AIG

by Larry Levin


Although the news of the Shitibank quasi-nationalization hit the tape last night, the indices opened higher today. Apparently many short sellers covered their positions, thereby driving the indices up. However, the instant the opening bell rang, the market dropped - slowly - and all day. As investors mulled over the details, they found out (surprise) there once again were no details which angered them, and they sold it. Investors are clearly tired of the not-so-well-thought-plans that keep emerging from the Obama administration.

After the market dropped below Friday’s low, the S&P tried to make a run higher. But news from AIG cut the rally off at its knees. According to CNBC, American International Group will likely report a $60 billion loss soon, forcing the troubled insurance giant to ask the U.S. government for more handouts! The losses may trigger more ratings downgrades, which would leave AIG needing to raise more collateral. The results may be reported next Monday, March 2. A spokesman for AIG declined to comment. AIG shares fell to 49 cents during afternoon trading.

AIG is already into the taxpayer for hundreds of billions of bailout-bucks and wants more. To make matters worse, it was also reported that AIG’s legal team is preparing the bankruptcy documents for a possible filing. Great - not one dime will have been paid back and AIG will close its doors.

AIG wanted to be the biggest bookie of CDS bets on the planet, which it apparently achieved. These bets, little more than gambling on a company’s credit worthiness, failed miserably and now all of the “clients” are coming in to get paid. Now, however, the debt is being paid by the taxpayer. These clowns make Bernie Madoff look like a nice guy.

When the dust settled, the Dow had closed as low as where it was in 1997.



Previous Day's Trading Room Results:

Trade Date: 2/23/09

E-Mini S&P Trades*
(before fees and commissions):


1) OTF sell @ 12:30pm at 751.00 = b/e

2) Algorithm positions (2)…combined SofT and Algo total…+4.25


Electronic (YM) Mini-Dow:


1) No trades today



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