How much is AIG worth?

I take your main point entirely – that AIG’s liabilities almost certainly exceed its assets.

But I don’t quite understand why you pick out the aircraft (apart from it being an asset quantified towards the end of the WSJ article). Why pick on that? If you pick off any of their major assets, their balance sheet will look worse than it in fact is – for instance, taking another asset priced in the article, one could equally say that “apart from the stake in Blackstone (previously thought to be worth $700m), AIG is clearly worth a large negative value”. Why pick on the planes?

This hit’s home as my company 401K is with ML and all of our liability as well as our workmans comp. is through AIG. Ouch!

KAS

There seems to be a race on among these deeply corrupt firms to bulk up to a size that is “too big to fail.” BofA has accomplished this by swallowing both Countrywide and Merrill. It may be too late for AIG.

We are witnessing the failure of desperate ad-hoc measures to solve a systemic problem. But who could have foreseen these difficulties, aside from the handful of honest academics and specialists who accurately predicted them? None of the careerists who were paid to look the other way warned us. Why shouldn’t we all be surprised?

I think Zamfir’s post explains why AIG would own an aircraft leasing company. Same reason they own mortgage-backed securities: it’s a perfectly safe investment… untl it isn’t.

#8: OMG, ROTFLMAO!

John E.’s point is a good one. If I were an ad consultant for Obama’s campaign, I’d think his team could get a lot of mileage out of this news, tying McCain’s privatization plans to their likely outcomes. It’s a good thing that our brothers and sisters in the news media who cover the events of the day are of a mind to talk only about issues of substance, important to the lives and, er, fortunes of real … um … oh, never mind.

I second that John E. made an excellent point. Remember the social security privatization that was proposed in 2005? Where do you think the money was going to be invested to produce higher returns than in the social security system? The Democrats really should be hanging this around any of the their opponents who argued for the scheme.

Perhaps a new tact from those darn regulator types [Dems] would be to put that the first order of biz will be to round up the top ten on the most wanted list – ie those who received a performance bonus over 20% of base pay and had their company become more or less worthless within a year and who did not under their own initiative resign and return bonus or more. To Leavenworth they go as Nat security dangers which should be hard for the Rep’s to argue with seeing how a war for Nat [economic] interest can be waged. At least this way we do not violate the Geneva Conventions… perhaps. Following them will be NCAA div. 1 football coaches; those who get paid more than 3x median income per game and lose or have a [lax] sub 50% graduation rate. These folks will be treated like common drug dealers and have all assets [including offshore and Fla] seized and perhaps put in the SS ‘lock box’. Obviously while incarcerated they will be allowed to eat cake, so long as it contains meal worms or some other protein source. Alternately instead of insects they would be allowed to go cannibal on each other, after all it is a dog eat dog world.

A review of the whole of the leased equip scheme[s] is long over due; while ‘innovative’ and ‘efficient,’ they really just amount to a pass the buck shell game / tax dodge.

”How much is AIG worth?”

One quote I ‘liked’ was, “… it’s worth [what could have been] health care reform,” referring to the larger folly being played out. Now they’ll be right when saying it’ll cost too much [of course that will still be short term thinking].

Before those looking to tie any of this debacle to politicians of any particular tribe get too far into the tying, they should make sure those of the other tribe aren’t equally culpable. From what I’ve read to date, that isn’t the case.

One reason that Obama isn’t making major political hay out of the situation may be the fact that – despite the pure Schadenfreude of seeing loads of those Masters of the Universe types getting their comeuppance – this financial crisis has only been getting worse for the past 12-16 months and plain old folks are getting very worried.

Pointing out with glee, “See, I told you so !” has limited traction in this environment and perches precariously over significant blowback risk.

Not to mention the fact that if Obama wins, he’s the one who’s going to be dealing with the aftershocks for some time to come.

Cheers,

It is important to see how the losses compare to the total size of the business parts that caused them, and how one part of the company can make such losses that the rest is dragged down with it.

Of course normally one part of a business failing wouldn’t be too bad – the other, still successful, parts can usually be spun off and sold as a worst case scenario. With the credit crunch it is going to be much harder to find a buyer for any such division, and so the price you would expect them to fetch will be proportionately less as well.

A couple of questions:

The Fed is taking an 80% share in AIG for $85 billion. As long as they’re throwing money at the problem, why didn’t they just take over the whole operation?

Is buying up insurance companies covered by some obscure “other duties as assigned” clause of the Fed’s legal mandate?

Thanks.