AIG To Report 60 billion loss

[chess9]

Originally posted by: Zebo
How can someone with bi-polar get a CCW or even buy a gun? They ask you on the form if you have mental issues, among other things, so I think it's perjury to say otherwise and they check with FBI. CCW is much more stringent than that. I was hesitant to even mention guns other than for food issues. Live by the sword... but could be useful for defense still under anarchy.

Good for you Chess about staying in shape..my dad is about your age and is an animal too - gives us young guys something to aspire to (when not being embarrassed) and seeing our kids grow up.

I don't know the rules on mental illness and owning a gun in Florida, sorry to say. But, has a gun. He isn't as crazy, or aggressive, as the guy who attacked him and that guy hasn't seen a psychiatrist as far as we know! He's a whacked out Cubano. Down here in the Third Word Reality of Florida, anything is possible, and even more is LIKELY.

-Robert

 

[Zebo]

Originally posted by: Drift3r

Originally posted by: Zebo
How can someone with bi-polar get a CCW or even buy a gun? They ask you on the form if you have mental issues, among other things, so I think it's perjury to say otherwise and they check with FBI. CCW is much more stringent than that. I was hesitant to even mention guns other than for food issues. Live by the sword... but could be useful for defense still under anarchy.

Good for you Chess about staying in shape..my dad is about your age and is an animal too - gives us young guys something to aspire to (when not being embarrassed) and seeing our kids grow up.

You do realize that there are tons of people who are bi-polar or have other mental issues but don't really know it since they have never been to psychiatrist. Then there are the people who just flat out lie and don't really care or think about the consequences even when they themselves know they have mental issues. Lets hope a background check flags his brother down ASAP.

I do realize that but he said his brother is taking medication so he knows, I know, you know.

 

[imported_Lothar]

Originally posted by: dullard

Originally posted by: GTKeeper
Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.
...
This is about as scary as it gets. Oh and AIG still has 500 billion dollars worth of CDS which we have no clue what percentage are 'good' or 'bad'.

AIG had the trifecta:
1) The first crash: residential mortgages. This started kicking in a year or two ago.
2) The second crash: commercial real estate. America has 6x the square footage per capita of commercial real estate compared to the next largest country (per capita). The commercial real estate market was propped up more than the residential market. It'll crash much harder, especially if the economy goes bad. This is kicking in right now.
3) The third crash: credit default swaps. I don't have a clue when this will kick in but it is a massive beast that is looming. Think multiples of the US GDP.

I've never really been able to understand this CDS market warning that people keep talking about.

Not all CDS are bad.
There are tons of companies making money off CDS in this market. Of course Mr. Market only likes to focus on popular companies that are on a media blitz.

 

[imported_Lothar]

Originally posted by: Fear No Evil

Originally posted by: Red Dawn
How bad would it be if we just let them go belly up?

According to your President it will possibly cause a crisis we will never be able to recover from..

Was it not your previous President who bailed out AIG?

 

[Zebo]

Originally posted by: chess9

Originally posted by: Zebo
How can someone with bi-polar get a CCW or even buy a gun? They ask you on the form if you have mental issues, among other things, so I think it's perjury to say otherwise and they check with FBI. CCW is much more stringent than that. I was hesitant to even mention guns other than for food issues. Live by the sword... but could be useful for defense still under anarchy.

Good for you Chess about staying in shape..my dad is about your age and is an animal too - gives us young guys something to aspire to (when not being embarrassed) and seeing our kids grow up.

I don't know the rules on mental illness and owning a gun in Florida, sorry to say. But, has a gun. He isn't as crazy, or aggressive, as the guy who attacked him and that guy hasn't seen a psychiatrist as far as we know! He's a whacked out Cubano. Down here in the Third Word Reality of Florida, anything is possible, and even more is LIKELY.

-Robert

It's a Federal form Robert
http://www.atf.gov/forms/4473/index.htm

Sorry to hear about the situation/ I think under the circumstances the second amendment is his right

 

[Drift3r]

Originally posted by: dahunan

Originally posted by: Drift3r
AIG may not deserve the money but the American taxpayer doesn't deserve to be dragged down to their deaths as AIG sinks. This is a perfect example of what happens when you grow so big and become so ingrained into the economy and finical institutions that you can ensure that if you go down you will take everyone else with you down for the ride.

Interesting point... Should the Free-Market have done something about the size of these corporations in the interest of National Security?

I know free market purists maybe against that idea but lets be honest here the US is not a pure "Free Market" economy. These companies have in the past benefited from receiving billions from our government, they've lobbied our government to change laws on the books to benefit themselves. In other words they've kept themselves artificially propped up for long time and now the reality of their finical situations have caught up with them and us. Yet it seems some were smart enough to ensure that they grew to large to fail. This is IMHO a threat to the health and well being of our nation and should of not be allowed to happen again. Hopefully we can weather this storm but I pray we learn some serious lessons here and we don't put all our eggs in one basket again.

 

[Special K]

Originally posted by: dahunan

Originally posted by: Drift3r
AIG may not deserve the money but the American taxpayer doesn't deserve to be dragged down to their deaths as AIG sinks. This is a perfect example of what happens when you grow so big and become so ingrained into the economy and finical institutions that you can ensure that if you go down you will take everyone else with you down for the ride.

Interesting point... Should the Free-Market have done something about the size of these corporations in the interest of National Security?

I hate the fact that large financial companies (and even hedge funds, apparently in the case of LTCM) are able to effectively hold the entire world hostage.

 

[StageLeft]

Originally posted by: Drift3r
AIG may not deserve the money but the American taxpayer doesn't deserve to be dragged down to their deaths as AIG sinks. This is a perfect example of what happens when you grow so big and become so ingrained into the economy and finical institutions that you can ensure that if you go down you will take everyone else with you into the abyss.

I have said this before. It is RIDICULOUS to have any entity that a nation relies on to such a huge extent and yet is not under government control. How, indeed, is it not ridiculous? If an entity truly is too big to fail and thus the nation "needs" it, then it should not be private, because it can act like a spoiled child who happened to find the briefcase with the red button and is now blackmailing daddy for a new toy or he presses it.

As mentioned above, this is a national security issue, an issue that affects many people's livelihood and indeed on a national level the country's health.

 

[chess9]

Originally posted by: Zebo

Originally posted by: chess9

Originally posted by: Zebo
How can someone with bi-polar get a CCW or even buy a gun? They ask you on the form if you have mental issues, among other things, so I think it's perjury to say otherwise and they check with FBI. CCW is much more stringent than that. I was hesitant to even mention guns other than for food issues. Live by the sword... but could be useful for defense still under anarchy.

Good for you Chess about staying in shape..my dad is about your age and is an animal too - gives us young guys something to aspire to (when not being embarrassed) and seeing our kids grow up.

I don't know the rules on mental illness and owning a gun in Florida, sorry to say. But, has a gun. He isn't as crazy, or aggressive, as the guy who attacked him and that guy hasn't seen a psychiatrist as far as we know! He's a whacked out Cubano. Down here in the Third Word Reality of Florida, anything is possible, and even more is LIKELY.

-Robert

It's a Federal form Robert
http://www.atf.gov/forms/4473/index.htm

Sorry to hear about the situation/ I think under the circumstances the second amendment is his right

The form is hard to read, but apparently it only asks if you've been ADJUDGED mentally defective, whatever the hell that means. So, unless a judge has found you, I'm guessing here, MENTALLY INCOMPETENT, then you can own a firearm if you meet the other qualifications.

But, the states have their own rules as well.

-Robert

 

[GTKeeper]

Originally posted by: Lothar

Originally posted by: dullard

Originally posted by: GTKeeper
Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.
...
This is about as scary as it gets. Oh and AIG still has 500 billion dollars worth of CDS which we have no clue what percentage are 'good' or 'bad'.

AIG had the trifecta:
1) The first crash: residential mortgages. This started kicking in a year or two ago.
2) The second crash: commercial real estate. America has 6x the square footage per capita of commercial real estate compared to the next largest country (per capita). The commercial real estate market was propped up more than the residential market. It'll crash much harder, especially if the economy goes bad. This is kicking in right now.
3) The third crash: credit default swaps. I don't have a clue when this will kick in but it is a massive beast that is looming. Think multiples of the US GDP.

I've never really been able to understand this CDS market warning that people keep talking about.

Not all CDS are bad.
There are tons of companies making money off CDS in this market. Of course Mr. Market only likes to focus on popular companies that are on a media blitz.

For those that don't know what CDSs are, they are insurance policies based on an event X. You can have a CDS for virtually anything. It could be as ridiculous as, if the sky turns pink tomorrow, AIG owes me a trillion dollars. AIG thinks the sky will never turn pink and it issues me the CDS and in exchange I pay a premium every year to AIG.

Lothar,

You are right, not all CDSs are bad. The problem with them is 3 fold.

1) They are not traded on an exchange. Right now I cannot look at ANY financial company's balance sheet and determine its worth. It simply cannot be done because off the books lie billions if not trillions of CDSs. So what if a company has 50 billion in cash on its books, if AIG fails (or some other entity) and I issued a CDS to someone who insured themselves of such an event, my 50 billion is wiped out instantly. This needs to change, we need to put all CDSs on an exchange.

2) Ultimately the CDS market allowed (much like CDOs) companies to circumvent the rating system. AIG started writing CDSs without hardly any collateral because they had a kick-ass rating. This also allowed places like pension funds, who cannot invest in anything below investment grade (A and above) to buy a CDS from AIG to insure their bond purchases that were B+ or whatever because the CDS (based on AIG's rating) suddenly made the bond investment grade. If that company goes bust, or AIGs rating gets cut then the pension fund cannot hold that bond anymore and it needs to sell. Not only that, when your rating gets cut AIG needs to IMMEDIATELY post collateral against all their CDSs! It is my assumption that the 150 billion we pumped into AIG was basically to settle CDSs. Unfortuently they have 500 billion on 'the books' still according to estimates.

3) CDSs can be written on ANYTHING. They are basically gambling instruments on Wall St. and because no one know who has them, how much they are liable for, we are in this black hole of no confidence and total lack of transparency. Free market at work here (no regulation, we trust what the companies say).

The reason CDSs are so destructive is that not only does a company like JPM have to worry about its books, but it needs to worry about places like Wells Fargo, AIG, BoA etc. because if they fail that pottentially puts JPM on the hook for billions. And in this case what does JPM do? It purchases MORE CDSs to protect itself from such events, but that just puts another strand in the massive spider web.

 

[BoberFett]

In which case the answer seems simple. If nobody knows what the actual value of the CDS in circulation is, then when somebody attempts to claim one it can be nullified by a judge on a case by case basis. Since the CDS appears to be an attempt to avoid insurance regulations to begin with then the contracts should likely be void anyway. Voila, no worries. If nobody knows what the amounts are anyway, then they won't be missed.

 

[GTKeeper]

Originally posted by: BoberFett
In which case the answer seems simple. If nobody knows what the actual value of the CDS in circulation is, then when somebody attempts to claim one it can be nullified by a judge on a case by case basis. Since the CDS appears to be an attempt to avoid insurance regulations to begin with then the contracts should likely be void anyway. Voila, no worries. If nobody knows what the amounts are anyway, then they won't be missed.

That needs to be done, yes. The hard time we are having is convincing all these financial institutions to crack open the books because if that happens everyone would know where the strengths and weaknesses are of these companies.

 

[Modelworks]

Originally posted by: Zebo
How can someone with bi-polar get a CCW or even buy a gun? They ask you on the form if you have mental issues, among other things, so I think it's perjury to say otherwise and they check with FBI.

If a person says they have no mental issues, that is where it ends. The FBI does not have records over who has been to a shrink or to a hospital. The only thing they would have records of is if someone was involved in something criminal.

Even a person that is committed to a hospital because they were suicidal , etc will not appear on any records. The laws consider it a civil matter , and under law the records are destroyed once the person is deemed okay to return to life by the doc.

 

[WhipperSnapper]

I wish we could get our money back first or go back in time and never have given them any money to begin with and then let them go bankrupt.

How about this...we agree to bailout AIG is all of the AIG executives agree to allow us to execute them as a sacrificial offering?

 

[Thump553]

AIG stock closed yesterday at 53 cents-roughly a 99% drop in the last year. Ouch.

The unanswered question to me in these bailouts is this-if the rationale is AIG is too big to fail (probably reasonable, they are the #2 insurance company in the US) and if the US bails them out, what is going to prevent this from happening again in the next economic downturn? Won't they still be too big to fail? I hate seeing our tax money being spent on propping up oligopolies.

 

[Modelworks]

Originally posted by: Thump553
AIG stock closed yesterday at 53 cents-roughly a 99% drop in the last year. Ouch.

The unanswered question to me in these bailouts is this-if the rationale is AIG is too big to fail (probably reasonable, they are the #2 insurance company in the US) and if the US bails them out, what is going to prevent this from happening again in the next economic downturn? Won't they still be too big to fail? I hate seeing our tax money being spent on propping up oligopolies.

That is the problem with the logic of 'too big to fail'.
They will ALWAYS be too big to fail so the revenue stream is guaranteed.

It just like GM saying, we just need $30 billion to make it. They can come back in 6 months, 9 months, or every day, and they will always be too big to fail.

 

[GTKeeper]

Originally posted by: Thump553
AIG stock closed yesterday at 53 cents-roughly a 99% drop in the last year. Ouch.

The unanswered question to me in these bailouts is this-if the rationale is AIG is too big to fail (probably reasonable, they are the #2 insurance company in the US) and if the US bails them out, what is going to prevent this from happening again in the next economic downturn? Won't they still be too big to fail? I hate seeing our tax money being spent on propping up oligopolies.

I subscribe to Nassim Taleb's view of 'Capitalism 2' a two-tiered system. Essentially what will happen is something like banks and insurance places become utilities. Meaning they cannot do risky things period, returns will be smaller, but things will be more stable. Then if people still want more risk, they will go to Hedge funds and let them be as risky as they want, but the underyling factor will be if all the Hedge funds go bust, that doesn't mean the entire financial system goes bust. It just means that the equity you had in the Hedge fund just went 'poof'.

Seems reasonable.

I also think this will be the last time (I hope) that we have a system of privatizing profits and socializing losses. That is about the biggest FUCK YOU to the capitalist system you can have.

 

[StageLeft]

Originally posted by: Modelworks

Originally posted by: Thump553
AIG stock closed yesterday at 53 cents-roughly a 99% drop in the last year. Ouch.

The unanswered question to me in these bailouts is this-if the rationale is AIG is too big to fail (probably reasonable, they are the #2 insurance company in the US) and if the US bails them out, what is going to prevent this from happening again in the next economic downturn? Won't they still be too big to fail? I hate seeing our tax money being spent on propping up oligopolies.

That is the problem with the logic of 'too big to fail'.
They will ALWAYS be too big to fail so the revenue stream is guaranteed.

It just like GM saying, we just need $30 billion to make it. They can come back in 6 months, 9 months, or every day, and they will always be too big to fail.

Exactly. Unless these companies are heavily regulated or broken up into small enough parts that they can fail and are not all intertwined, there is nothing to prevent this happening in the next downturn. Especially with the precedent now already well entrenched, I predict easily that any significant recession in the future for the US (unless the results of these propping up are universally shunned by historian economists) will involve various bailing out.

 

[JeffreyLebowski]

Originally posted by: Zebo
Loss my ass. We need to start banging in the doors of these trolls and take everything from them but about a million bucks, If they argue hang them.

Paulsons worth 700 million where'd he get that? All these crooks are worth similar or better where'd they get it? Think about it.

Take everything but a Million??? Whatever, take everyhting and line them up a job at McDonalds and garnish their wages. Make them feel what it's like for everyone else.
I think anyone in charge at these companies that caused this mess, need to have every last penny taken from them, all their assets sold out from under them and left destitute like the untold #'s that will be that way because of them.

It's to easy for these big wigs to gamble with company money when there is no real downside to loosing. They still get their millions while everyone else in the company gets shafted.

 

[TallBill]

Originally posted by: Drift3r
AIG may not deserve the money but the American taxpayer doesn't deserve to be dragged down to their deaths as AIG sinks. This is a perfect example of what happens when you grow so big and become so ingrained into the economy and finical institutions that you can ensure that if you go down you will take everyone else with you into the abyss.

FDIC intervention, chop up the bank into however many pieces necessary for someone to buy them up.

Someone that isn't on the TARP list already.

 

[chess9]

Originally posted by: TallBill

Originally posted by: Drift3r
AIG may not deserve the money but the American taxpayer doesn't deserve to be dragged down to their deaths as AIG sinks. This is a perfect example of what happens when you grow so big and become so ingrained into the economy and finical institutions that you can ensure that if you go down you will take everyone else with you into the abyss.

FDIC intervention, chop up the bank into however many pieces necessary for someone to buy them up.

Someone that isn't on the TARP list already.

AIG is an insurance company.

-Robert

 

[dullard]

Originally posted by: chess9
AIG is an insurance company.

You are partly correct. AIG does sell insurance and that is supposed to be their primary market. Thus, it normally wouldn't really count for FDIC or TARP interventions.

However, stating that AIG is an insurance company is quite an oversimplification.
[*]AIG formerly owned or partly owned multiple private banking businesses, including Brazil's #3 bank Unibanco (which would be covered by those type of interventions, but they just sold it off).
[*]AIG Financial Products certainly isn't a typical insurance company. Its credit default swaps may be a form of insurance, but it is far removed from the highly regulated insurance business. AIGFP was one of the first bombs.
[*]AIG's mortgage-backed securities division isn't an insurance company (and you know what happened to mortgage-backed securities).
[*]AIG flat out owns much real estate - certainly that isn't insurance related nor is it going up in price.
[*]AIG is a major player in foreign currency exchange - yet another non-insurance product.
[*]To finish them off (Oops, I mean to finish the list off), AIG was heavilly invested in energy - the energy that plummetted in the last few months.

While AIG's insurance policies are doing well, the rest of AIG was pretty much a crap-sandwhich that could be (and is being) sold off as small steaming piles of crap.

 

[theeedude]

We should not be bailing out AIG's CDS. People buying CDS from them knowingly accepted the counterparty risk of it going belly up.
Companies like AIG enabled this housing bubble by ensuring credit risks that should have been uninsurable. The only way to prevent this from happening again is to have creditors bear the counterparty risks they assume.

 

[Craig234]

Originally posted by: Thump553
AIG stock closed yesterday at 53 cents-roughly a 99% drop in the last year. Ouch.

The unanswered question to me in these bailouts is this-if the rationale is AIG is too big to fail (probably reasonable, they are the #2 insurance company in the US) and if the US bails them out, what is going to prevent this from happening again in the next economic downturn? Won't they still be too big to fail? I hate seeing our tax money being spent on propping up oligopolies.

See my sig. I'm all for the government butting in enough to prevent the existence of any corporation being too big to fail, and butting out enough to let them earn *legitimate* profit.

Legitimate means, for example, selling the insurance products *as regulated by the government* which are reasonably profitable, *not* inventing credit default swaps, spending the money to lobby Congress to make it legal, and then gouging hundreds of billions in additional profits with irresponsible 'insurance' and no reserves for it simply because it's profitable to bet on things like 'Lehman won't go bankrupt', and let competitive forces pressure nearly all the industry to do so as well, making the system vulnerable.

 

[chess9]

Originally posted by: dullard

Originally posted by: chess9
AIG is an insurance company.

You are partly correct. AIG does sell insurance and that is supposed to be their primary market. Thus, it normally wouldn't really count for FDIC or TARP interventions.

However, stating that AIG is an insurance company is quite an oversimplification.
[*]AIG formerly owned or partly owned multiple private banking businesses, including Brazil's #3 bank Unibanco (which would be covered by those type of interventions, but they just sold it off).
[*]AIG Financial Products certainly isn't a typical insurance company. Its credit default swaps may be a form of insurance, but it is far removed from the highly regulated insurance business. AIGFP was one of the first bombs.
[*]AIG's mortgage-backed securities division isn't an insurance company (and you know what happened to mortgage-backed securities).
[*]AIG flat out owns much real estate - certainly that isn't insurance related nor is it going up in price.
[*]AIG is a major player in foreign currency exchange - yet another non-insurance product.
[*]To finish them off (Oops, I mean to finish the list off), AIG was heavilly invested in energy - the energy that plummetted in the last few months.

While AIG's insurance policies are doing well, the rest of AIG was pretty much a crap-sandwhich that could be (and is being) sold off as small steaming piles of crap.

Yes, good points, but they are not a BANK.

-Robert