Financial Time Bomb
Government support of AIG and its effect on the economy.
Our vaunted government has once again pumped more “fool’s gold”, our valuable tax dollars into a company that will surely be dead and buried before 2009 ends.
AIG now owes the government $180 Billion and counting! Think about that! It is also thought that AIG has exposure to CDS’s of more than $300 Billion. Obviously no company holds enough cash to offset such a huge liability and AIG certainly cannot be entirely faulted for the collapse of the housing and mortgage markets.
On the other hand, AIG, like a great many financial firms let greed overrule common sense. The company ceased to properly hedge it’s bets and we now find ourselves with the current disaster.
Is AIG too big to be allowed to fail, as Bernanke and Paulson claim? Or is the Treasury Department throwing money down a rat hole? AIG has been selling off corporate assets in piecemeal fashion and not realizing anywhere near what it will take to repay what it owes the U.S.. The Treasury has become a huge shareholder in AIG, but so what! The stock currently trades at less than $.50 from a high at one time in the $60’s. One million shares are worth less than $500K. 100 Million shares are worth only around $50 Million! The company owes $180 Billion and that’s just what it owes to one creditor!!!
Is AIG a financial time bomb about to explode? One can only hope not; but this may be just wishful thinking.
