More Money to AIG? Say It Ain't So

by Eric Ames

After insurance giant AIG (AIG) reported the biggest quarterly loss in history — $61.7 billion to be exact — the government is ready to give them another $30 billion to help maintain their operations. In addition, the government is restructuring past bailout deals to ease the burden on AIG. This new $30 billion will bring the total bailout tab to around $180 billion. That is, and should be, a difficult number to swallow. We will have invested $180 billion in ONE company. There are only two U.S. companies that even have market caps above $180 billion (Exxon (XOM) and Walmart (WMT)). AIG’s market cap is about $1.2 billion, in case you were wondering.

I’d like to say I thought this would be the last bailout for AIG, but if I did I’d be lying. Right now we are simply plugging holes in AIG with taxpayer dollars, and once the $30 billion gets used up they are going to come crawling back for more. The worst part is after we have already invested $180 billion, how are we going to say no to a few billion more? What will the final tally be when all is said and done? Your guess is as good as mine.

Matthew Karnitschnig from the Wall Street Journal wrote a good blog post that goes over some of the restructuring pieces included as part of the latest bailout. If you want to become more depressed about this whole situation then you are right now, I’d encourage you to read it. Here is the link.

Comments

[Aristophanes:]

Here are 2 other links about the situation and its intense complexity:

www.nytimes.com/2009/0...

dealbook.blogs.nytimes...

Mar 04 12:18 AM

[Moon Kil Woong:]

How exactly is AIG suppose to survive when no one would reasonably write a policy with them? And why is the government fooling itself thinking it can dig its way out of this? There is 2 reasons, AIG owes tons of derivatives debt to banks which have sway on Washington (Goldman etc.) so this is a hidden bank bailout again. And AIG has tons of derivatives that no one wants you to know what type of garbage they wrote which would become public if they went officially bankrupt.

Mar 04 12:27 AM

[the_lazy_ob...:]

and how come we don't see anybody going to jail due to this mess? these greedy guys who caused the collapse of AIG should be put to jail for the expense they incurred from the taxpayers.
if i spilled a barrel of oil on the coast, which then caused tens of thousands to clean up, do you think i will get the same nice treatment that was given these AIG execs? losing 60 BILLION dollars is the same as 10 exxon valdez spills -- but then again, exxon valdez execs mostly got away with that mess too.

Mar 04 09:36 AM

[misiosnechacz:]

I don't belive anymore that they've got enough cash to save them all. I think that we will see more lehmann followers in 2009/10.

Mar 04 03:20 PM