AIG will file backrupcy on Wednesday because they can't come up with 75 billion.

[dogindia]

as of CNBC a few minutes ago.

[SoonerPride]

1. House of Cards. And here comes a breeze.

ouch

[SeattleGirl]

2. And down they go.

[elocs]

14. A great domino scene:

http://www.youtube.com/watch?v=GPfI9oxZuEo

[SeattleGirl]

16. One of my fave movies.

And that scene IS great!

[elocs]

20. I have the "V" logo as a large tattoo on my upper right arm

with the word "FREEDOM" above it and "FOREVER" below it.

[SeattleGirl]

50. Very cool!

Bet it's a great looking tat!

[AwakeAtLast]

39. That was on last night - I had to watch it again!

Great movie!

[SeattleGirl]

51. I went and got the DVD after I first saw it on TV.

I love that movie, and the extras that come with the DVD are great to watch too.

[andym]

3. All because of greedy real estate lenders and speculators.

Bubble is finally bursting. Good thing some of FDR's federal protections are still in place.

[Pale Blue Dot]

11. That's a big part of it, but it's far from the whole story.

And I think people will be surprised to learn how few of FDR's protections are still in place.

[andym]

24. What's the rest of the story?

What's the rest of the story, beyond the various derivatives and bond trading based on the real estate bubble?

[Pale Blue Dot]

28. Our massive personal, corporate and national debt. Also, deregulation.

We have, as a nation, spent FAR more than we can afford - it goes beyond housing.

[MadMaddie]

72. Deregulation! You can't forget that! Phill Graham and the

Repugs pushed for it and we are seeing the direct result of it.

[cottonseed]

65. add Hedge Funds, Investment Banks, Greenspan

[dansolo]

4. Chickens are coming home to roost

[msallied]

5. So how is this going to trickle down to affect average folks?

I ask this out of curiosity. Are men and women outside the investment community going to feel these ripples caused by the falling banks and investment firms, and how?

[sketchycharacter]

19. YEss this is bad BAD BAD for us...

It will make it harder to get loans for qualified borrowers. It will cause the FED to lower rates even more which in turn will result in inflation thus making our buying power to decrease. And It will cause world markets to destabilize even more which will result in a host of other problems ie. Runs on banks... Make sure to diversify your investments and your savings because the FDIC will only insure banks up to 100k.

[msallied]

21. Thank you very much for this. I regret not having concentrated more of my studies in econ.

Because when it comes to these sorts of catastrophes, I really have no idea how to sort through all of it. The only investments I currently have are with company stock options which don't amount to very much since they are with a tech company. My net worth is pretty much nothing as it is right now.

It's just a worrisome situation over all, but I need to know what I, as a common broke middle-class American, need to be bracing for. And the news just doesn't see fit to tell me that. Thank you.

[Sebastian Doyle]

33. Well, I can give you one example

Was just talking to a friend a little while ago. Apparently her mom, who's a retired widowed school teacher (hardly a billionaire) has an insurance policy with AIG worth about $250,000. If AIG goes dead, only $100,000 of that is covered under FDIC or whatever equivalent entity covers insurance companies. So, yeah, this is going to hit regular people :(

[Missouri Girl]

55. Need to Check With Your State's Insurance Department

Some states have Guaranty Funds that sort of act like an FDIC to guarantee some portion of a policy.

I am concerned because I don't know how bankruptcy affects an insurance company. Typically, you have a receivership set up - they either "reorganize" or liquidate. I haven't seen any discussion on that.

[MadMaddie]

73. Many, many Americans will lose their retirement benefits and

savings.

[GOPNotForMe]

6. Oh f***.

I saw their stocks drop another 60 percent today and hoped for the best...

[vanderBeth]

7. I don't want to hear this.

:scared:

[HughMoran]

31. Me neither

:scared:

[Ichingcarpenter]

8. Yikes and Goldman Sachs gives earnings tomorrow

not gonna be a good day for the market

[aint_no_life_nowhere]

9. Now all we need are the airlines and domestic car companies to ring alarm bells

to make this a very frightening situation. The next president whoever it is (hopefully Obama of course), is going to have his hands full.

[MadMaddie]

74. Actually the domestic car companies have already been

talking about trying to get bailed out again.

[Doremus]

10. 2 dumb questions -- isn't AIG an insurance company? What is causing their failure? n/t

[high density]

17. AIG has their hands in a lot of stuff

Including credit default swaps, a type of insurance which is currently costing them billions.

http://www.cnbc.com/id/26718242/?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol

[Doremus]

42. oh okay, thanks! n/t

[Critters2]

77. It's a re-insurer. So, it takes the hits for insurance companies and investment firms

who need to be insured themselves. Talk about a risky business!

[alcibiades_mystery]

12. This is not definite

Appears no where else.

[Obamarulz11]

13. I just sold my stocks

"Its going to crash soon, Cash out NOW!"-my stock broker and best friend.

[maseman]

18. Stocks are one thing

You cannot sell a 401(K) or IRAs.

[Obamarulz11]

22. Its true..

Can't sell IRA's, 401K. Mutual funds or any other investment you will take a serious hit. I feel bad for anyone out there who was any of these.

[maseman]

44. About 90% of my savings are in this shit

Thank God I am in my mid thirties. The only good that will come out of this will be dollar-cost averaging. I'll be able to buy more for less money. Then hopefully the markets increase in the future to the point where they were about two years ago. If that happens I'll be fine. But the people hitting retirement age...the boomers...could be in a hard place.

[progressivebydesign]

62. The stock market is for investors who are in it for the long term.

No one can truly predict which way the market goes.. hopefully you have found something stable to put your money in. I'd worry if my stockbroker told me to sell off all my stocks when everything is down so much...

We're not going to have a Depression... but panic selling and runs on banks will guarantee something close.

[mb7588a]

82. Looks to me as if the crash already started today. Sigh. nt.

[pretzel4gore]

15. notice junyer's not in the picture

it's almost embarassing to watch the Teat Media dance around such obvious details such as the bush crime family, the iran-contra affair, october surprise, the jfk murder, bush and the cia, the crack epidemic, and a military budget bigger then the rest of the planet put together, not to mention 911 and wmd's- but the criminal nature of these tiny little conmen surprises everyone! It is pure joy to watch the DOW Jones Industrial Average lose lose and lose more, pure pleasure. I hope it crashes. I hope a sandwich made of scrubgrass cost $10k in our big cities within a couple years. fukkit.......

[VoodooGuru]

23. This is really, really bad.

I have a good friend who works for them. :( I hope her job is safe, but I'm not sanguine about it - nor should I be, from the sound of things.

Big Money falling like dominoes. I may not like them, but I do NOT want colossal craters on Wall Street. This is bad mojo.

[Jennicut]

25. God its looking worse and worse

How bad will the market be tomorrow I wonder?

[Fran Kubelik]

26. Hold on - are you sure you heard that right? As far as I know that isn't certain.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aO.ypWiGjrAU&refer=us

Sept. 15 (Bloomberg) -- American International Group Inc., the biggest U.S. insurer by assets, may be propped up by $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to people familiar with the situation.

The Federal Reserve urged AIG to seek private capital and discouraged the insurer from expecting a loan from the central bank, according to two people with knowledge of the discussions. Goldman and JPMorgan are working with AIG to determine how much the New York-based insurer needs, said two more people, all of whom declined to be identified because negotiations are private.

Wall Street's biggest firms are working together to avoid a failure at AIG, which sold the banks and other investors protection on $441 billion of fixed-income assets, including $57.8 billion in securities tied to subprime mortgages. The companies convened at the New York Fed for a fourth consecutive day, this time to discuss AIG, which plunged 61 percent today in New York trading.

[alcibiades_mystery]

27. The original post os DEEPLY IRRESPONSIBLE

The poster either misheard the analyst, or is misrepresenting what he said. NOBODY is claiming on any channel whatsoever that AIG has committed to filing Chapter 11 tomorrow.

The last thing we need right now are panic, untruths, and unsubstantiated rumors.

[Pale Blue Dot]

30. Yeah. "Panic" is our main problem.

That's what I was told 6 months ago when I tried to worn people that this crisis was coming.

[anigbrowl]

41. Panic caused by misinformation IS irresponsible

The OP is an hour old and I don't see news online anywhere about AIG filing for bankruptcy. Chances are the OP got it wrong. If you need an example of how getting it wrong can have undesirable results, look up what happened to united airlines last week and stop being such a poser.

[Pale Blue Dot]

45. That this was said on CNBC

was confirmed by at least one other DUer in a separate thread.

On edit: And here's another confirmation, right in this thread.

[alcibiades_mystery]

49. It was an alalysts speculation at best

The OP posted it as a fact.

That's wrong, and you know it.

[Pale Blue Dot]

52. Let's talk on Wednesday. nt

[alcibiades_mystery]

56. It wouldn't matter if it did happen

The fact is that the poster is reporting as a done deal something that has ZERO confirmation. It's irresponsible.

[anigbrowl]

61. Agreed. Prediction is one thing, false reports are quite another.

[Ichingcarpenter]

53. Glad I sold my stocks and 401s back in 06

They did say it, and CNBC was irresponsible not the OP.

[anigbrowl]

59. Er, not.

'I heard that too' and 'The bank of Japan is having a meeting' very possibly relevant, but not any kind of proof. I do think it's a very strong possibility, but no announcement has been made so far. It would be a bit strange if they declared this on CNBC 2 hours ago and not one financial wire service had seen fit to run a story about it since.

[alcibiades_mystery]

46. My wife works in the industry

I know full well what the real problems are. that doesn't change the fact that spreading bullshit rumors is deeply irresponsible, and verging on stupid.

[blondeatlast]

38. I posted the Motley Fools' take below; they aren't all lollipops and sunshine, but no imminent doom,

either.

[Ichingcarpenter]

43. I heard it too on CNBC earlier...... from analysts talking.

I'm watching CNBC right now and it looks like the Bank of Japan
is gonna have an emergency meeting according to their
foreign correspondents. They are having a special show from Asia right now.

[progressivebydesign]

63. I agree. Too many panic postings here.. People seem to misunderstand how panic contributes..

they get all pissed off if you mention that banks failed in the past often because of rumor and panic and runs on the bank...

AIG is not failing tomorrow, from what I read, they are filing chapter 11...

And.. even tho the media loves a salicious story reporting that TWO Giants failed today, Lehman Brothers did, but only after a deal fell through to buy/save them, and the other.. Merrill Lynch was bought up by BofA, they didn't fail, they were purchased.

And the media has barely mentioned the 70billion dollars put in play today by several banks to calm the economy.

But panic sells.

[TexasObserver]

80. You are naive about the business failures and chapter 11 proceedings.

Where do you get your talking points, Fox Business News?

You are repeating things always said by those with just a smidgen of business knowledge. It's the same thing the naive said in 1929 and 1987. Keep thinking it's ok, but know that your words do not sell to those who actually understand how fortunes are made or lost.

Merrill Lynch lost half its net worth since the start of the year. Yes, it was bought, but thousands of its employees will be cut now and looking for jobs. Its stock and operations are affected, and that affects many Americans directly.

Lehman Brothers is going into chapter 11, but that's just a way station on their road to insolvency. They're effectively finished.

AIG is a major insurer in the world, and many of those claims in the gulf coast from the past several hurricanes will go unpaid. AIG is a major client of law firms in the nation, and its inability to pay will sink a number of such firms. There will be other insurers who will have to take up the slack where co insurance and/or reinsurance are involved. The LOSS by AIG's action will be huge, and your comments about their filing chapter 11 reveals your lack of understanding of that process, too. Do you have any idea how many chapter 11 bankruptcies become liquidations, not reorganizations? Over 90%.

The $70 billion you mentioned is a drop in the bucket compared to the economic storm surge that is a trillion or better. You keep clinging to those sayings someone told you, the ones you repeat when you think they're appropriate. Meanwhile, those of us who actually understand economics will say BAIL NOW! There is such a thing as moving money into bonds or precious metals, you know, when the stock market tanks. The suckers are the ones who stay in, following the kind of advice you repeat, which has about as much utility as a fortune cookie saying.

[Ichingcarpenter]

35. What a mess but they are all tied together by failures they created

and ultimately they will try to keep each other afloat since they
are tied together in their interests.

Goldman Sachs is suppose to give earnings tomorrow and analysts said they don't look good.

Rumors are flying right now on the economic channels right now, it will be a rough day tomorrow.

[Fran Kubelik]

37. shit

I'm really scared. I've been scared for months, but I was really hoping it would all be ok.

[nadinbrzezinski]

29. FUCK

The ramifications... OH MY GOD

[HughMoran]

32. Black Monday has been postponed to "Suicide Tuesday"?

This is crushing.

[Rockholm]

57. The Asian Markets are tumbling right now.

Down 5% on average. The US futures are not horrible, but not good at all. This could be a good time to buy. The markets could actually rebound on Tuesday, but does not look promising.

[chieftain]

34. I am in insurance folks and this is huge. We are in free fall and

the free market ship of fools who got us here have no idea what to do but to continue to insist that the fundamentals are strong.

[progressivebydesign]

64. If you're in insurance, then you should really read up on this. They aren't failing tomorrow. n/t

[TexasObserver]

81. Correct. If AIG is not paying losses, it means either other insurers or the insureds are.

This is an economic fact lost on many Americans, particularly those who think this AIG bankruptcy is just a reorganization. The fundamental economics are bad, and that is the weight bearing down. The air is being let out of the Bush frauds the past 8 years, and the overextended and overleveraged business world is paying the tab.

AIG is in serious trouble, and so is anyone who has an insurance claim with AIG.

Any insurer who is involved with AIG in coinsurance or reinsurance is also exposed.

It's going to get a lot worse before it gets better. Bet on it.

[blondeatlast]

36. It's NOT imminent even if the news ain't good. Take a walk and breathe, guy.

Listen to the Motley Fools (who are anything but fools):

AIG fell more than 50% at one point Monday morning on news it had rebuffed an offer from a group of private-equity funds that would have injected capital, but that could have left the insurer vulnerable to an all-out fire sale. Running out of options, AIG appears to have gone knocking on the Federal Reserve's door, looking to borrow around $40 billion to keep its books in working order. Without raising enough cash, some fear bankruptcy could be around the corner.

(snip)

Speak now or forever hold your peace

Without any firm news coming out of these two, investors are bound to assume nothing but the worst. It isn't necessarily that we know how bad they are, it's that we basically know nothing at all. If either of these companies comes out with a detailed announcement of something that's done -- not one that's just being planned -- both could see a huge rebound. Alas, until then, both are bound to remain in the black-hole death trap they've put themselves in.

http://www.fool.com/investing/dividends-income/2008/09/15/clocks-ticking-for-aig-wamu.aspx

[Ichingcarpenter]

48. Leyman Bros. have suspended all trading in Hong Kong

Japanese banks tied to Leyman are in trouble on the Japanese Market.

[Barack_America]

40. THERE IS NO OTHER MENTION OF THIS IN THE MEDIA

In fact, the NYT just filed this report. No mention of bankruptcy...yet.

http://www.nytimes.com/2008/09/16/opinion/16lewitt.html

[Pale Blue Dot]

47. The NYT article is old news.

By the time this was posted, Moody's and S&P had already downgraded AIG. This article didn't know that had happened, so it must have been written before.

[Ichingcarpenter]

54. AIG has lost over 60 percent of its value. A share costs only $4.76 now.-Market watch

AIG has lost over 60 percent of its value. A share costs only $4.76 now.

They are desperately trying to avoid having their stock rating downgraded.

SAN FRANCISCO (MarketWatch) -- American International Group Inc. lost more than 60% of its market value Monday as the giant insurer rushed to raise capital and stave off ratings downgrades that could threaten its survival.

...

AIG is rushing to try to raise capital to avoid ratings downgrades. If downgrades happen, the insurer may have to post billions of dollars in collateral to support credit-derivatives positions. The downgrades also may trigger an exodus of clients, with some customers canceling policies. That may require AIG to return any unearned premiums covering the rest of 2008.

"What's really needed is a significant amount of external capital as quickly as possible," said Sean Egan, president of Egan-Jones Ratings, a ratings agency that's paid by investors rather than issuers. "The most likely avenue for that is the sale of some of AIG's operating units to another insurance firm."

If AIG can arrange short-term financing of at least $25 billion, that would probably give the insurer enough time to sell businesses and raise the capital it needs to avoid downgrades, Egan explained.

Shares of AIG slumped 61% to close at $4.76. Spreads on AIG credit-default swaps widened by 1,000 basis points to 1,908 during afternoon action, according to Credit Default Research. That suggests traders are a lot more worried about an AIG default.

http://www.marketwatch.com/news/story/aig-slumps-insure...

[truthisfreedom]

58. Story moved (link here)

http://www.marketwatch.com/news/story/aig-slumps-insurer-rushes-raise/story.aspx?guid={F3C3CF29-5FD9-48E7-82A9-8EE035691B83}&dist=msr_3

[anigbrowl]

60. Man, I wish I had a bunch of cash to invest right now.

at 21c/share, I figure buying up a bit of Lehman is probably a reasonable chance - lots of people go to Vegas with the plan to fritter away at least as much on slot machines.

[Blaze Diem]

68. Ya & Foreign investors are probably thinking along the same lines.

Foreign investors with a lot of money.
As in Arab Nations.

[anigbrowl]

69. Well, some of them have money. I only have living expenses in my back account right now :-/

Oh well, what are you gonna do. If I could spare a few thousand I'd buy cheap stocks like Lehman right now and put the stock certificates in a drawer for 10 years. But I can't, ho hum. That's my own fault I guess.

[Blaze Diem]

75. Ya me too. Barely living expenses. Don't even know why I bother to have

a bank acct.
Savings has now been moved to daily survival acct.

[Dr.Phool]

79. Which brings to mind an old parable about a fool and his money.

What normally happens in a corporate bankruptcy of this magnitude, and this is a BEST case scenario, if the company manages to reorganize and emerge from bankruptcy, COMMON STOCK IS WIPED OUT and new stock is issued.

I personally don't think Lehman will survive, but anyone owning common stock will be left holding an empty bag. I worked for a major company that did this shit TWICE.

There were plenty of hucksters out there selling common shares for $.10, even though authorities were warning that they were worthless.

You'd have a better chance winning the lottery. And you know what the odds of that are.

[Dr.Phool]

78. That was just today.

They've lost 90% of their value since November.

[IndianaGreen]

66. The fundamentals are sound, saith McCain

Don't worry, be happy!

[bridgit]

71. He said also that 'the fundamentals' were actually people...*people!!* Now is that the ultimate...

Human Resource term or what? People aren't really people...they're fundamentals, incidentals, moving parts, cogs in a wheel, items to be acquired, slips of paper in a suggestion box sooner to be ignored, pink slips to be delivered; anything but people. It's a glimpse into the greater republican mindset, the dehumanization of: We The People. We The People are not We The Fundamentals. True unadulterated gibberistic douchebaggery that!!

[bridgit]

67. These matters must be positioned as the end of republicanism...

I care less for the retort they're already using, so predictable so lame: Dems have controlled congress for blah, blah, blah; it doesn't matter what they say republicans are done. These sick & twisted trickle down/trickle sideways/trickle to my crony policies have Reagan's, and the likes of Phil Gramm's *deregulation privatize it all* stamped all over them.

[Alhena]

70. I doubt they file bankruptcy- AIG is solvent, just illiquid ...

big difference between it and Lehman, which was insolvent. I heard NY state officials say publically today that the company was solvent, in which case I'm sure some investment banks will work out a rescue plan. The consequences of an AIG bankruptcy are too dire to contemplate, given their heavy involvement in credit default swaps and the like. It could sink Wall Street. Goldman Sachs et al know that and will pony up the money needed to keep it afloat- *IF* AIG is solvent.

Having said that, if AIG is insolvent then they will have to file b'cy in all likelihood, in which case we'll be facing the financial equivalent of several Hurricane Katrinas.

[TooRaLoo]

76. Holy crap.

What will happen to the policy holders?