The Wall Street Journal is reporting that Standard & Poor’s has cut AIG’s credit rating by three notches. Good to see the agency has returned from its 2 year hiatus well-rested and intent on completely fucking what’s left of the global financial system. Oh, and WaMu was downgraded to “junk” earlier tonight, but you already knew that.
Update: According to CNBC, AIG has until Wednesday to pull $70 billion and a rabbit out of a top hat or it’s starts with a ‘b’ ends with a ‘ankruptcy time.’ An updated version of the Journal story corroborates Wednesday as pack your shit up day, though claims the number is more like $75 billion.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
this is a disaster.
Welp, it was fun while it lasted.
come on. everyone knew they were going to be cut, that’s why it tanked.
how about something constructive: do any of these news sources tie the rate cuts to an absolute number that would correspond to how much of a haircut it amounts to?
Question for all:
Would you rather buy shares in Conseco than AIG?
Bess, I’m scared. Will you hold me?
Who is dumber, AIG’s CEO? or this WR from Philly? Are you kidding me?
Really not helping CNBC is acting like its a “financial nuclear bomb”. Carl Quintinilla should be shot for that one.
“And if ratings agencies downgrade it, the company could have to come up with at least $10 billion, and perhaps as much as $18 billion.”
Thank you, guest.
You’re welcome.
OY! the worst part about THIS might just be that David Patterson is the governor. Who the hell is going to hold HIS hand? Maybe we can get Corzine to…
#3
Rate cuts are no longer relevant in a liquidity crisis. It is the availability of credit that has disappeared. You can cut rates to zero but the end result will still be the same – We’re fucked!
The Japanese knows this very well and they are pumping 1.5 trillion yen into their system before they even think about lowering rates (already near zero).
It’s all about CDS.
It’s said that the corporate bond market is torpid. Would like to know if anyone can address that. Yeah, you can look up “torpid.”
May-hay-hayjor unwinding fittin’ to commence.
@ 9 Ratings are mathematically tied to capital requirements. Google “Reduction in Yield Method.”
9, ratINGS, not interest rates. OY!
Bollocks
If AIG does down the shitter, then WM, then WB, then C, then GS we might as well start bartering for our goods
Left a shitty industry to go to financial, now that financials are shit I guess there is only one place left. The circus.
Oh fuck, let’s all move to Idaho and live on pemmican and wild berries.I wanna be a kook jes like you!
ok this is good.
you know you’re near a bottom when the word “bartering” starts showing up.
@15 don’t let the door hit you!
want some stunned mullet with that?
14 don’t flatter yourself. wanna bet armageddon won’t happen if they close capital markets for 10 years? happened before it can happen again. and what’s up with all the pussies at this hour? aig already has 20 grand. they gonna get 40 more tomorrow. move along nothing to see here.
@17
You really think this is a trading issue?
Where’s the bottom from an AIG collapse?
@ 20 waddaya mean whats with all the pussies here? it’s wall street, 2008. as soon as there’s a breeze, they all catch cold.
capital, liquidity, trading…it sort of all ties together.
try to picture an ecosystem…
ok, wasted an hour of my life here.
20′s right, nothing to see.
nite-nite.
@18 don’t worry your coming along monkey
what is the new rating?
As Bess has pointed out, S&P and their ilk completely dropped the fucking ball for the past 2+ years.
Why the fuck is anyone listening to a single word they say now?
WTF?
@7, totally agree. CNBC has done enough damage already.
new rating is 5 shamwows
@27
You ever read a contract? AIG has these neat little ratings-based collateral trigger provisions.
What if this was just a giant short run sponsored by all the sovereign wealth funds who hate us anyway? Screw it, someone should blame the Clintons, I’m they caused all this crap anyway. I’m going back to parents’ farm to if there’s still a future in corn and hay.
yeah…the guys with the funny accents on bberg tv are talking about “overregulation” …
it’s true. this isn’t the worst of things, this asset writedown. the overregulation that suffocates markets will be the real bummer.
What if this was just a giant short run sponsored by all the sovereign wealth funds who hate us anyway? Screw it, someone should blame the Clintons, I’m sure they caused all this crap anyway. I’m going back to parents’ farm to if there’s still a future in corn and hay.
It’s over boys and girls. Time to pack it up, say goodbye to the models and bottles, put greed behind, and use our collective brainpower to do something worthwhile, like commercializing clean energy, curing diseases, eliminating poverty, or some other worthwhile cause . . .
Who knows, maybe we can make some good out of the end of this era.
What if this was just a giant short run sponsored by all the sovereign wealth funds who hate us anyway? Screw it, someone should blame the Clintons, I’m sure they caused all this crap anyway. I’m going back to the parents’ farm to see if there’s still a future in corn and hay. At least that’s a plan versus the rest of this country.
@ 34 puuuuuuuuke!
i just puked a little bit in my mouth 34. thanks.
bloomber interrupts a halfway decent recap to interview barack fucking obama?
who gives a rats ass what that kid thinks about anything?
gnite.
Maybe I’m just an idiot who posts the same thing three times, but with a slight difference each time. Yup, back to the farm.
I only wish Hunter S was around to see this. “when the going gets weird the weird go pro”.
I’m as much a nattering naybob of negativity as everyone else but this isnt exactly the end of the world. Yeah WallStreet is melting, Manhat. has seen its heyday (nothing new there), and the empire is faltering.
If anything this is good for the new art and music, gets us closer to family & friends and helps rethink priorities for some (re: MGD at the local vs. Ketel 1 at Cain., pot vs. powder, homemade porn vs. Scores).
The world is still viable [unless CERN destroys it]…and hell if it does all end, the final couple of minutes of a game are always the ones most worth watching.
good times, good times,
-C
CNBC is giving AIG tomorrow to pull 70 billion out of its ass to shore up their shitty bond backings or they will file BK by Wednesday.
Can we PLEASE get serious?
What happens to Man U?
In 2006, AIG became main sponsors of Manchester United Football Club.
http://en.wikipedia.org/wiki/American_International_Group
the only thing that could make this worse is Obama as President, you wanna talk about the Apocalypse!
Maria B. is like a shreiking banshee, it’s just disgusting. They just said it’s gonna be “financial armageddon.” Somebody slap her. I’m going over to Fox Business from now on. Snort.
Someone here said AIG already raised 20B
yea, they raised it FROM THEMSELVES. How is that solving any problems? They just brought it from the subsidiary level up to the holding company
Too long, didn’t read.
Were any of you sods around back in the fall of 1990 when a wide assortment of banks,mostly east coast, went into death spirals? That too was a calamity…unprecedented…generational….
I’m sure if this blog existed in 2002 and covered Silicon valley and TV channels were devoted to the collapse of the entire tech world and everyone in San Jose to San Mateo was losing their homes and eating cat food…then posters would believe the world was at an end.
The important part of the $20 was that they swapped $20B in highly liquid assets on the subsidiary level for $20B in less liquid assets that were on the corporate level so that they could post the liquid assets as collateral for a bridge loan until they can sell some of their holdings to cover their cash call.
yes…that blog was fuckedcompany.com. even had a guy who had his 15 minutes.
Hey 44, I saw that two and just about puked and turned off the t.v. She and all those egotists at CNBC were shouting over each other in a total panic to prove who ‘knew’ more. Here’s who knows more: Neil Cavuto. And he ain’t so obnoxious. Bye barracuda-face Maria and loud-mouth Leseman.
@ 30
No shit sherlock, pardon the apparent hostility but the fact that over the past year where the ratings agencies showed their complete and utter ineptitude (eclipsing even the equity research brethren), that contracts and mandates dependent upon credit ratings weren’t re-written.
I realize in reality this makes far too much sense, just grinds my gears…
I never thought I would see the day CNBC would stab the market in the back like this. As the wind blows I guess
@42….Man U has bigger things to worry about. Were you crying this weekend after Pool kicked your silly Red Devil ass.
YNWA!!!!
As usual the market is way ahead of the ratings agencies.
god save us all
@34 & 40 (and sort of @ 55): Concur
why isn’t GS at zero?
I am a hedge fund manager what is a downgrade?
Maybe bankruptcy is not that bad; LEH may be able to sell most of its businesses to Barclays in Chapter 11 according to WSJ
@ 47
There are some of us on this blog (believe it or not) who actually remember when tech went to shit. Whoops there goes the college fund, poof!
We will move on, just gotta remind the foil-helmet crowd ya know
Aren’t these just the counterparty ratings? Isn’t the long-term senior debt rating the one that triggers the collateral provisions?
@34:
There is nothing so intransigent as human greed. If you remember your campus recruiting sessions, Wall Street already took credit for all of those things anyway, through its role as the efficient allocator of capital.
When the dollar goes to zero and we barter for wampum, one man will out bargain the rest. Others will wish to learn his secret. He will open a 2 year school and charge 50,000 deer skins a year to teach 20 somethings how to effectively trick others out of their wampum. Still others will borrow wampum in order to increase the growth of their wampum wealth and the cycle will begin again.
Just as when you kick over an ant hill the ants must rebuild, it is all they know.
“Maybe, Bud, in some screwed up way, this is the best thing that could happen to you-teach you to build something, instead of living off the buying and selling of others”
“I’m going to jail, dad.”
@63 good one. the whole LEH thing reminded me of the boardroom scene, picking over the pieces.
I remember the techs, 9/11, and even parents of friends getting fucked in ’90. But I will most definitely remember walking from my office with a box of kitty calendars and firm mugs later this week. The only thing I can hope for at this point is a black car to take me and my worthless shit home. Fuck everything.
It’s time to take the “tea test” at my local starbucks and get used to “extra-hot mochas, with light cinnamon.”
Who will be most affected when AIG goes under? Who are its major CDO counterparties?
MS
GS
C
in that order, pls
can’t a guy watch the cowboys in peace? dang, last night they tried to interrupt entourage, now this! for the home gamers keeping score, you know I’ve been saying for some time that the www was going down. you also know (and for full disclosure) I’ve been long wb puts since last week. while wamu has been much maligned, the press seems to have overlooked/ignored wb and wfc. the world has not changed and it’s getting worse by the minute. bottom line, if you have sub-prime resi exposure (esp. in ca), you’re going to take one for the team. add the downgrade by not one or two, but three (3) notches of what was one of the largest financial companies in the world and you have an armageddon scenario.
as a recap, let’s see what discern what is deserving of the moniker “too big to fail”. as of now, I’m not sure we have a good blueprint (or “roadmap” for you politicos out there):
Bailed Out:
BSC – Assets: $399 bn; Liabilities: $387 bn; Current Mkt Cap: NA
Purgatory:
FNM – Assets: $886 bn; Liabilities: $844 bn; Current Mkt Cap: $652 mm
FRE – Assets: $879 bn; Liabilities: $865 bn; Current Mkt Cap: $252 mm
Toast:
LEH
Assets: $639 bn; Liabilities: $613 bn; Current Mkt Cap: $136 mm
Teetering:
WM – Assets: $310 bn; Liabilities: $279 bn; Current Mkt Cap: $3.4 bn
WB – Assets: $812 bn; Liabilities: $734 bn; Current Mkt Cap: $23 bn
WFC – Assets: $609 bn; Liabilities: $561 bn; Current Mkt Cap: $103
AIG – Assets: 1,050 bn; Liabilities: $961 bn; Current Mkt Cap: $13 bn
clearly, the market is telling us that it something’s wrong in denmark (apologies to willy shakes). good luck to the longs tomorrow…but I have a feeling we’re going to see lower lows for the banks that have yet to walk to the confessional and raise new capital.
Thnx 67
@61 – it’s usually a combination of the short-term and long-term ratings in the downgrade provisions of the CDS.
I was around for tech. This is much worse than tech. Most of the tech companies were garbage vaporware and everyone knew it, stocks without balance sheets.
*This* is the vaporization of trillions of dollars of balance sheet, of firms that the system as we knew it needed in order to work the way it did.
Cluzo – thanks you rock!
Looks like I picked the wrong week to quit sniffing glue.
I am so fuckin ruined………..
I am so fuckin ruined………..
@64 thanks,,,actually I think the whole boiler-room shtik was actually based on Lehman’s infamous 55 Water Street operation…..
So long, and thanks for all the fish…
#74 & 75
We all are. We are all in the same boat. That decoupling idea is bullshit.
I still have a job because my investors still want to have an exposure to Asian markets. Also my investors still love me because I have been holding cash since beginning of this year.
My investors have been badly burned by other “hedge fund managers” who have lost upwards of 50% and they are trying to gather whatever assets they have left in the fund to start a new fund in six months time to dodge the NASTY high water mark of 2007. I am gonna walk to Moscow naked if these guys manage to raise a new fund!
@74/75 – c’mon, don’t give up so soon! how did you get to where you are now, it wasn’t by throwing in the towel. we all face hurdles, this one is a tad higher than others. for some reason, I like you – now it’s time to look into the abyss, what do you see?
http://www.youtube.com/watch?v=oYEkzKhFhFM&feature=related
now, let’s go cowboys!
Do you think that people looking at my resume will remember that it was AIG Financial Products that ruined the world and not AIG Investments?
Best performance year ever, down the drain…now people will just say that we only outperformed because we couldn’t own AIG, which is only like, 10% true!
Hey guys at least oil fell below $92, hurray! Uh, guys? Anyone? No?
Bess, get some sleep. We’re going to need you at AIG HQ on Black Wednesday.
can someone tell me where the f*ck dick fuld is? someone needs to eat a bowl of beans, head over to the lehman building, and fart him out of the desk hes hiding under.
Anyone still long and on WS deserves to lose their money and their jobs.
Long canned tuna, twinkies, and ramen. I’ll trade that for pelts all day long. What do you think Paris will give me for a nice pelt?
What would the broader consequences of an AIG bankruptcy be? I assume they’re not as tied into the system as an investment bank, so are we talking systemic risk here or just the mind fuck of AIG possibly going tits up?
Cluz – how can you possibly group WFC with AIG, WB, and WM into the “teetering” category? GS and MS have much bigger problems – those guys dont have access to the liquidity provided by the deposit base that a retail bank does.
systematic. take a look at their CDS / CDO exposure – they insured a lot of debt…this would not be a good thing.
@61 and @70–in this case, I think it is just the long-term senior debt. NYT reporting that only $1.1B in collateral options have been triggered, not the full $15B.
Still don’t know how to get to $75B though.
which gasy fuck on this board is going to fart dick fuld out from wherever that weasel is hiding
@86
Agreed. WFC is better than most. If WFC and BAC fail life is over as we know it. Only thing worse would be USk, and god forbid that ever happens because even cash under the mattress won’t buy anything…
85 – Enormous systemic risk. At least as bad as any investment bank, probably more like a major commerical bank, as this will hit both the voodoo markets and Main Street (insert joke about AIG never paying policy anyway here) very, very hard.
It’s also one of the biggest companies in the world, with headcount well north of 100,000, a lot of that in NYC.
If you aren’t scared of AIG collapse, you are either ignorant or insane.
EVERYBODY TAKE A DEEP BREATH.
This is not the end of the world. We will survive this. We’ve survived worse.
GS is fine because we’re smarter than the rest of you. WaMu and AIG are effed.
How does Berkshire Hathaway’s stake in WFC affect it in these conditions? Beneficial? Moot?
CAN SOMEONE RESPOND TO THE DICK FULD FART STRATEGY? WE NEED TO TAKE CARE OF THE ENEMY
Pull the pin. Hold the grenade against your head. Iwo style.
@85 – you couldn’t be more wrong! any company with assets north of $1 trillion dollars (esp. a financial one) is going to affect the markets. this could be cataclysmic…for the record, cds exposure is what got aig in this mess in the first place.
@86 – did you notice that the govt asked gs to lend to aig? if they have bigger problems, I’m not sure they have revealed that to hank. ms was saved by kenny lou. deposits do provide cheap liquidity, but at the end of the day, it’s about reputation – I agree deposits are good b/c they don’t have a “maturity” date, but they can head for the hills at the first sign of challeges (esp. brokered deposits). I’m not going to say wfc or wb goes to zero, but they will go lower.
Seems like a lot of people have forgotten what capitalism is all about. It is a dynamic, risky, chaotic system. It grows by creative destruction.
For a reminder of how this damn system works, watch this AIG ad, maybe the best ad ever filmed:
http://www.jeroenbours.com/gallery.php?type=work&uid=97
Thanks 91, from 85. I’m scared, just trying to better understand my fear.
Does anyone of you know that the whiter-than-white AIG has its origins in Shanghai, China?
Maybe the Chinese may care to extend a helping hand to a distant cousin?
Fuck, no, this was the beautiful AIG ad I was trying to link earlier:
http://www.jeroenbours.com/gallery.php?type=work&uid=88
Anyhoo… yeah, Capitalism is all about risk and creative destruction. Can’t believe so many have never learnt that lesson.
The crazy thing is that deposit attracting firms will do well because everyone is liquidating and moving assets.
Sit in their shoes…I trust my bank more than my broker, and (to an extent) it is insured. Classic flight to quality…problem is that USB, WFC, etc. aren’t going to “save” anyone. It is not what they do.
Sorry to anyone at LEH, AIG, WB…you guys are done.
Sorry to anyone at MER, serious doubts about transaction getting done on pub terms.
@100 – don’t confuse aig with aflac (the duck). they are big in asia…
http://www.youtube.com/watch?v=nzQko1y5ho4&feature=related
can the company that backs the SKF go under?
can we win so big with the SKF that we lose?
inquiring TN banjo pickers want to know
@103 – actually, no, aig was founded by cornelius vander starr in Shanghai as the “American Asiatic Underwriters”
@85–about a thousand times more intertwined than an investment bank. There might not be a bank in the world whose financial position wouldn’t be impacted by an AIG bankruptcy. It’s the sort of thing that would make a risk manager throw up his hands and quit.
Which is to say nothing of the annuity, consumer, and insurance industry effects. It could MAYBE be accomplished if it were a limited bankruptcy that wiped out shareholders, but it would also be the most complicated bankruptcy in history. Insurance is regulated at the state level, and AIG is about as global as a company can be. Just…it can’t happen.
@105 – you got me! that explains why they own the golf course morefar. I thought the story about the name was ancient lore, but now I know it’s really true.
on a separate note, life goes on. cowboys win!!!! 2-0 beyatches phily beatches…
I just finished the can of beans….who’s with me?
When was the last time a Dow component declared bankruptcy? (Honest question, I’m sure it’s happened, but I can’t recall). I agree with the side that says “this too shall pass” but at the same time, how does the largest insurer in the world go bankrupt? Eric Dinallo better go to f@cking jail for this one.
aflac = American Family Life of Akron and Cincinnati?
@103 please never post again.
#100 here
Thank you #105, Mr C V Starr was a prominent American in Shanghai before the World War I
I was in Shanghai last week and my friends showed me the building where Mr C V Starr operated his businesses.
Same as HSBC, it stands for Hong Kong & Shanghai banking Corporation. It was started by two Scotsmen in Shanghai to faciliate trade with Great Britain. Their old headquarters at the Shanghai Bund still has a beautiful wrought iron gate that bears the name HSBC.
Seriously people…back to the issues that matter. Can you believe Obama’s ‘Lipstick’ comment?
@111 – please enlighten me, what value have you added to this board? okay, back to gawker for you…
@ 98/101
Was pissed at you for a moment.
Remember that commercial. Sums up the mentality over last five years brilliantly.
That said…life will go on. You think that Moody’s/S&P/Fitch would be allowed to downgraded BAC? Lewis has purchased eternity, so long as life doesn’t end. The boys in Charlotte beat NYC. JP would laugh if he was alive.
NO!
Back to the ISSUE that matters? which gasy fuck on this board is going to fart dick fuld out from wherever that weasel is hiding? I’m not going to ask again! Mt gas and patience are running out
AIG is still huge in Asia. Some of the brands aren’t AIG (AIU, AIA, etc.), but they’re AIG member companies and it’s all the same stock.
Also, AIG is *extremely* well-connected politically, in the US and maybe even moreso in Asia. Not as much as when Hank was in charge, but I think Hank is pulling his strings now too.
With profuse apologies to the Dixie Chicks, this sounds about right for the times and the place:
When it’s my turn to march up to old glory
I’m gonna have one hell of a story
That’s if He forgives me
Oh, Lord please forgive me
Praise the Lord and pass the ammunition
Need a little bit more of that sweet salvation
They may take me
with my feet draggin’
But I’ll fly away on a sin wagon
cluz – how was morgan stanley saved by ken lewis? last i heard he was buying mer…
you’re hedging your comment by now saying that they are merely “going down” rather than “teetering.” Everything is going down… i think wfc and other similarly well managed banks will outperform the remaining brokerages such as ms and gs. why are you thinking otherwise?
if retail depositors at wfc are spooked enough to truly create a run on that bank, as you’ve speculated…like the prior commenter noted, we’ve got much, much bigger problems. if that happens, ms and probably gs are already gone at that point.
only the uni students and 1st year analyst monkeys crow about what a hardon they have for goldman. i expect better from you cluz, you seem to be a pretty insightful commenter.
Dick is in Greenwich, CT with his wife and kids.
http://cityfile.com/profiles/richard-fuld
Probably better if you just move to Idaho 116. Too much anger.
Whatever. Any chance at revenge tonight is now over. I took a major dump and let out all the gas w it.
I’m an AIG stockholder (it was about 1/3 of my net worth months ago) trying to figure out what is ahead.
Can someone explain to a layman how an *insurance* company can survive something like this even if AIG gets the 75 billion dollar loan?
If someone is looking for a life insurance policy why in the world would they buy from a company that flirted with b’cy like AIG as opposed to MetLife or someone like that. An insurance company depends upon public perception that it will always be there.
Someone please correct me if I’m wrong, but I see no way out of this. I’ve already lost 100k on this crap company anyway- might as well finish the job.
@109 – uh, was Enron a Dow component? I have no idea. I’m guessing it’s probably an automaker or an airline – each of them have gone bankrupt like dozens of times.
So if AIG melts down, how badly does that fuck the people who got hit by Ike and Gustav?
@ 68/Investor Cluzo
Listen you prick. Not only are you a Cowboys fan but you forgot to mention that Wells Fargo’s market cap is at $102.5b. As in billion, bitch. Quit trying to create market panic by forgetting figures.
E-A-G-L-E-S
Don’t worry GS, JPM and MS will be there to take care of your clients
@115 – check again, bac was downgraded today…
http://www.marketwatch.com/news/story/sp-downgrades-bank-america-places/story.aspx?guid={43B9227A-0B76-4E75-876F-D1C4919A4C4C}&dist=hpmp
@119 – I must have miss-wrote (don’t recall putting ms in the mix), please forgive the misprint (I was drinking while watching the game) b/c I still don’t see it.
trust me, I have sat across the table from gs bankers – I’m not so sure they are any smarter than you or I, but they have a halo from the that damn name on the card. how does it look when your board hires stifel (no disrespect intended) over gs? exactly, you get a free pass with gs, even if stifel’s bankers are better in that sector. as for wfc and wb, wb is more likely to go to 0 than wfc. wfc has the buffett halo and a more diversified revenue base.
Delta was a Dow component.
Carney/Bess (of whom I have no picture, despite visit to coffee man outside LEH) getting credit?
http://cityfile.com/dailyfile/1848
Awesome!
Has anyone seen a document on BAC/MER? No way shareholders approve a transaction that values MER at pre announcement closing price and BAC at 21% lower. If anyone has seen, would love link.
@125 – stop being a hater! the game was an instant classic and your e-girls lost. I was drinking while watching the boys stomp on your team, but I believe it’s clear that $103 was billion (I even rounded up for you). not trying to start a panic, just trying to give people some real hard facts. now go back and sulk until your team gets a rematch (only to be defeated at home)…
#130
MER = Beggars
Beggars can’t be choosers
@129– too slow to the draw hombre. i was there at 6 and chatted it up with miss BL.
@132 I agree.
Still skeptical. No document anywhere. Where is the GD document?
BAC by itself is golden. BAC w/ MER is questionable. How can anyone trade w/ out knowing details…
@130: There isn’t one yet, which I find highly suspect. Remember JPM/Bear–they posted the merger agreement almost immediately upon the announcement. The fact that they haven’t for this deal makes me think this might not actually happen (at least not according to the terms they have proposed).
Also, I think the actual price they are paying is misleading. As I understand the deal, BofA is willing to pay X premium over the market price of MER based on an average price for a certain number of days (so basically a VWAP).
Basically, this means that both stock prices could crash and, if that happended, MER shareholders would still get a premium over the market price, but it wouldn’t be as high as first stated.
i respectfully disagree cluz. this crisis isn’t about the reputation/halo or lack thereof associated w/ the bankers. its the illiquid assets sitting on their balance sheets – and gs/ms dont have access to cheap liquid capital like wfc does. i agree with you that wm and wb are likely gone by next week at the latest. wfc is nothing like those two disasters. like i said…ms and gs cease to exist in their present form long before wfc does.
does stifel even have banking…
#134
In God We Trust
I think Union Carbide was in the Dow
@135 agreed.
And all these people talking about MER brokers jumping are smoking crack. Where are they going, AXA?
Give me the document…then we will decide. Until then, the short pain shall go on.
Long live USB. The FED is dead.
Mayo and Tuna. Mayo goes nice w/ Tuna.
From the NY Times:
“According to the filing, seven Japanese banks have $1.62 billion in outstanding loans to Lehman, including Aozora Bank, with an exposure of $463 million, and Mizuho Corporate, with $289 million.
“Aozora said Tuesday in a statement that its actual exposure is ‘significantly smaller’ than what Lehman reported.”
Anyone want to venture a guess as to how much of Aozora’s diminished exposure is due to hedging through CDS from AIG?
[http://www.nytimes.com/2008/09/16/business/worldbusiness/16asiastox.html?hp]
#135
John Thain was watching how the Lehman sale was unfolding all weekend. As soon as he found out Bank of America dropped their bid for Lehman Brothers on Sunday night, Thain called Ken Lewis for a deal.
The deal was done quick and hence the lack of details thus far.
@136 – I need to look at gs/ms a little closer before I debate (but appreciate the respectful disagreement). that said, wfc has level III assets of $34 billion (up from $21 billion a year earlier). this type of deterioration does not bode well given that we are just now seeing the ill effects of poor mtg underwriting. as for the deposits, they make up roughly half of the co’s funding sources, so it has some cheap funds that could help it weather the storm. but before you leave your broker, you should realize that the fdic insures up to $100k, while sipc is at $100k cash plus $500k securities. buffett has deep pockets, if any one can stay solvent longer than the market can stay irrational – it’s warren g (er, I mean b). was out with a ms guy this evening, he was worried about the ramifications of aig – apparently, they have some large exposures (but I haven’t verified). as for gs, everyone has called them a big prop fund for years. so far they have yet to truly disappoint.
ha! I tried to pick a firm that would offend the fewest people. I know stifel does have research.
GS must merge w/ higher compensation in order to survive.
a bank?
GS must merge w/ USB to survive.
When will the Russian military begin to merge with Eastern Europe? (and would WW3 save us from what is to come?)
@ 147 – scary thought…but very poignant
You know that AIG owns Stowe mountain in VT. How much would that go for?
WW-III is all that will save us now
abondon hope all who pass
@149 – Why would they own a Ski Resort? (not doubting the truth, trying to understand it)
legacy of C.V. Starr
@151 – I’m pretty sure AIG’s founder owned the mountain in the 20′s. They rolled it into the company and have had it ever since.
AIG also several non-insurance related businesses like, for example, the world’s largest airline leasing corp.
The bottom line is this-if you or I make a bad financial choice no one bails us out. these people are well educated and knew the risks. Let them ALL go out of business !
GO BILLS !!
Aircraft leasing? Well, we all know how fantastic things are in the airline industry right now, so I’m sure that’s going to be their saving grace.
AIG is a bloated corpse floating in the East River by Wednesday afternoon.
#153
AIG, Australia’s Allco, MS’s aircraft leasing business……………….
Time to short Boeing and Airbus also given the global economic slowdown and leasing companies in trouble.
#143
Yes, Goldman’s flagship global alpha funds have disappointed. Goldman without front-running is the same as all of us. You can only shove so many things under the “Level 3″ carpet.
#147
The Russians are smarter this time around. Why do anything when the United States of America and much of Western Europe have already committed suicide. The Russians will use their resources and new found financial clout to re-establish their dominance in Eastern Europe and Central Asia.
@83 — I have it on good authority that JayCayne is harboring Fuld in his basement.
#157
No doubt enjoying a game of bridge with Jimmy Cayne, Chuck Prince, and Stan O’Neal with Ken Thompson as the tea-boy.
That basement must be getting crowded.
This is a sincere question — any idea if AIG offers homeowners insurance?
If so, do you think they have large exposure to Texas policy holders (aka Hurricane Ike). Those people would be soooo fucked.
Layoffs Re BAC/Merrill — this is inconsistent with what I have read to date, but Mayor Bloomberg was quoted (and Fox5 and Eyewitness News) both reported that layoffs would be minimal because the businesses have little overlap and the theory is that they would be run as 2 separate entities. This would be good news for Merrill peeps …
#159
I would concur with you that those poor souls who have taken out insurance policies with AIG are soooooo fucked.
Anyone knows AIG’s cash & liquid assets holdings?
Insurance payouts are paid in cash and I can’t see how AIG can come up with even a portion of the total claims anytime soon.
@159
If only there was some sort of website or place where people could look and learn about other companies.
http://www.aig.com/insurance-individuals_20_16514.html
Thanks @161. I thought they had some exposure. If the damage numbers the media is reporting are even somewhat accurate, those alone could tank AIG … forget about their other problems.
Am I the only one who feels physically sick from the past 48 hours? Or maybe it’s because I’ve already been interviewing for close to a year only to be faced with hiring freezes and other obstacles.
I’d like to think this can’t get any worse, but I don’t think that’s the case.
#163
The crisis will ONLY stablise when the US housing market has hit the bottom and when buyers return to the markets and unsold inventory goes to under six months (it stands at nearly 12 months now). Only then can banks begin to repair their balance sheets in earnest. I can’t see how Paulson and Bernanke fix the housing market…………..
It sucks doesn’t it. I felt a little sick this morning and I am sitting half a world away. I’m told Lehman’s Hong Kong office is very orderly today with most staff locked in team meetings in the morning and most have been told they will be paid until the end of September. They were shut out of trading by the authority here. Most guys are in job-hunting mode. Of all the i-banks in Hong Kong, only Deutsche, RBS, and Barclays are hiring. But not in large quantities.
The Lehman guys in Hong Kong have worked hard to establish themselves in HK. But some of them are real cowboys. They once offered to be our prime brokers with no ISDA agreement.
@164 — Appreciate the insight. I agree housing is a key to this. This may not be mainstream, but one analyst said tonight that LEH, MER, AIG were not so much victims of the economy as they were of being grossly overleveraged and simply not properly valuing the trash on their books. Plus a little mismanagement. That’s somewhat comforting, but doesn’t really change things.
Interesting what you said about the international i-banks. I’ve been meeting with DB since just before Labor Day and I’m supposed to hear back about a final interview this week … then this all happened and I’m worried that maybe there will be a hiring freeze.
Not sure if you can tell me who you are with, but what area do you work in?
#165
Good luck with your final interview with DB.
I manage an emerging market fund. I wouldn’t call myself a “Hedge Fund Manager” though.
#149 the current issue of Rob Report has a piece about the 410 million dollar renovation they just put into the new lodge.
AIG HQ – if my pet insurance goes belly up the hounds shall make your furniture portfolio a big fat zero
forgive a layman’s comments, but what’s the point of keeping AIG afloat with a loan for 24 months, what happens month 25? if you so believe in
letting the market forces dictate, then let if fall, that’s what the market dictated. maybe just buy up the insurance policies or something, but let the rest fall. that’s what happens to badly managed companies that over extend themselves in one market. i mean everyone talks about it being such a calamity, but what are the DETAILS of that calamity – really/and wouldn’t it correct itself eventually? As compared to this ridiculous precedent of bailing out poorly managed, and obviously poorly audited companies – by dipping into the american taxpayer coffers.
#169
The 24 month loan is a bridge loan to give breathing space to AIG while it conducts an orderly disposal of assets so it could bolster its financial position and repay the $85 billion loan from the Treasury. At least, that is the plan anyway.
Yes, the government should not bail out these firms. But the prospect of the US banking system collapsing is even more daunting and the consequences may be too scary to contemplate (think Latin America style bank runs and the US dollar losing its status as the reserve currency of the world and the hyperinflation that follows).
The Fed and the Treasury are colluding with these insolvent banks. Most of them are insolvent on conventional measures. That is, they have too little equity capital and are too leveraged. So a 10-15% downward swing in asset value will wipe out ALL the equity. Remember John Thain’s famous backtrack on CNBC? Thain said “We are well capitalised, TODAY.” We all knew what happened a month after he said that.