AIG has lost over 60 percent of its value. A share costs only $4.76 now.

[Selatius]

They are desperately trying to avoid having their stock rating downgraded.

SAN FRANCISCO (MarketWatch) -- American International Group Inc. lost more than 60% of its market value Monday as the giant insurer rushed to raise capital and stave off ratings downgrades that could threaten its survival.

...

AIG is rushing to try to raise capital to avoid ratings downgrades. If downgrades happen, the insurer may have to post billions of dollars in collateral to support credit-derivatives positions. The downgrades also may trigger an exodus of clients, with some customers canceling policies. That may require AIG to return any unearned premiums covering the rest of 2008.

"What's really needed is a significant amount of external capital as quickly as possible," said Sean Egan, president of Egan-Jones Ratings, a ratings agency that's paid by investors rather than issuers. "The most likely avenue for that is the sale of some of AIG's operating units to another insurance firm."

If AIG can arrange short-term financing of at least $25 billion, that would probably give the insurer enough time to sell businesses and raise the capital it needs to avoid downgrades, Egan explained.

Shares of AIG slumped 61% to close at $4.76. Spreads on AIG credit-default swaps widened by 1,000 basis points to 1,908 during afternoon action, according to Credit Default Research. That suggests traders are a lot more worried about an AIG default.

http://www.marketwatch.com/news/story/aig-slumps-insurer-rushes-raise/story.aspx?guid={F3C3CF29-5FD9-48E7-82A9-8EE035691B83}

[whistle]

1. Are they selling shares on Ebay yet?

[Yo_Mama_Been_Loggin]

2. Looks like the Dow will go down another 500 points tomorrow

That'll put it at a lower level than it was when G DUHbya took office.

[Selatius]

5. I fear that a panic will take hold on Wall Street. I hope against it, but the thought makes me shake

It could be very bad tomorrow. How bad is the question of the hour.

[Yo_Mama_Been_Loggin]

9. All snickering aside

It's said some $700 billion in investments were lost today. What people need to remember is a lot of that is people's retirement money, pensions and 401K's.

It sickened me to here Cariboo Barbie today say how great this all was because the Bush Administration saved the taxpayers money.

[ingac70]

10. That's why I never put my money in the stock market.

No way, no how, not ever.

[MannyGoldstein]

3. If Honest Hank Paulson Can't Get A Deal To Prop AIG Up By Tomorrow

The Market could get ugly again.

[Old and In the Way]

6. I think we're running out of white knights.

knights with billions of USD looking for a buyout opportunities.

[Old and In the Way]

4. I wonder how many people got wiped out on this stock today?

I think they were one of the the 'conservative' stocks...a good place for pension funds. This really sucks.

[Sancho]

7. I don't have stock, but I have some Valic annuities, I wonder if they are safe?

They were supposed to be super safe, but nothing seems safe anymore.

[hendo]

8. now would be a good time to buy. n/t

[Selatius]

11. Not necessarily, unless you are certain that the bottom has been reached.

Otherwise, you're just putting your hands into the blender before the blades have stopped.

[hendo]

15. it sounds

as though they are undergoing massive restructuring. I would venture a bet that they won't fall much further, and next year AIG stock will be much higher than it is now.

[Selatius]

18. That depends if they can stabilize themselves before their liquidity runs dry.

It all depends right now on if the 20 billion they have secured is enough to handle day-to-day operations. As collateral, they have essentially put up all their insurance subsidiaries. If they are burning through that 20 billion too quickly, Moody's will bring down the hammer and downgrade their stock rating.

[progressive_realist]

19. Much like Bear Stearns or Lehman Brothers?

Financial cheerleaders love to talk about how stocks always rise in the long run, but that is ignoring all the companies that go bankrupt along the way. It is quite possible for the value of a stock to fall to zero and stay there permanently. That is, in fact, one of the biggest risks with stock investments (nationalization a la Fannie Mae/Freddie Mac being the other).

[ingac70]

12. I wouldn't chance it. n/t

[Ichingcarpenter]

13. Gold and Oil are taking a beating also

That surprises me.

[Selatius]

14. That's pretty odd. You'd think gold would be rising. It's a "safe harbor" investment.

Perhaps somebody was swapping gold for some other safe harbor investment?

[Ichingcarpenter]

16. Leyman Bros has suspended trading in Hong Kong

Seems to be some panic with them in Japan with Banks tied to them also.

Most analysts are saying that a lowering of the interest rates
by the feds would be bad and won't stop the slide

Money is going into US treasury notes.

[PeaceNikki]

17. It was in the 90's before Bush took office

http://finance.google.com/finance?client=ob&q=NYSE:AIG

[1]

20. the thing is...

the value of anything in the moment doesn't mean shit.

unless the value goes to zero. and even with a saddest of cases like enron, it was never even close (billions) to zero.

the value of anything only realizes itself when i sell that anything.

if i buy gold at $100, and it dips to $20 and then rises to $900, what have i gained? or lost?

as long as i am holding the gold i bought, nothing.

if i sell at $20, i lost. if i sell at $900, i gained. if i hold that gold without selling, the price fluctuations are just price fluctuations.


you guys get this, right?

economics 101...

[Selatius]

22. Econ 101 also says if the company goes out of business, your stock in it really becomes worthless.

Unless another company agrees to buy AIG, you get nothing, and even if a company does buy AIG, you likely won't receive but a fraction of what you invested in the first place when the buying company pays for your shares. You still lose in that situation; the only matter worth discussion is degrees of loss. You can lose big or lose bigger.

If you ask my opinion, AIG probably will be unable to avoid bankruptcy.

[1]

23. that would be the "unless the value goes to zero" part of my post...

which is not going to happen.

[Captiosus]

24. Econ 101 doesn't distinguish between stock types, however.

If you have common stock and a company goes into bankruptcy, your stock value IS worth zero because they only have to pay partial dividends during restructuring or asset liquidation to PREFERRED stock holders.

If I buy 100 shares of common stock in Company X and then they tank and another company buys them, I'm going to end up losing most, if not all, of my investment. Sure, you can argue semantics that it's not zero, but if my 100 shares of Company X common stock bought or traded for 1/16th of a common share of the buying company, it's a huge loss.

[1]

26. oh, ok. my bad. you buy common? ok. yes, you are right about common. n/t..

[Captiosus]

27. Nah, I'm out of the market and have been a while but...

A lot of people have NO idea what's actually IN their portfolios.

They "trust" their advisers or managers to manage their money and I wouldn't be shocked, in the least, to hear that people who think they have well-managed, diverse plans actually have portfolios that are bloated with common stock.

[Selatius]

25. Judging by what's happening, likely not, but at this point, you could literally be arguing pennies.

AIG would likely not be a good investment decision at this point in terms of buying their stock. I wouldn't advise anybody to pick up their stock.

[nadinbrzezinski]

21. Now they are junk

and this is not going to be good

Take into account, if they go into Chap 11 (as they may indeed do on Wednesday), they insure quite a bit of the damage in the Gulf Coast