Bonanza36

AIG Bailout: Over to Congress

So AIG turned down private equity two days ago and now gets a bailout at my expense?

This is socialism that even FDR could not have conceived.

Solvency and Liquidity: Non-Identical Twins

If you listen closely, you will hear the banks tell you that they have plenty of "liquidity". They never say they are "solvent".

This is like me saying that I am liquid because I borrowed a $100,000 off my Visa card and put it in my checking account, while at the same time my assets are exceeded by my liabilities by a million dollars.

I am insolvent, but liquid. I am hoping that my creditors are not smart enough to figure that out and come asking for their money back.

This is where the banks are: they are praying for a miracle.

I know lots of folks who are solvent but not liquid. Times are tough for them.

I also know folks who have money in the bank but a negative net worth.

Right now, you need a solid balance sheet and plenty of cash to survive, something the banks have lost sight of.

The banks are "liquid" only because they have used Uncle Ben's pawn shop to hock their most toxic loans, but they are not solvent.

We are simply putting off the day of reckoning when the banks are bailed out by taxpayers. Right now, they are just playing the game of "hide the sausage" and are hoping we don't notice.

The Case for AIG - Patience Required

And while we are talking geniuses who invested money in losing companies, add Joe Lewis and his lost $billion to the BSC collapse.

These value guys are no brighter than you or me. Just ask Bill Miller at Legg Mason how his fund is doing this year.

Follow the leader here will just get you to the poorhouse quicker.

The Case for AIG - Patience Required

Home prices falling faster than the great depression. The bottom is not in. See "The Economist" on 5/29 and come back and tell me the SIV, CDOs, MBS and all the other financials will be written up.