AIG Struggles To Survive
Did you ever think you would see the day when American International Group was in such dire financial trouble that it would be forced to beg for a federal bailout to maintain its rating and perhaps its very solvency? That’s the unfortunate situation that has arisen today, with millions of investors and policyholders holding their breath as Doomsday on Wall Street unfolds.
(To read all about the latest developments with AIG, click here and here.)
Meanwhile, the overall financial market meltdown, fueled by the subprime mortgage debacle, continues to widen and deepen. Lehman Brothers is likely to declare Chapter 11. Merrill Lynch will be taken over by Bank of America.
What will become of AIG, short- and long-term, has yet to be determined.
This economy is scaring the life out of me! It’s gotten to the point that I don’t even want to open the statements on my various retirement and investment funds anymore. I’m diversifed, but there doesn’t seem to be any safe havens these days.
The idea of a behemoth like AIG being in serious trouble doesn’t help me sleep any better at night, that’s for sure!
The federal government is doing what it can to keep sticking fingers in the dike, plugging holes as quickly as possible. But like with the New Orleans levees, Uncle Sam can’t do much if there is a total breach. Is that where we are heading?
How do you folks think this will all turn out?!?
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AIG is no different than any of the other players who gambled and lost! Unfortunately, they are one of the most visible and ultimately, their employees will feel the brunt of their poor judgment, and greed, as this falls apart.
Sam, they won’t be the last to fall. Just the biggest. I seem to remember some years ago when they had one of the biggest layoffs in the industry as they restructured, and before that their engineering department suffered through what seemed to be a slaughterhouse-type reorganization.
Sorry to say, but like the old adage, the bigger they are, the harder they fall. That’s borne out by history in the financial markets and elsewhere.
I’ve worked for some of the smaller fish being eaten by the big guys and then…poof…the big guy gets swallowed multiple times until there is no bigger fish around and the entire company self-implodes.
Sound familiar?
I find it interesting that you have no response to your very important question. It’s like the industry is holding a collective breath and afraid to say anything for fear of having to face a horrible truth.
What goes up too fast and too far must come down. How fast and how far down is the real question. The government can keep plugging holes in the dike, but along the line Uncle Sam will run out of fingers.
Somewhere in the last decade and a half or two we became an instant-profit nation. We want more and more and more. And we want it now. Percentages of profit for instant gratification stockholders pushed equally greedy CEOs to do anything and everything to bump up those profits.
Little fish being eaten by bigger ones. And each bite means big profits. Then the company cut, cut, cuts quality for quantity and bigger and bigger instant profits.
Then we sell high.
As a nation we traded steady-Eddie mom & pop operations, the backbone of this nation’s economy, for Wal-Mart. But look at all those profits and those low, low prices. My, my. Who can blame us?
Buy low, sell high. Everyone deserves the American dream and you don’t even have to work to get it. We can package loans so you can buy a half-a-million dollar home on your 3/4 time job at McDonald’s.
Forget let the buyer beware. In two years, when the home is worth another hundred grand, dump it. And by then you’ll probably be managing your own franchise.
If not? Oh well. No worries from my greedy corporate end. When the piper needs paid, I won’t own the paper.
Sell those loans to someone else who sells them to someone else. We all put on blindfolds and the last person holding the bag loses.
What a fun game. And we’ll all get rich. Except for the last guy holding the bag.
And even if I am the last guy holding the bag, and I’m the CEO of the company. When the stockholders righteously dump me out on my–uh–anyway, I get millions in severance pay, millions more for stock and I’m set for life.
Too bad about you.
And much of this crisis is driven by regulators who derived the political profit of power that eventually leads to financial profit once they move into the private sector.
This is a simplistic analysis, but you get the point. We got greedy and now we’re in a hell of a mess.
And what is most laughable is typical of the instant addicts we have become. This nation looks for a quick fix, that fast, easy, happy Hollywood ending courtesy of a government that plays a huge part in why this mess is here in the first place.
What do we do? Learn to be patient. If you can, get out of debt. Those who are debt free will survive this crisis a lot easier than those that aren’t.
For right now we’re in trouble and like all addicts, the withdrawl from the drug isn’t going to be pretty.
I have no pity for AIG. As has been said, they gambled and lost. Why should the Fed bail them out?
A lot of very highly paid execs steered this AIG ship on to the rocks, thinking the entire time they were the smartest guys in the room, and now they are crying for government help with taxpayer money. Bullocks!
I can remember not many years ago when Lloyd’s was struggling for its own survival, and Hank Greenberg arrogantly proclaimed that the world would be just fine without Lloyd’s.
Right back at you, Hank.