I've been up since 4am but can't go to sleep now. American International Group (AIG), the world's largest insurance agency, just got downgraded by Moody's and S&P...this after a brutal day of trading that broughtthe insurance giant'sstock down yet another 60%. Let's cut to the chase here: WHAT---WHO--- WILL SAVE AIG?
The mere fact that I'm asking this question just hours after Lehman Brothers (LEH) went under is astounding. We haven't had a minute to really digest what happened to this venerable institution and we're already rushing to the next disaster zone. Right before the markets closed on the East Coast, the Fed had asked JP Morgan (JPM)and Goldman Sachs (GS)to cobble together a $70 billion dollar pool of money that AIG could tap. We watched as the market came back a measly 40 or so points and then continued its steady march back down with the Dow eventually wiping the blood from its forehead to the tune of a loss of 504 points, the worst point drop since 9/11.
Billions and billions of dollars in stock market value across the board disappeared today, but what happens tomorrow when the markets wake up bruised and battered from today's rout, only to face the AIG nightmare head-on?
Will Treasury Secretary Hank Paulson, who categorically said today there would be no more traditional bailouts of any more financial institutions, have a change of heart or soul? Can you really let AIG drown as Treasury and the markets did with Lehman? Or *should* Paulson and Company let it go down? How many more 'saves' can the U.S. government pull off involving companies that got badly burned because they gambled and lost?
I don't know. But I do know we WILL survive this. Americans have made it through the crash of '29, Black Monday in 1987, the market fall after 9/11.We're resilient and optimistic. Let's live up to our rep.
--See you tomorrow