That Short-Lived AIG Explosion

Author:
Updated:
Original:

The news that the government was discussing a possible bailout of American International Group was closely followed by a rise in the major averages, with rises of almost a quarter of a percentage point in the Dow, the S&P and the Nasdaq. Shares of AIG jumped on the report, rising two dollars. But this burst of buying was short lived, and shares have now dropped down below where they stood moments before the report. a financial lifeline, AIG's survival might come into question as the credit squeeze weighs on the company.
There seems to be widespread agreement that there will be no financial lifeline for AIG coming from the private market. This has some believing that the government will step in as a last resort backstop. Others, including nearly two-thirds of DealBreaker readers responding to our reader survey, believe that AIG will file for bankruptcy.
One rumor that we're hearing is that the possibility of a bailout was floated as a test to see the market's reaction. We'd like to dismiss the idea right now. The reaction to a government bailout was completely predictable. No such craftiness was necessary, and we don't believe the Fed engaged in this underhandedness just for fun.
Although we already have one survey on AIG running, we're going to run another on this government bailout story now that it's out there. After the jump, tell us whether you think the government will step in.

Online Surveys & Market Research

Related