Globonomics!

Consulting|Technology|International business

AIG struggling to stay afloat – no pun intended!

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https://ecofin.wordpress.com/2007/08/12/the-us-subprime-crisis-increasing-chance-of-a-us-recessionburst-of-the-us-housing-bubble/

If you have read Warren Buffet’s letters to shareholders and his book – The Warren Buffet way (2nd ed.), then you know what a float is. I am not trying to strike a relation or anything to this problem but am just stating that insurance business is supposed to insure others and AIG (American International group) had that obligation to keep but something clearly went astray.

Well, it appears the very companies that are supposed to insure others against risks have got themselves into a lot of trouble as AIG was struggling to stay afloat as of Tuesday with emergency measures being taken to prevent AIG’s collapse. They probably have 36-48 hours to survive according to reports.

As with my usual habit, I connected to almost all financial news websites to get updates on the developments of some of Lehman’s asset sale to Barclays for $2 billion (may or may not happen as yet) or AIG’s or WAMU’s bleak future. AIG has got into the same muddle as the rest with its businesses getting into insuring risky credit default swaps and not realizing the repercussions.

Meanwhile, the king of all, Goldman Sachs came out with their earnings that beat street estimates but was still way down.

We are watching Wall Street closely.

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