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09-16-2008, 08:07 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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AIG
Two questions.
1. If AIG goes bankrupt how will it affect my home and auto insurance?
2. I own unsecured bonds of International Lease Finance Corp which is wholly owned by AIG. Am I screwed?
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09-16-2008, 09:04 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 1,645
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My mom has one of those stock market indexed annuities with them and I hope it is ok. It has a guaranteed minimum interest rate and will begin paying in a few more years, after a 10 year period.
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09-16-2008, 09:38 AM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Policyholders will very likely be protected, since any BK filing would be by the holding company while the insurance companies would stay out of BK and keep doing business. If you want a precedent, go look at what happened with Conseco policyholders. The holdco went bust but the insurance companies (which were much weaker than AIG;s insurers appear to be) keptright on chugging.
ILFC is a big question mark. I think it is a very likely sale candidate if AIG gets the time to sell stuff in an orderly fashion. Its an attractive business with lots of hard asset value underlying the bonds. The question is what protections there are for ILFC bondholders vs. AIG's troubles and whether ILFC would get dragged into BK if the AIG holdco files.
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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09-16-2008, 01:08 PM
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#4
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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 Quote:
Originally Posted by brewer12345
ILFC is a big question mark. I think it is a very likely sale candidate if AIG gets the time to sell stuff in an orderly fashion. Its an attractive business with lots of hard asset value underlying the bonds. The question is what protections there are for ILFC bondholders vs. AIG's troubles and whether ILFC would get dragged into BK if the AIG holdco files.
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Berkshire Hathaway has been rumored to be sniffing around this one... but after all the Gen Re & AIG prosecutions, AIG would be dragged through a knothole on the price. After walking away three or four times, Buffett would eventually negotiate a price about two bucks over a bankruptcy liquidation.
Wow, look at that-- Berkshire Hathaway's stock price was up during Monday's meltdown and it's up another 3.5% this (Tuesday) morning!
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09-16-2008, 01:12 PM
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#5
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Recycles dryer sheets
Join Date: Mar 2005
Posts: 352
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Quote:
Originally Posted by Nords
Wow, look at that-- Berkshire Hathaway's stock price was up during Monday's meltdown and it's up another 3.5% this (Tuesday) morning!
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Yeah! I gleefully noticed that and wonder why.
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09-16-2008, 04:24 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Dec 2005
Posts: 1,228
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That's what I love about BRKB... it usually goes up when the rest of the market is in trouble, as investors "flee to quality".
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09-16-2008, 05:37 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,698
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Just announced,
85 billion for 85 % of AIG from the fed.
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09-16-2008, 05:38 PM
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#8
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Quote:
Originally Posted by 73ss454
from the fed.
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I guess that duct cleaning business really took off for him then.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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09-16-2008, 06:21 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Dec 2005
Posts: 1,228
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Quote:
Originally Posted by cute fuzzy bunny
I guess that duct cleaning business really took off for him then.
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I was thinking the Fed had found a strong stash of weed like thefed used to grow.
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09-16-2008, 06:25 PM
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#10
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by free4now
That's what I love about BRKB... it usually goes up when the rest of the market is in trouble, as investors "flee to quality".
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Berkshire is the only single-company stock that I would consider treating as an asset class for asset allocation purposes. It has a long-term trend of rising in value, it is itself a very diversified operation AND it feels like it has a low -- if not negative -- correlation with the broad market.
The market meltdown of 1973-74, for example, may have been the best thing that ever happened to Berkshire, as it was able to use its "Fort Knox of capital" to buy quality companies at insane discounts. And in the 2000-2002 bear market, Berkshire stock was sharply higher. I don't think investors who hitch their wagons to Warren Buffett in bear markets have forgotten that.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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09-16-2008, 06:26 PM
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#11
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jan 2008
Location: NC
Posts: 21,305
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Congratulations everyone! We now share a controlling interest (and then some) in AIG, without any control whatsover...
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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09-16-2008, 06:29 PM
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#12
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Quote:
Originally Posted by ziggy29
Berkshire is the only single-company stock that I would consider treating as an asset class for asset allocation purposes. It has a long-term trend of rising in value, it is itself a very diversified operation AND it feels like it has a low -- if not negative -- correlation with the broad market.
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Wait until Warren kicks the bucket suddenly. You'll get to see all sorts of single-company stock behavior. Doesnt matter that they have a succession plan set up...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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09-16-2008, 06:36 PM
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#13
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by cute fuzzy bunny
Wait until Warren kicks the bucket suddenly. You'll get to see all sorts of single-company stock behavior. Doesnt matter that they have a succession plan set up...
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Oh, I know it. And the funny thing is that in terms of *operations* of its subsidiaries, Buffett does *nothing*. None of its companies will be negatively impacted by Buffett's departure, since he has a rather unique management philosophy of only buying businesses with top-notch management and leaving them alone. (Okay, for Gen Re that didn't work so well, but usually...) That would be in stark contrast to (say) Apple, where much of the value and execution of the business operations is dependent on the ideas of its CEO.
To me, that means that if BRK sold off so viciously that the value of only the current operating companies and stock holdings were more than the share price, it would be an incredible buying opportunity. I think it would produce one of the larger market inefficiencies we've seen in quite some time -- fitting, it would seem, as Buffett himself has become a legend largely on the basis of doing just that.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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09-16-2008, 06:44 PM
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#14
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Yeah, it might be a good buying opportunity...might also be a situation where the folks who own the stock for emotional reasons part company with it, and the institutional holders start asking why they'd own it vs owning 'best of breed' in each of its holdings industries.
You might be looking at a couple of years before the price started picking back up.
Dont get me wrong...love the guy, love the company, and I've owned A and B shares before. But I got a wee bit nervous about a guy who likes to eat cheeseburgers and candy on a regular basis thats getting along in years being the reason why a lot of people own and hold the stock.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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09-16-2008, 07:00 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Posts: 1,600
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I am definitely in the wrong business. In engineering, if you screw up your company goes bankrupt. In finance, if you screw up your company gets bailed out by the American taxpayer.
I'm no longer an employee, so I can no longer spend as I did during the old days. My new low income status is a threat to the American financial system. So where's my taxpayer bailout? Surely the economic masturbation payment I received earlier this year doesn't represent the extent to which current and future taxpayers are willing to sacrifice in order to make my life more comfortable :confused: :confused: C'mon, folks, belly up to the bar and pay for my drinks! The round's on you... 
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09-16-2008, 07:05 PM
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#16
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by socca
I am definitely in the wrong business. In engineering, if you screw up your company goes bankrupt. In finance, if you screw up your company gets bailed out by the American taxpayer.
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As the saying goes: Privatize the gains, socialize the losses. I wish I could do that with my 401K!
On one hand, some in Washington are bashing Big Oil for being too successful and profitable even as on the other hand they reward bad management with bailouts. Nice consistent message to send there.
This is a problem with allowing companies to become "too big to fail." I consider myself a good capitalist who believes in free market economics, but when any one company becomes so big that they threaten to cause major economic damage to the entire nation (if not the world) if they go under, one has to wonder whether that's an advisable situation to allow.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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09-16-2008, 07:15 PM
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#17
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Had I only known we could get payments for masturbation...well...I guess I could have retired a lot earlier than I did. I might have barely made it out of high school...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Hank Greenberg-With Friends Like This, Who Needs Enemies?
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09-17-2008, 12:10 AM
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#18
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Hank Greenberg-With Friends Like This, Who Needs Enemies?
Did anyone see the open letter he sent to Robert Willumstad, CEO at AIG?
Basically he said that You are a disaster, you and the board have ruined this company.
Just saw Hank G. on Charlie Rose. What an impressive guy! Usually youk see morons on TV. Greenberg is so not a moron.
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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09-17-2008, 02:13 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,713
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Can anyone answer where the authority comes from for these bailouts?
Didn't it require an act of Congress to give loan guarantees to Chrysler?? and that was a lot less money..($1.5 billion in 1979 dollars = mebbe $5.5 billion today). Carter was attacked for it IIRC.
Who's running the joint here?
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09-17-2008, 02:14 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,434
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A friend asked if he would be allowed to write off the losses in his 401k. I broke the news gently telling him that he was the working class.
Oh and AIG. I have some AIG VALIC 403(b) from years ago - not much but I still have a fondness for it. They say that the insurance and retirement components of AIG are firewalled and might change owner but won't be financially hit. I would find it reassuring if I could muster the ability to believe anything "they" say.
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