AIG Has Used Much of Its $123 Billion Bailout Loan

[Chris Coles]

AIG Has Used Much of Its $123 Billion Bailout Loan

http://www.washingtonpost.com/wp-dyn...src=newsletter

By Carol D. LeonnigWashington Post Staff Writer
Friday, October 24, 2008; Page D01

The troubled insurance giant American International Group already has consumed three-quarters of a federal $123 billion rescue loan, a little more than a month after the government stepped in to save the company from bankruptcy.

AIG has borrowed $90.3 billion from the Federal Reserve's credit line as of yesterday, the bulk of it to pay off bad bets the company made in guaranteeing other firms' risky mortgage investments. That's up from roughly $83 billion AIG had borrowed a week ago, and the $68 billion level it reached a week before that. The news comes as the company's new chief executive warned Wednesday that the government's financial lifeline may not be enough to keep AIG afloat.

The high volume of taxpayer funds that the trillion-dollar corporation tapped within five weeks also has others fretting that the largest government bailout in history may still not be adequate. AIG began reporting unusual multimillion-dollar losses this spring as a result of its heavy exposure to risky mortgages, and the U.S. Treasury decided that its failure would probably bring down several other major investment firms and banks whose fortunes were tied to AIG.

But Wall Street analysts said this is a vulnerable juncture for the insurance giant. It's now in a deep trough -- from which it may either emerge leaner and meaner or never return.

"It can't be good that they have to pay out so much more money, " said insurance analyst David Schiff of Schiff's Insurance Observer. "They're obviously in a lousy spot."

[grapejelly]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

this is the public story of AIG. But the same exact thing is happening privately to every major bank and insurance company in the world, is it not?

[Tulpen]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

The market functions like a vacuum cleaner right now, everything with cash value is sucked up into a big black hole.

[Chris Coles]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

Listen to tis report this morning on BBC Radio 4 Today.

http://news.bbc.co.uk/today/hi/today...00/7688225.stm

[D-Mack]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

this is the public story of AIG. But the same exact thing is happening privately to every major bank and insurance company in the world, is it not?

I bet there are some in the world who weren't involved in CDS stuff (outside of the Anglo world)

[LargoWinch]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

Can spas and luxury resorts be really that expensive?

[Rajiv]

Re: AIG Has Used Much of Its $123 Billion Bailout Loan

Elaine Supkis had and interesting take on this today

Nearly double the rescue amount! Will the entire $700 billion, minus the 10% cut off the top so AIG officials can party, will all of this end up in the Bottomless Pit?

Yes, it will. This is why the government should have siezed AIG, put the executives on trial and then shot them dead at Yankee Stadium, Chinese-style. This, in turn, would put real fear in the gnome community and cause them to hesitate before doing insane, stupid things in the future. Of course, we could be merciful and have them spend a lifetime in Sing Sing up the Hudson river. These people are Enemies of the State since they are bankrupting our government.

I am happy that Bill Bergman admits that AIG is NOT an insurance company but rather, a Big Black Hole. and this hole is in the Cave of Wealth and Death. Instead of ending risk and being a well-funded counterparty to any claims of losses, AIG is a loss leader, not a loss fixer. And this is due to them playing games whereby they pretended to be an insurance company while really acting like a piratical hedge fund.

As I said years ago, hedge funds no longer hedge. A hedge is supposed to be a support when things go bad in regular markets. Instead, hedge funds became this vile creation that were supposed to bring in bigger and bigger profits come rain or shine. So they did this by exaggerating whatever systems were being used, NOT AS A COUNTERBALANCE! If commodities began to rise, all the hedge funds would run off to the Bank of Japan for cheap loans in the carry trade and then use this to speculate in commodity markets. If stocks were rising, they bought stocks. If stocks were falling, all of the hedge funds would short stocks.

The wild, rocky, violent ups and downs we are seeing in stock markets, commodities, forex exchanges, etc are all amplified effects of a massive number of hedgers hedging harder and harder. The number of hedge funds exploded in the last 8 years and the dire efforts of these endless numbers of pirates has unbalanced an already grossly out of balance global trade/monetary system. And now, we are seeing the entire thing sink.

AIG's collapse has but just begun. The US efforts at saving it has now created conditions that may lead to the bankruptcy of our nation. Imagine that: an insurance company, thanks to them feeding everything into the maw of the Derivatives Beast, kills our nation? Like I said, we must put these people on trial. Not scold them at a Congressional hearing.