AIG has blown through the entire $85 billion from the nomination:
The New York Federal Reserve is lending up to $37.8 billion to American International Group to give the troubled insurer access to much-needed cash.
In exchange, AIG is giving the New York Fed investment-grade, fixed-income securities that it had previously lent out to other institutions for a fee. Those institutions are now returning these securities and want their money back.
The new program, announced Wednesday, is on top of the $85 billion the federal government agreed to lend to AIG last month to prevent the global company from collapsing. AIG said last Friday it had drawn down $61 billion.
How deep is the hole? As to the whole credit mess, there was a great analogy in the comments earlier:
I heard a great analogy yesterday. You’re in a room with 100 people, and 20 of those people have a deadly disease that is spread by touch. You have no idea who the 20 are, so your strategy is “touch no one”. The banks have no idea who is toxic and who is not, so lending has frozen.
You can send your thanks to the geniuses who thought a $60T unregulated financial market casino was a fine idea, and to Bush, Paulson, Cox, and Bernanke/Greenspan, who appear to have been completely asleep at the controls.
Someone better give them some liquor and antibiotics and they better start touching each other soon, because 120 billion in a few weeks to AIG alone is terrifying.
Martin
Good spas ain’t cheap!
(I know the St. Regis – credit for good taste)
But AIG might singlehandedly be pushing the public toward accepting a nationalization policy.
That One - Cain
It’s going to be great watching Bush the republican president end his career by doing my socialism than all the other democratic presidents combined. Great legacy, dude. Your presidential library is going to be in a roach coach in some dinky town called NomNom in Texas.
cain
Comrade Dreggas
This should not be a surprise to anyone. I was talking with a friend about this loan the other day and basically said "they’ll blow through that in a month tops".
Tsulagi
I’m thinking they already had plenty of all that during their spa trip last week.
D. Mason
Terrifying my ass, it’s infuriating. How in the holy fuck can they be getting more billions while the news of their most recent largess is still fresh. They even have another junket scheduled for next week. What the fuck is this bullshit.
Perry Como
I hate to be the bearer of bad news, but the OTC derivatives market is $600 trillion. The credit default swap market (what AIG is exposed to) is $60 trillion.
comrade sparky
hmmm…see, this is the problem with trying to act as if the CDS market is a real market. no one–i mean no one–has 60+ trillion to give these lunatics, even if it were a good idea to do so. and it’s not. everyone is going to have to somehow pretend that these trades never happened. since we made this bizarro world in the first place, we can unmake it, too. the trick is erasing it without pulling down the real financial system. the worst thing we could do is try to prop it up. that would be like ummm inventing a new rationale for invading Iraq after the first one was uhhhh…. oh crap.
Tsulagi
I see Martin already put a link to the WaPo AIG spa story. Not only taking spa trips, AIG continuing to pay the guy who helped get them in this mess, a financial products manager, $1 million a month in consulting fees. Amazing. I am so in the wrong fucking business.
Sister Machine Gun of Mild Harmony
Off with their heads?
tripletee (formerly tBone)
In fairness to the AIG execs, some of them brought their own wetsuits.
Stevenovitch
So, do you think all of you baby boomer idiots who voted for Reagan and his ilk will go down in history as Tom Brokaw’s Shittiest Generation for basically fucking over all of us younger generations with your hopelessly selfish "greed is good" bullshit? I hope so.
CIRCVS MAXIMVS MMVIII
Phil Gramm saw my post and realized Christmas is just a few short months around the corner and he forgot he needs to purchase 300 foot yachts for all of his friends?
I’ll bet the one he gives McCain is going to be teh awesome!
CIRCVS MAXIMVS MMVIII
They just want to make sure they thoroughly spit in the faces of regular Americans before the entire economy comes crashing down.
Montysano (All Hail Marx & Lennon)
@Perry Como:
Yeah Perry, I know. I was talking about the swap market. The OTC derivatives number is so scary that I don’t even like to think about it. In fact, Jim Sinclair (the gold guy) taught me a new word the other day: he thinks the value of OTC derivatives may have passed $1Q. That’s one quadrillion dollars.
Here’s my simple-minded way of looking at that: global GDP is about $50T. So imagine if you were leveraged at 10x you annual income; that boat doesn’t float.
Martin
It’s local news here. They’ve already got a bunch of first-hand accounts from the St Regis on right-wing radio. I’d say its kinda awesome to listen to, but really its the same old deal. The crazy white guys read about something in the paper in the morning and bitch about it in the afternoon. I don’t think they really care what it is they are bitching about, so long as they get the audience good and outraged on the way home.
This particular story is at least mildly interesting because it’s the well-off conservative white guys bitching about how awful rich conservative white guys are. They have absolutely never heard of irony.
Martin
Brokaw? The guy in the tank for McCain even today. Funny luck of the draw that McCain got the question from the Navy man, wazznit? No, I think we’re stumbling out of the ultra-greatest generation to Brokaw, bankrupt country or no.
Stevenovitch
Tom Brokaw’s integrity was central to my point. You win.
Glenn
AI fucking G what a bunch of wankers! These criminals had the gal to spend $400K on a party for the top execs. after they took 85 Bil. in our tax money! Talk about contempt. It gets worse now these same bastards want even more $$. This is a friggen bottomless pit I say stop now before were all sucked into this rapidly spinning and deepening Black hole! Whatever happened to all the lectures on personal responsibility? Suddenly, the right wing think tanks are silent. They should all STFU permanently after this nightmare. Nothing that spews out of these paid for flunky whore holes is to be believed. CATO, ENTERPRISE , HUDSON all on the CORP. neo-Con payroll, none have any credibility anymore.
NYT
Its worth remembering that just three weeks ago New York’s Insurance Superintendent Eric Dinallo, wanted to allow AIG to transfer $20B from its NY subsidiary up to the parent as a "loan".
That money would be gone now and NY policyholders would have been left holding the bag.
jake 4 that 1
Too big to fail = Too big to give a fuck.
In a slightly less civilized society Paulson, Bernanke, Cox and their 21st Cen Robber Baron pals would be trying to get the tar and feathers off so they could pluck out the splinters from the rail.
Meanwhile, The Worst Thing to Hit America Since Small Pox tells us to hang in there, heh. The super duper financial fix is going to take a while to work and then we’ll all have ponies, heh.
And people still support this result of a broken rubber?
Afuckingmazing.
Kamishna ya Watu Xenos
That is one HELL of a deleveraging we have coming our way. I need to change my prediction of the stock market bottom from Dow 8100 to Dow 81.00!
I must have been crazy to be worried about hedging against inflation. Maybe Mugabe was just a bit ahead of his time.
Comrade This One
@jake 4 that 1:
To quote some early 20th century reformer, I wouldn’t tar and feather them, because even pitch can be defiled.
Kamishna ya Watu Xenos
I suck at this stuff, but thought I ought to at least try:
If the OTC derivative market is leveraged to one quadrillion, the human race has pretty much nuked itself, financially.
Well, it worked in preview. Here is the link.
nabalzbbfr
The correct approach out of this economic crisis is to rapidly phase in Social Security privatization over the next Presidential term. This will rapidly revitalize the capital markets, injecting several trillion dollars into them. It will also produce outstanding returns for its beneficiaries, as the markets are now tremendously undervalued with numerous bargain basement values available.
Only McCain and Palin have the cojones to carry out such a bold move. Obama/Biden plan to do an FDR reprise, whose disastrous New Deal is now unanimously panned by knowledgeable economists, whose consensus view is the US would have been far better off if Hoover had been reelected in 1932.
Ecks
1) Don’t we now own rights to 79.9% of AIG? Why don’t we take up 51% of those rights pronto and fire these asshats straight up.
2) If the problem is that there are 20 diseased people and we don’t know who, then surely the best medication is to force everyone to throw open their books, figure out who’s packing the spirochetes, and let them die their miserable deaths in quarantine so everyone else can get back to good promiscuous ole financial normality??
Update: nabalzbbfr, what you are suggesting is the equivalent of just giving EVERYONE the damn fatal disease (but at least those poor infected guys won’t feel lonely any more). DIAF.
Lesley
Naomi Klein predicted this scenario in the Shock Doctrine. Deregulate every thing under the sun so the private sector has a no holds barred profit making machine. When the bubbles burst, deplete the treasury of every dime bailing out the scum who profited via deregulation; and then tell the masses there’s no money in the till for social programs like old age security and health care. Privatize these programs and contract out to the lowest bidder who would be…the crooks that profited from deregulation and the previous bail out.
You really think the average middle class joe taxpayer is a beneficiary in this scenario?
jcricket
It really is amazing we’re worried these greedy bastards will have some kind of revolt if we limit their pay, hold them accountable, etc.
Listen fuckers, there are about 1,000,000,000 of us for every 1 of you. FOAD.
Oh, and there are easily 1,000 people willing and probably able to take your place if accountability isn’t your bag, and in bad times you don’t get a $10m golden parachute.
Letting ourselves get cowed by bullies who say, "strike and we’ll leave your state", "impose rules and we’ll go offshore", "hold us accountable for criminal acts and we’ll … cry like babies", etc. is fucking ridiculous.
Stand up, like Clinton did. Do the right thing (raise taxes, increase regulation/oversight, toughen punishments, redistribute the tax code instead of capping exec. pay). Nothing bad will happen, except a lot of WATB moaning about how they’re making $10m instead of $12m.
Jay Severin Has A Small Pen1s
$600T?
$60T?
I cannot believe how much trouble poor people have gotten this country into. After all we did for them!
Dickens would be rolling over in his grave.
Fulcanelli
@jake 4 that 1:
Ahhh. No.
Fixt.
TenguPhule
Every time AIG has to ask for a loan, one of their executives gets randomly selected and executed.
It’s the only way to be sure.
TenguPhule
Fixed.
In the good old days, they hanged the crooks.
OriGuy
Then they stuck their heads on pikes along the road into town as a warning.
Billy K(hrushchev)
Seems really silly for MY guvmint to loan money to a bank so they can loan it to me. I guess I really am a Commie, cause it seems to make more sense that the guvmint loan it direct. And if they make some money off that loan, they can finance another war!