The other shoe to drop in the failure of AIG

[SportsNut]

Our government is busy scrambling to attempt to bouy AIG and avert a failure. They will likelly agree on the 700Bn, although they haven't as of this writing, but it seems to be a foregone conclusion.

So for the sake of this exercise, lets say that AIG is stabilized and now 80% owned by the US Gov't. What happens next...? Next week they are supposed to post of list of assets that they plan to sell... then what...?

Here is the achilies heal, IMO. The company had 60Bn in premium income... How many of you are offering AIG products in the past week, or plan to next week...? How many of you that have insured with AIG are planning to move that client to higher ground...? Their expenses will continue on, and maybe increase, but the income will go down the chute. This company will implode regardless of the huge bailout, IMO.

The only thing that I can figure is that AIG must be so inter-twined with every other ins co and bank that exists, that we cannot allow the true value of the AIG junk to be known; hence the scramble to save them. Otherwise, if we must go to fair value for AIG assets, it will put so many institutions into default that are holding a position with AIG, either equity or insured losses on mtgs as a result of dirivititves, that the house of cards crumbles immediately. Scary.

But, back to the original premise... what keeps AIG around more than a qtr, or 6 months...? As soon as lapses and annuitity contracts are cashed or rolled, and no new biz hitting the door, they are toast. Unless the new equity owner, (US Treas now owning 80% of AIG) comes out and like war bonds during World War II, states that it is your patriotic duty to insure with AIG... Nothing would surprice me at this point.

Your thoughts on the above, please.

 

[moonlightandmargaritas]

True to form, the government installed Ed Liddy, former Allstate Chairman/CEO to run it into the ground. He won't do it cheaply either.

Before Allstate, he helped run Sears in to the ground.

 

[Crabcake Johnny]

Tank 'em. I'm a purist - let 'em go under. The gov't, if they had a brain, would design some type of plan to take care of the policy holders and let AIG sink.

Last time I checked we were into capitalism...which is a bit like Wild Kingdom - the weakest antelope gets killed.

Who will continue with the daily operations? Likely the same people who tanked 'em in the first place.

Be done with them and move on.

 

[SportsNut]

Tank 'em. I'm a purist - let 'em go under. The gov't, if they had a brain, would design some type of plan to take care of the policy holders and let AIG sink.

Last time I checked we were into capitalism...which is a bit like Wild Kingdom - the weakest antelope gets killed.

Who will continue with the daily operations? Likely the same people who tanked 'em in the first place.

Be done with them and move on.

Here is the problem (me thinks).

The bank sitting on the corner near your house or mine, may well have their survival tied to AIG's survival. They may on their balance sheet either promises from AIG or an equity investment...

The great domino game will effect everyone if AIG is not saved. Sure, let me fail sounds good, but what if you (we) awake one morning next week, or next month, to realize that retirement accts are devalued by huge percentages, horrendous layoffs as a result, and so on goes the spiral...

I am not yellig "F-I-R-E" in the theatre, but it seems to me that this is looming, in the event that we were forced to face the music on the AIG failure NOW. Think about it... why else would the Treas Secy and Fed Chmn be up there in fron the Senate Bankng Committee, groveling and begging for 700Bn...?

There is no other reasons that come to mind.

 

[moonlightandmargaritas]

The great domino game will effect everyone if AIG is not saved. Sure, let me fail sounds good, but what if you (we) awake one morning next week, or next month, to realize that retirement accts are devalued by huge percentages, horrendous layoffs as a result, and so on goes the spiral...

Well let's see, they bailed out Bear Stearns, that was supposed to calm the waters. Then they bailed out Freddie Mac and the other one. That was supposed to calm the waters. AIG to the tune of what, 80 billion? Looks like that didn't do the trick either.

Now another 700 billion to 1 trillion. Where does the madness stop?

The whole thing is just another bad joke...on the taxpayers.

Not letting the market work is only delaying the inevitable!

Do you really think Henry Paulson gives a rat's *ss about you or me or anybody besides his Wall Street cronies? What does he care? He raped Goldman Sachs for $38 million in comp his last year there...

What more does this administration have to do to prove it's "priorities"?

 

[Winter_123]

Tank 'em. I'm a purist - let 'em go under. The gov't, if they had a brain, would design some type of plan to take care of the policy holders and let AIG sink.

They may still go under with the bailout. This is all a crap shoot. We only know that the 700 billion will help. Will it help enough? We don't know.

Talk about socialism. I listen to both parties now talking about what the compensation for the CEO's of America's leading companies will be. Not should be, but will be. McCain came right out and said that no CEO of any of these companies should be making more than any government official. I think that is fair if the government owns the company which it arguably will, but it is socialism by any name.

Winter

 

[Crabcake Johnny]

I'm not into the domino theory - didn't we buy into this with Nam? If they go commie doesn't the entire world go commie?

It'll be the same crap coming up with GM - so what's the lesson? If your company gets big enough don't worry, the gov't has to bail you out?

We get the "think of the jobs lost" blah blah. It's all horse hockey; "this too shall pass."

Get Jack Welsh in there. First thing he'll do is fire the entire layer of "middle management" - they run the business prevention department.

Next - VPs actually have "jobs" - if they don't they're canned. You don't hire a bunch of people to make sure other people are doing their jobs. If someone isn't doing their job - they're fired.

Each year you reward production and fire the bottom 10%. If something runs a a loss it gets shut down.

Read up on it - it's the way to actually run a company

Jack Welch - Wikipedia, the free encyclopedia

Let anyone walk around AIG headquarters for a week. You'd be able to fire 75% of the executives and no one would notice they were gone.

 

[SportsNut]

Well let's see, they bailed out Bear Stearns, that was supposed to calm the waters. Then they bailed out Freddie Mac and the other one. That was supposed to calm the waters. AIG to the tune of what, 80 billion? Looks like that didn't do the trick either.

Now another 700 billion to 1 trillion. Where does the madness stop?

The whole thing is just another bad joke...on the taxpayers.

Not letting the market work is only delaying the inevitable!

Do you really think Henry Paulson gives a rat's *ss about you or me or anybody besides his Wall Street cronies? What does he care? He raped Goldman Sachs for $38 million in comp his last year there...

What more does this administration have to do to prove it's "priorities"?

What good does Henry's 38 mil golden parachute do him if the banking and financial services system fails...?

Panic and fear creates a run on the system, which equals T-R-A-I-N-W-R-E-C-K.... but then we haven't had anything to stay up and watch on the 24 hr news channels lately, so we are due for a real catastrophy.

BTW, if we have a couple dozen or more ins co's fail, who buys ins following such a breach of trust...?
- - - - - - - - - - - - - - - - - -

McCain came right out and said that no CEO of any of these companies should be making more than any government official. I think that is fair if the government owns the company which it arguably will, but it is socialism by any name.

Winter

That happens to be a GS 15, and highest being a Step 9 & 10, meaning with 18-20 yrs of experience, pays $ 149,000 per yr, in the highest pay region of the country. Of course w/o that much service, the starting rate for a GS 15 is $ 119,676. I think that the applicants may be limited.

Looking at it another way, I would not want someone who would accept 149K in salary, to be running an enterprise responsible for 700Bn. Kind of like granting a precision contract to the lowest bidder. That works for me as long as I am NOT on that flght.

15 119676 123666 127656 131645 135635 139624 143614 147604 149000 149000

 

[Crabcake Johnny]

They may still go under with the bailout. This is all a crap shoot. We only know that the 700 billion will help. Will it help enough? We don't know.

Talk about socialism. I listen to both parties now talking about what the compensation for the CEO's of America's leading companies will be. Not should be, but will be. McCain came right out and said that no CEO of any of these companies should be making more than any government official. I think that is fair if the government owns the company which it arguably will, but it is socialism by any name.

Winter

Totally agree. This is a very slippery slope. What CEO's make is up to the stockholders.

Maybe after incidents like this stockholders will require a little more from their CEO's.

I'm for less, not more government. We can't run the country - we certainly can't run private industry.

Is this the same gov't that's billions and billions in debt?

To me that's like a father who writes bad checks helping out his broke son.

Also, PLEASE everyone understand this is is all run on FEAR. We are being horn swaggled into thinking and it's ALL GONNA COLLAPSE! WE'LL ALL BE IN CAVES HUNTING WITH SPEARS!

This is why you simply can't watch the main steam news for information.

 

[moonlightandmargaritas]

"Panic and fear creates a run on the system, which equals T-R-A-I-N-W-R-E-C-K...."


As if we don't have one already?