AIG WHACKED
August 7th, 2008WTF is happening on the dollar? The worse the news, the more it gaps up! Amazing. I’ll have to get out the squiggly lines and chicken entrails on the USDX very soon.
I saw this story and I smugly thought, “Surely this dollar rally will be over.” WRONG!
Via: Bloomberg:
American International Group Inc., the biggest U.S. insurer by assets, fell the most since going public in 1969 after writing down more than $11 billion of holdings and saying it won’t rule out raising capital.
“It’s very hard to predict right now when and if we’ll need more capital,” Chief Executive Officer Robert Willumstad said today in a conference call with analysts. “Future losses can change that assumption and we’re obviously dependent on the condition of the U.S. housing market.”
Willumstad faces increasing pressure to turn around AIG after the insurer posted more than $18 billion in losses over the past three quarters. The second quarter’s $5.36 billion loss, reported yesterday, was worse than analysts predicted and renewed concern that AIG may need to raise cash by selling shares. Willumstad called current capital “satisfactory.”
AIG slid as much as 18 percent in New York Stock Exchange composite trading, its biggest one-day drop in 39 years, according to Los Angeles-based Global Financial Data, which keeps records on historical share prices. The stock declined $4.75 to $24.34 at 1:56 p.m., leaving the shares down almost 60 percent this year. AIG’s quarterly loss was driven by $5.56 billion in pretax writedowns tied to credit-default swaps.
Willumstad, 62, took over at New York-based AIG in June after investors including former CEO Maurice “Hank” Greenberg called for the ouster of Martin Sullivan. Willumstad, who said AIG made too many bets on the U.S. housing market, has promised to deliver a turnaround plan by late September.
Another thing I’ve noticed about the markets: The Plunge Protection Team has been working very, very hard to make sure the Dow Jones Industrial Average doesn’t slide very much below 11,000 points. If it did so, that would mean that the “Dow” has lost 20% of its value in the past year, which would make people realize how grim things really are.