Timmothy Posey

Why Has AIG's Stock Risen So Rapidly?

Umm, all of this article is wrong.

The WSJ/CNBC put out a notice a few days ago saying that the gov't is going to request physical delivery of its 79.9999% in stock certificates in order to prevent further short selling by making it extremely difficult to borrow the stock from a broker. Thus, the rise has been nothing than a really bad short squeeze.

Monday's Options Recap

Roubini has been predicting a recession and Dow 5k since 1997. I think everybody has forgotten he is a pariah and has only gotten attention lately because he was finally right about an oncoming recession.

Even a broken clock is right twice a day.

For Insurance Companies, Is a Crisis Looming?

The rumor a few days ago was that Geithner was minutes away from approving TARP money for Insurers. However, that never happened in that 'failed speech'. Thus, the insurers are now trading like financials, without the extra TARP capital or any kind of promised gov't backstop.

It's one thing for a bank to fail (and the FDIC steps in), and its a whole 'nother thing to let an insurance company fail and they stop paying annuities and death benefits.

The Dwindling Value in AIG

Being Long in AIG's common equity isn't really a good idea, especially since the gov't owns 79.9% of the equity, with the right to purchase the other portion if it ever has to extend another loan.

One way to play AIG is buying its corporate debt, which trades as low as 60 cents on the dollar for the debt that is maturing in October.

AIG Bailout Redux: The Perils of Open-Ended Liability

If AIG goes up in smoke, then so does the $140b or so in the existing "bridge" loan from the Fed. Not to mention the endless ripple effect of possible TRILLIONS in unsettled CDS derivatives floating around the world.