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And the last shall be...
...first
Nemooooooooo!
Cheers,
Drill here, drill now!
"Don't worry son; we're with AIG."
...
"I wish I were an orphan"
Today A', Tomorrow BBB, the day after B and Kaput on the weekend.
"extremely limited."
I believe they are searching the couch cushions. Extremely limited? Yeah more like null and void.
This is gonna blow a hole in something.
Cheers,
The masks are coming off, and our true industries are beginning to reveal themselves.
Hustling Yokels
Pleading
Extortion
The HYPE economy is finally falling apart.
"A"???!!! Doesn't Fitch have a rating of "F"? I think F would be more like it. What's the idea of giving AIG an "A".
So, this is an incredible crisis, and there was no intervention beyond some widening of the discount window. That's not going to help anymore, much as changing discount/FF rates is irrelevant now.
Is the Fed going to actually start to monetize assets now?
If they don't, then it seems that they actively chose debt deflation today, and with Bernanke at the helm, the alternative must have been unfathomably bad, or political constraints have been imposed that forced him to do so.
Has anyone figured out how the liquidation of an insurance company that huge would work yet?
I think Paulson needs to stay up tonight and figure out all the banks and insurance companies he will need to nationalize NOW. Before it is too late. If he can do it to FNM and FRE he should be able to do it for C and WB and BAC and a number of others.
This will make a great book in ten years, and I will probably be one of 343 that buy the actual paper copy to read.
AIG needs to look under the cigarette machines at nice resturants. At least that is how I made some good money when I was 6.
Is this where we cue the cascading cross defaults?
Although I don't see what Fitch's problem is. New York says AIG can just transfer all of the insurance subs' reserves to the parent and use them to buy more CDS.
Son ob a Fitch.
Fisher's seminal work
on debt deflations and great depressions.
Has anyone figured out how the liquidation of an insurance company that huge would work yet?
First step: write everybody a nice letter saying "your insurance has been cancelled. Sorry."
i miss him. so optimistic
AIG 2 years stock chart:
AMER INTL GROUP NEW Share Price Chart | AIG - Yahoo! Finance
Nude,
"Is this where we cue the cascading cross defaults?"
That is event is now rapidly approaching.
I've been predicting it...but it actually happening is friggin' scary.
Cheers,
Misean writes:
I believe they are searching the couch cushions.
I spent the last couple of hours talking to my neighbors. Guess what ? They noticed the DOW had dropped 500 points and asked my why.
I had to swallow several times before I answered, but, if you wanted J6pac's attention. I'm pretty sure he's listening.
AIG is a Re-Insurer too:
The main use of any insurer that might practice reinsurance is to allow the company to assume greater individual risks than its size would otherwise allow, and to protect a company against losses.
Joe6pk is going to have a tough (northern) winter. Insurance premiums guaranteed to rise just when food price rises and heating oil rises hit home.
deboraski aka debora,
Cliff diving 101....Yeesh!
Cheers,
New York says AIG can just transfer all of the insurance subs' reserves to the parent and use them to buy more CDS.
Nemo I wish you hadn't written that. Now I need to read the article to ensure you're making this sh*t up....
(That and I havent done jack at work today;)
........
OK,
For all of you glod and sliver bugs- there is no physical supply available right now at spot.
You wanna pay $3 over spot for any quantity and get on a list.
I was at the largest retail coin shop in Phoenix and it was a madhouse today with phones ringing off the hooks and the similar refrain.
Not available-no eagles- unless you want gold sovereigns, you can buy large bars, we can special order comex bars, no junk silver available at spot, you can get on the list to buy what comes in at the current markup we are charging.
Thank heaven I wanted collector type coins. That area was quiet like a tomb. got a screaming deal on a 1809 bust half;-}
So buy CEF- they ain't no physical to be had in quantity during this panic, except at prices considerably over spot. BTW they were paying spot for stuff on the waiting list. Guess they took quite a bath riding down their inventory.
Or, if you have the guts buy some financial or anything heavily shorted.
As i pointed out earlier Cox is going to use his bazooka on short sellers.
Vol on puts is going to explode.
The rate cut will be the topper to kick off the counter rally.
Someday this war's gonna end...
AMER INTL GROUP NEW Share Price Chart | AIG - Yahoo! Finance
It looks like the cliff Homer Simpson went off several times. He always ended up okay at the bottom if a bit bruised. Picked himself up and went on. That encourages me no end.
"Not available-no eagles"
Thats cause Misean is hording...
Not fair...
.....
ades --
I am exaggerating, but only slightly.
ew thread alert!
Popeye,
"I spent the last couple of hours talking to my neighbors. Guess what ? They noticed the DOW had dropped 500 points and asked my why."
Yeah, had a few of the people who would look at me funny this last year as I would start my Tin Foil hat banter.
They looked a bit scared today.
But then again, I went through batteries like mad today in the Super Colander Tin Foil Hat.
Cheers,
Andy in NZ:
North or South Island?
dk writes:
Fisher's seminal work on debt deflations and great depressions.
ndk | Homepage | 09.15.08 - 7:37 pm | #
Thanks!
Mind opening writing. Very good.
The part on biz cycle and the fact that it isn't was great. It is really cycle(s). Kinda like a solar system. Some cycles, some comets, some floating trash. Random varibles yet predictable.
I'm gone to Fisher land.
ades,
"Thats cause Misean is hording..."
You bet your sweet ass.
Cheers,
North or South Island?
steelhead
Auckland (north!), Married to a southern girl so feet in both camps.
Fisher's seminal work on debt deflations and great depressions.
People should be a bit careful about inferring solutions from this however. We may look back and say debt-deflation theory lead to the incorrect conclusion that negative real interest rates were a quick fix for deflations. Recent events suggests that perhaps is not the case.
Used correctly the science of economics has been very good for making diagnoses, but not quite so good for coming up with treatments.
I think as a medical science economics would still be in the lobotomy and blood letting phase:
"This man's brain is hemorrhaging. We need to remove it right away!"
So this downgrade is perhaps going to trigger some further deterioration in AIGistan...what about Moody's and S&P? Or don't they matter once on of the three downgrades?
People should be a bit careful about inferring solutions from this however. We may look back and say debt-deflation theory lead to the incorrect conclusion that negative real interest rates were a quick fix for deflations. Recent events suggests that perhaps is not the case.
It's a great insight, ac, but I disagree with you slightly. I believe negative real interest rates are absolutely a wonderful, quick fix for deflations.
The trouble is, you can only use that trick a certain number of times. We used it to great effect in '97, '98, '02, and we tried really really hard to do it again.
Can AIG survive this? How?
Opening the window does help. Were it wide enough the hopelessly insolvent institutions could go under and the solvent and borderline institutions borrow enough to buy their assets. The problem is that there's not enough equity capital + Fed Reserves to cover the losses. The Fed can't open it wide enough for everything to clear. The foreign central banks probably have enough to refloat everything - but they don't have the incentives. The end result of decades of deficits, especially the last 8 years (which are half the entire mess).
So we have to have massive bankruptcies with the assets handed over to the creditors and the debts canceled for equity in the refounded companies. This will require unwinding all the complicated derivatives since they assume creditworthiness of the parties. Unfortunately the last Depression didn't have this unwinding issue so there has been little thought on how to carry this out. Anybody want to do a quick collection of research-lifetimes on unwinding in the next, oh, 3 days?
Maybe Ben will monetize just because he has no other way to clean this up. Yuck.
I hope we dont get to that point F.E. but it sure looks like we are approaching it rapidly. Each of Ben's moves looks more desperate and impotent, and he's running out of ammunition. The final solution is printing presses. Personally, I think they have used up too much of their armory too soon, thinking they'd restore confidence through some liquidity. Sadly, they seem to have no way to rebuild munitions.
I keep getting back to wondering if they didnt realize this was an insolvency issue at first, or if they were just hoping that it wouldnt somehow go away if we could just get everyone to be irrationally exuberant again.
It's pretty clear now that while a financial system meltdown is being avoided, the fix isnt really working and the patient is dying.
That's a much better distinction than I drew, Fair Economist. I absolutely agree. Thanks for your insights.
Fitch? Who cares. Do people trust them anymore? The only ratings agency with backbone is CCCR. We just upgraded the american people to a AAAA+ and downgraded the executive, legislative and judicial branches to DDD (admittedly, for some that would be an upgrade).
Providing Doc concurs, of course.
Cha-Ching Conglomerated Ratings, Inc.
If this is not a Minsky moment, I don't know what is. Tomorrow, Dow 9,900. Wednesday, Dow 8,700 and so on and so on.
Geoff, I don't think it's a matter of using their armory too soon; I think it's that the armory isn't big enough. Over 1 trillion in losses to an already overlevered system but only about 850 million in Fed assets. Plus of course when they open the window not all goes to covering losses. I think it's a better choice than a total panic, and I'm sure given the choice of cutting the banks off and having a total crash and taking an inflationary depression, "Helicopter Ben" will go for the inflationary depression.
We go away for the weekend, no phones, no TV, no radio, and no internet and all hell brakes loose.
Driving back roads home we (I somehow) got to talking about the usual CR banter - the abysmal situation. Basically Roubini's video-of-the-day today.
So we get home and Mrs.A who plays all her cards very close to her chest tells me she has an annuity at AIG. (Apparently she's been salting money away for years.)
I read here but don't know much about this stuff.
One question: should she move it out tomorrow morning?
S&P also just downgraded AIG. I understand Moody's call is the critical one to trigger lots of further additional capital requirements.
thanks anon!
CDS=Cascade,Domino,Snowball
Bring Back Hank Greenberg! He will save us with his voodoo!
Hey, AIG is an insurer and the fact that AM-BEST downgraded it ( AM-BEST is THE guy for insurers ) is important.
-skk
AIG goes to A-
how'd you post a 948 comment at 943? and could you give me a cite for your source re AM Best A-?
AIG has dropped from A+ to A today on AM Best. I think it was Fitch that dropped it to A-
thats what i thought. an AM Best of A- or lower would trigger complete nonrenewal of their large commercial lines, most of which are calendar year policies.
I'm not looking forward to moving that book!
Has this downgrade finished AIG or not? Anybody have definitive answer?
Another down grade would finish it off, right?
They'll wait until they are gone to downgrade... I wonder if Enron is still rated at "A-" - unreal!