AIG Must Not Fail! - Cramer's Stop Trading! (9/15/08) 18 comments
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Recap of Jim Cramer's comments on Stop Trading! Monday September 15.
Failure Not An Option - American International Group (AIG), Lehman (LEH)
American International Group, despite its present troubles, does not need to go the way of Lehman Brothers, Cramer said. It would be a tragedy if they just let AIG fail. Unlike Lehman which only had Neuberger Berman, AIG has plenty of assets that the company can sell to raise the capital needed to stay in business. Cramer urged both the company and Washington to take the actions necessary to save the firm. "I would radically have to change my view of where the market’s going if AIG fails," Cramer told Erin Burnett. "This one needs to be stopped. I don't know how to stop it. AIG is too big to fail." AIG will be allowed to use $20 billion in assets held by subsidiaries to help stay in business, New York Gov. David Paterson said in a news conference Monday. The insurer, which has already raised $20 billion in fresh capital in 2008, on Sunday turned down an offer from private equity firm J.C. Flowers & Co. that would have allowed the investor to acquire AIG for $8 billion under certain circumstances, The Wall Street Journal reported.
Unquantifiable Risk - Allstate (ALL), MetLife (MET), Prudential (PRU), Chubb (CB), Travelers (TRV), American International Group (AIG), MBIA (MBI), PMI (PMI) and Ambac (ABK)
Cramer explained that there are two kinds of insurance, such as property/casualty, and life, which would deal with situations such as a hurricane. But in AIG's case, financial insurance, "it's really hard to figure out what they've insured." "This is not Bear Stearns, or Lehman where all they have is Neuberger." Companies in the former category are Allstate, MetLife, Prudential, Chubb and Travelers. The other, riskier group includes AIG, MBIA, PMI and Ambac. "AIG is so opaque; they never disclosed what they own," Cramer said. "If you could just call a timeout, AIG would be able to sell a lot of different things," Cramer said. "If it's in free fall [and beaten down by the shorts], and we don't change the uptick rule. ... AIG must not fail."
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This article has 18 comments:
Here we go again. Maybe Johnson & Johnson should take over AIG. Isn't it just a Band-Aid® for the credit mess?
Liquidity = Ponzi Scheme
We need an economy based far less on unbridled borrowing.
Both Cramer and is sidekick Larry Kudlow who less than a week ago suggested along with 3 out his 4 pannel members (with the appropriate caveats) that little old ladies take their savings and invest in banks. It is amazing how these geniuses are allowed to stay on the air
Tuesday September 9 - www.cnbc.com/id/158402...
Just never forget that these are HIGHLY LEVERAGED DERIVATIVES and the investors do not know their value, least of all Jim Cramer (therefore, they are worthless toxic waste.) I hate to be the bearer of bad news: LEH going to zero is but a foretaste of things to come.
"Somehow the banks will survive."
from: 'A Prophetic Vision of the 21st Century' by Rick Joyner, 1999
"... Lots of high-multiple stocks are going down; they'll probably bounce later in the day."
OOPS - Wrong again!
It's called 'starve the beast' and the beast is at our door.
www.riskglossary.com/l...
An excerpt:
"Analyzing CDOs is difficult. Not only is there an entire portfolio of credits to analyze, in managed deals, an investor won't know what collateral will be purchased. On top of this is the added complexity of the tranching, which must also be analyzed. Sophisticated portfolio credit risk models should be used. Needless to say, there is much potential for manipulation or abuse by sponsors."
Its no wonder the stock of the 'sponsors' like LEH and WM is going to zero - no investor can even figure out what these companies own, so they've decided it's all toxic waste.
Unfortunately this will hit the debt holders the hardest - people who because of their bad financial decisions, assisted by the mortgage crooks, will be slaves to their debt obligations - the banks - for years to come: a return to American Slavery.
"Why blame the government?
Because this stuff as so known and so obviously in the cards that you have to wonder whether perhaps the government has some marching orders from the president to do nothing until after every collapse -- nothing that is preventive."
Well Cramer, here is a little Politics 101:
We would all love to receive a crisp $1,000 bill in our mailbox daily, courtesy of everyone else (read: taxpayers). Personally, I think that would be just the cat's meow.
However, in an election year that's like wishing for World Peace. It's just not going to happen, even if it were the right thing to do (and its not), because it would be political suicide for McCain in particular and the Republicans in general, and of course Bush knows this.
The music has stopped, the dance is over, and its time to find a seat.
Why do we lionize such foolishness?
The entire premise is he and GE take the stand that he is nothing less than one long infomercial. And according to the laws an advertisement is an advertisement and nothing more. It is not an offer, it is not a guarantee, it is no a solicitation.
For the other issue of discussion, why does the governmet allow a "Mom and Pop" store fail? When they fail the governemt autions off all the assets to pay all debts, but, when a large corporation like MER, or AIG falter under the same misguidance learned and demonstrated by Jim Cramer the governemt comes to the rescue.
In my humble opinion nothing real bad would happen if any of the big boys collasped. You would have a bunch of smaler scavengers scraping up the goods and going about their ways. The risk of allowing a government insured company like Freddy Mac and Fanny Mae go bust is it would mean the goverment guarentee is worthless. While if the big boyss go bust and the CEOs are held accountable for their actions it sends a clear message throughout the indutry that enough is enough.
Let's hope the hocky mom gets into office. I can wait another two years when McCain drops out of sight and leaves her the reins.
The pig sty has to be cleaned out every now and then to make sure the rest of the farm animals don't catch hoof-and-mouth disease.
I just wish someone in law enforcement would exercise their oath to defend the counstitution against all enemys foriegn and domestic and make a few politicians and CEOs do their public PERT Walk.
The only thing that I could figure out is that there is someone of importance working for AIG that the biggies don't want to lose a job.
There are plenty of good insurance companies that could gobble AIG and it should happen after all BK is nothing nowadays.
Another afterthought is that someone doesn't want the public to know what AIG is doing with the liberal accounting.