Tag: Aig - 24/7 Investor

Watch ‘Em Squirm

I plan to be unavailable for a few hours, starting around 10 a.m. this morning. I want to hear the members of the New York Fed try and defend their actions regarding the AIG (NYSE: AIG) bailouts in front of Congress.

The New York Tines published some of the prepared testimony of the principal players. I try to keep a level head, but I’m reaching for my pitchfork and torch right now.

*****Recall that the New York Fed orchestrated what ultimately became an $85 billion bailout. A good portion of that cash was paid directly to other companies with which AIG had entered into the now famous credit default swaps. These were essentially insurance contracts on mortgage backed securities held by banks and underwritten by AIG.

A full $25 billion in AIG bailout money went to pay off Goldman Sachs (NYSE: GS). Here’s a section from the New York Times (Mr. Baxter s the general counsel for the NY Fed):

Mr. Baxter explained that the New York Fed felt compelled to pay out A.I.G.’s counterparties in full to unwind tens of billions of dollars in derivative contracts because "there was little time, and substantial execution risk and attendant harm of not getting the deal done by the deadline of Nov. 10." That was the date when A.I.G. was scheduled to report its earnings and could face downgrades from credit ratings agencies. A downgrade would have led to more collateral calls and even greater liquidity problems for A.I.G., Mr. Baxter said.

AIG |

Dubai: Crisis Averted?

Speaking of debt, AIG (NYSE:AIG) is actually paying back some of the $180 billion it owes the U.S. government. The company announced today it’s paying back $25 billion raised by selling two insurance subsidiaries.

That’s nice, but it’s hard to imagine AIG will ever make good on the balance. The Treasury owns $40 billion in preferred AIG stock. The company is currently worth about $6 billion. And selling off profitable business units is certain to lower income going forward.

*****Bloomberg reports that China’s manufacturing sector is growing at the fastest rate in five years. That’s helping to support economic recovery and stock prices around the world. Asia’s growth is being credited for a rise in European manufacturing and a drop in Germany’s unemployment rate.

As you know, I’ve been extremely bullish on China for most of 2009. And that bullishness is paying off for my SmallCapInvestor PRO members. We have several Chinese companies in the SmallCapInvestor PRO portfolio. We’ve got gains like 121% and 67%. And today’s news that China will grow at 10.5% this quarter makes me confident that there’s a lot of upside ahead for our Chinese stocks. For more about how you can profit from high-quality, undervalued Chinese stocks, click HERE.

*****The Dow Industrials has been locked in a tight range between 10,200 and 10,470 since November 9. As you know, I’ve had a 10,500 target for the Dow for months. So what happens now that the Dow has essentially met that target?

NYSE:AIG |

Geithner’s PPIP Comes Back to Reward Investment Banks

I was starting to think that Treasury Secretary Tim Geithner was secretly hoping that everyone had forgotten about his plan to remove toxic assets from bank balance sheets. But now he’s out saying the Public-Private Investment Program (PPIP) should start in about six weeks. (Go ahead and mark your calendar now, in pencil, of course.)

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Get Even with AIG and Get Paid to Do It

If you think the financial crisis on Wall Street was big news, just wait...the details of the "secret money funnel" from Washington to Wall Street are just coming out now.

AIG |

Obama the Stock Analyst

As much time as Fed Chief Bernanke spends before Congress, it’s amazing he gets any work done. I have to say, I’m starting to like Bernanke. His forthright talk is certainly a refreshing change from Greenspan’s garbled speech. Yesterday, he expressed his feelings about all the bailouts.

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Paulson Asset Management, LLC

So now the Treasury has a massive $700 billion bailout plan on the table. The idea is to create a government agency to deal with bad mortgage related debt, sort of like how the Resolution Trust Corp. (RTC) dealt with $394 billion in assets of failed banks during the S&L Crisis in the 80s.

PAM |

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