Gip, I'm glad you provided the link to that article. Let's take a closer look at what the data tells us..... That evidences the fact that while more funds are closing than in years past, there are more new funds launched than those closed. The industry continues to grow albeit at a slower rate than in the past..... This little nugget gives us an indication of the size of the business..... if 7% equals 700, that suggests that there are currently 10,000 funds in business today and the number as we have seen is growing.....and have TRILLIONS of dollars under management. Trillions...... So, if you don't believe that of the thousands of hedge funds, managing multiple trillions of dollars that there isn't at least one, that wouldn't hire the AIG swap desk in it's entirety tomorrow and promise each and every one of them a million dollars or more to make the change, you are simply wrong.......in truth, there would be many and the competition for these guys would drive the bounty to ridiculous proportions. That may not play well during the populist war on the investing class, but it truly is the way it is......
That article was written in September 2008. Since then the market has crashed, Madoff has crashed, folks have been liquidating at ever increasing rates and hedge funds have been shrinking if not closing. http://online.wsj.com/article/SB122417277242940961.html?mod=googlenews_wsj
Gip, There is no doubt the industry is not living the heady times of years past and assets have shrunk as market values have declined. There is also no doubt that of the thousands of funds that will continue to exist, managing the mere trillion or so that will remain, there are scores of firms that would gleefully line up for the opportunity to offer there guys millions to make the jump......not to mention the investment banks, foreign banks, boutiques, private equity firms, insurers, pension funds, mutual funds, sovereign wealth funds and so it goes......no doubt. None. Not one.....it is what it is.
I see that Sen Dodd (Democrat) is now proposing a special tax to recoup the bonus money. Of course it was his ammendments that specifically allowed these bonuses to be paid in the first place. Dodd tries to cover his ass
I've got a question for you. AIG is tading at under a 1$/share, given that the Govt has taken the position it's too big to fail what is the down side to buying a good chunk of their stock?
The Govt has told us that it's unlikely to go to zero.....therefore, given that it is trading for $0.90, I'd estimate the downside at anywhere between $0.01 - $0.89! 8) Rim shot please.... In all seriousness, the threat is that continued investment by the government will so dilute the interests of the existing common shareholders that their individual stakes become so small in relative proportion as to approach zero......
Question: How much, or how many, of these failed policies can be directly tied back to some form of legislation that either created programs or forced programs that lead to these mortgages or forced guaranteed investments? I do not believe that there is solely a failure by the insurer or mortgage/investment companies... but every time I read up on these things that go horribly wrong, they all seem to have a root in some political policy that had unforeseen benefits and pitfalls. Would AIG be a similar case? BTW-As for Obama's saber rattling... He is welcome to give back that money AIG donated to the Democrats at anytime. American International Group Campaign Contributions
Amazing how over the course of 18 years AIG gave 50/50 to the Dems and GOP.....almost exactly. Playing no favorites apparently...
Maybe they came to realize years ago that there really isn't any difference between the lable on the sleeze.
actually they have paid out more to Dems in 6 of the past 10 elections, and it seems they went on a spending spree in 02... just as they did with this new administration.. Well, for all the huff and puff of the Obama Administration about how angry they are... It turns out they KNEW AIG WAS PREPARING TO PAY BONUSES WITH BAILOUT MONEY How shocking.. but seriously..any answers to my questions about political policy forming and forcing this environment with AIG?
Maybe the answer to your question is to look at why they spent so much comparatively in 2002 vs. other years. What is it they were looking for or what were they trying to avoid?
The problem here is that when the original bailout happened there were no conditions tied to the money. Why Congress agrred to give this to AIG unconditionally is beyond me. To bonus the very employees responsible for this collapse with public money is unthinkable.
Corey, your point is a good one.....in effect, AIG was insuring against borrower default. Without the default spiral, AIG has no issues. We know that certain government policies contributed to the default crisis and the subsequent collapse of sectors of the securitized mortgage market. In addition, AIG held reserves and collateral in assets that were subject to "new" mark-to-market accounting provisions. Consider the vicious downward inexorable spiral when default rates began to rise, mark-to-market valuations began to decline necessitating ever greater reserves and more and more collateral as asset prices spiraled downward......a vicious cycle that doomed the company and brought the world credit markets to the brink. I am not by any stretch saying that AIG is blameless at all......they are not. It is simply as I have been stating all along.....the blame for this mess goes from Wall Street, to Capitol Hill and Pennsylvania Avenue to Main Street. I don't believe that one can be blamed more than the other....we wouldn't be in this mess without the contributions of each. If people don't borrow more than they can repay, there is no default. If we don't have "CRA loans" wrapped inappropriately in certain securities, we have more clarity and confidence and less risk in collaterized assets and in credit ratings. If we don't have "new" mark-to-market asset valuations and reporting requirements, we don't have a capital crisis, forced asset liquidations and collateral calls forcing asset prices ever lower. If we have more effective and efficient regulatory oversight of certain markets, the warnings would have gone off well before the situation spun out of control and of course it we didn't have fundamental human greed on Main Street, Wall Street and indeed on Capitol Hill, there would never have been an issue....... Our President, his administration and Congress have chosed to demonize but one of the eqully culpable contributors of this mess for political purposes without fully appreciating that in so doing, he himself is contributing to the mess and trashing and handicapping the very sector and indeed the only sector with the wherewithal to pull the car out of the ditch......brilliant. If we have gotten to the point where we believe that the solution to this train wreck is in Washington, we are fooked.....
I know that this thread is about AIG (hell I started it) but there is another failed organization that is getting federal money that may make AIG look well run. I'm referring to the Detroit Public School System. Here's an article on them http://www.michronicleonline.com/articlelive/articles/3194/1/DPS-courting-disaster/Page1.html The system which has a reported deficit of over $400 million dollars has not auditing department. Millions, perhaps tens of millions have been unaccounted for. http://www.michronicleonline.com/articlelive/articles/2826/1/Failing-DPS/Page1.html So what't the solution. Why the Obama Stimulus Plan of course. It's slated to give to the DPS $530 million. I saw reported on TV the other night that 5% of "graduates" from the DPS are able to do college work. (the other 95% must be playing for M or MSU) Over half a billion in taxpayer money being poured down a swere drain. Why don't they just burn the money to heat the schools. At least it will serve some legitimate purpose.