Community | February 27, 2011 | 3 comments

Will AIG Implosion 2.0 Lead To QE 3.0?

source: http://www.zerohedge.com/article/will-aig-implosion-20-lead-qe-30-0

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Schnookums
There was a time when everyone thought CDOs are perfectly safe. That ended up being a tad incorrect. It resulted in AIG blowing up, recording hundreds of billions in losses and almost taking the rest of the financial world with it, leading ultimately to the first iteration of quantitative easing.

A few years thereafter, several blogs and fringe elements suggested that munis are the next major cataclysm and will likely require Fed bail outs (some time before Meredith Whitney came on the public scene with her apocalyptic call). It would be only fitting that the same AIG that blew up the world the first time around, end up being the same company that does so in 2011, and with an instrument that just like back then only an occasional voice warned is a weapon of mass destruction: municipal bonds.

AIG dropped over 6% today following some very unpleasasnt disclosures about its muni outlook, and corporate liquidity implications arising therefrom:

"American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity."

So how long before we discover that Goldman has been lifting every AIG CDS for the past quarter? And how much longer after that until someone leaks a document that the company's muni strategy was orchestrated by one Joe Cassano?

Continue on at:
http://www.zerohedge.com/article/will-aig-implosion-20-lead-qe-30-0
  1. groups:
    Community,   Actual News,   Greatest Depression,   Business News & Analysis,   1 more
  2. tags:
    Bailout,  AIG,  Monetary Policy,  Quantitative Easing,  1 more
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3 comments // Will AIG Implosion 2.0 Lead To QE 3.0?

  • Dagum
    • +1
      Dagum  

    • "As of Dec. 31, the company had more than $700 million of state general-obligation bonds from California,"" It also held more than $200 million in the bonds from Illinois."

      What type of idiots do they have building their portfolios? Unless they already know that they are going to get bailed out when interest rates shoot up and municipalities default.

      What is their investment strategy, have political connections, make terrible investments that they know are going to blow up, and instead of going into bankruptcy, call up your political connections and get a taxpayer funded bailout?

    • 1 year ago
  • Schnookums
  • Dagum
    • 0
      Dagum  

    • This probably is the year the municipal bond bubbles busts. But A second bailout for the flunkies at AIG? I hope not. But as the crisis proved anything is possible when you have the right political connections.

      If Q.E.3 does happen I am starting to lean toward the idea that the federal reserve is deliberately trying to crash the dollar so they can use the resulting chaos as political cover to transition the U.S. to one-world currency control by the IMF.

    • 1 year ago
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