OBLIGATIONS, MY FRIEND, DERIVITIVES.
Big difference to stay in a very nice Marriott or Crown Plaza Hotel VS the two extremes you speak of. An exclusive 5 star resort and a Motel 6 are two ends of the extremes of where they could have stayed. On the tax payers dime it is not an exclusive resort they deserve though.
“Seriously, I want them to have their brains cleared of any unavoidable clutter and ready to deal with the issues at hand. “
That does not make sense. Apparently for their whole lives and careers they stayed in the resort type places but it did to keep their brains cleared to this point. So using your reasoning, they probably should have stayed in palaces or the white house their whole lives and careers then they would have made the right decisions... and not made MULTI BILLION DOLLAR errors.
Is that what you are saying? Because it reads like that. We would not be bailing out their exclusive high rent brains if only we had allowed them to pamper themselves just a bit more throughout their lives.
Oh, in the long run then it's the tax payers fault. How could we have been so ignorant and uncaring to them their whole lives? We don't deserve these well pampered and educated brains of business. Had we just treated them better all along! Forgive us, if only we had known better! Now I see, we caused them to work beneath their prime by our lack of understanding of their deserved social and career stations in life.
Give us a break. Do folks who make what amounts to back alley class decisions with the money of their principals and investors deserve more than Holiday Inn treatment? Business genius's deserve 5 star resorts. These folks have proved to not be genius's. Obviously not even as bright as a small town grocer or service station owner in middle America.
I mean, how dare we not think their actions show they deserve only the absolute best? Because they did not behave like the best so why treat them that way?
Sorry, but your post sounds almost elitist.
“Sorry, but your post sounds almost elitist.”
from some viewpoints, it probably sounds VERY elitist. I cannot help this.
Do you want bushgov working from a few motel 6 suites?
Similar analogy, at least if you have a vested financial interest in the subject firm in this case. There is no morality, just numbers.
I have neither stated nor implied that there would not be errors, omissions, or gross corruption from the system I proposed. Are you familiar with the White House? You might consider any study in the influence of opulent surroundings upon those not adapted for them with the previous occupant.
I am puzzled at the invocation of taxpayers as anything other than a victim in this - it seems clear that taxpayers have only limited influence over policy, even in the most extreme circumstances, and a few gyrations of the dow or some other spectacular event are sufficient to address this.
seriously, we may be on the same page on many topics, but if an extra 300/night for exec A adds enough seratonin to his ego or whatever to add another 100,000,000$ to whatever deal is first in the morning to liquidate, guess which is better for the co.?
The math is brutally in favor of the most opulent surroundings available...
Citizen bagholder.
Monthly income was in the billions, but no one knows where the money went. They do no deserve my money, let them break rocks. They were nothing more than illegal gambling.,
Why can't the government, as a creditor, attach those assets?
If I give $1,000,000 to by brother-in-law immediately before I declare bankruptcy, I'm pretty sure the courts would turn right around and snatch it back. Why should those bonuses be any different?
They should stay in the Graybar Hotel.
They took bets they knew or should have known they wouldn't be able to cover. And I don't think it was an accident.
Suppose I offer you a proposition: you give me $100 and, if Monday's afternoon Pick-4 in Illinois comes up 1-9-5-4 I'll give you $1,200,000. Suppose I have $2,000,000 in assets. For whom would that be a good deal or bad deal?
Suppose I were to make a similar wager to 10,000 people, all with different numbers. For whom, good deal or bad deal?
Now suppose I do the same thing except all 10,000 people get the same number. For whom, good deal or bad deal?
I don't think the correlation of risk was an accident. Correlating risk greatly reduces the rate of small payouts. If one is only going to have to pay out pennies on the dollar for the big payout, correlating risk will allow an "insurance" company to be very profitable until things explode. If the executives allowed to shrug at that point and say "oh well", then the overall strategy is sound for the "insurance" company and bad for everyone else.
Bet those bonuses are long since spent or in offshore accounts. But I agree with you. The IRS doesn’t let someone transfer property within a certain number of months or it is still taxed.
PRECISELY the question a Federal Grand Jury should be asking.
To you or to me, yes.
To the people who print money, it's nothing.
If a company needs a $1,000,000,000 bailout as a result of fraud by 10 executives, why shouldn't the IRS impose a 100,000,000 tax lien on each of them (not punishment, but restitution)? If they don't want to come up with the assets, fine. But they might decide that they'd rather bring back $100,000,000 of their offshore assets to clear the liens than live with the restrictions they'd impose.
“The math is brutally in favor of the most opulent surroundings available...”
Incorrect. If they were in a holliday in or marriot of something beneath their station in life they might get the word that the jig is up.
Produce what is good for the citizens and we will have some one at least fill the ice buckent. Otherwise expect motel 6 from now on.
obviously they are apparently doing what I suggest anyway, but in the context of opinion, we disagree, at least in terms of what will produce the best return for the remaining % owned by the public of AIG.
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