AIG, too big to fail

Today in Financial Media and Communication, me and my colleagues have made a presentation on AIG. 

What we have to keep in mind is that: 

The collapse is due to the correlation between the CDs and the Firm which had caused the main losses in the balance sheets. 

Then, the firm has been downgraded by the three majors credit rating agencies which had caused a drop in its share price. 

On the 16Th of September, the government intervened to saved AIG from the bankruptcy with a 85bn bail out. 

After this bailout, the media sphere overreacted. Here we have some comments about the bailout: 

•“’I am floored,’ said former Treasury counsel Peter Wallison in an interview. ‘No one could have possibly imagined this a few months ago.’” (bloomberg.com, 2008)

•"Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression » said Lewitt, president of a money management firm (nytimes.com, 2008)

•« We must not bail out the management and speculators who created this mess. They had months of warnings following the Bear Stearns debacle, and they failed to act. » Mc Cain said (bizjournals.com, 2008)

•

CNBC interview, Nouriel Roubini « Socialism on Wall Street »: http://www.cnbc.com/id/15840232?video=858667820&play=1 

The most interesting is the one concerning Nouriel Roubini. The interview was during the meeting between Paulson and Bernanke. Nouriel Roubini said that it would be not the job of the government to help AIG because it is not its role. I invite you to have a quiet look at it. 

After that, a second and a third bail out appear and the forecast concerning AIG is not very encouraging for the future.

What are your predictions? 

They are very welcoming...