AIG has turned into the worst brother-in-law you could have in the family. A money-losing blob that just won’t go away. The government has turned into the perfect enabler relative that just won’t admit when all is lost and to simply cut bait. 

On October 10, 2008 AIG received $ 85 Billion. It was my first mention of AIG and I wrote “The downside is that I highly suspect this will be nowhere near the amount of money that AIG ends up needing.”  

On September 17, 2008 I wrote about AIG receiving yet another chuck of cash. This time it was $40 Billion. I wrote “Matter of fact, I am going to say it again; I highly suspect this STILL will not be the end of it. Companies like this seem to always keep coming back to the government trough (I hope I am wrong).” 

Now, AIG is back again (surprise!) and the government is handing them another $30 billion. More taxpayer money going to a company that can’t seem to get their sh*t together. 

When will government understand bailing out companies, in a capital market, is not the right answer? Most of the bailout companies, I am sad to say, will still end up failing. The only catch is that they will blow through billions of taxpayer dollars before they do fail! 

Let them fail and the next company, that is trying to do everything right, will step up to the plate! 

***Be a Part of the Conversation and ADD A COMMENT***

If you remember, the government agreed in September to give $85 billion to faltering AIG to avoid a collapse in the economy (mmmm, how did that work out for you?).

AIG was so happy with the bailout that saved their company and their jobs they continued on with a $440,000 posh California retreat just days after the bailout. 

But wait, there is more. Buried in the news… 

AIG is saying they need more money. And the government, in such a giving mood right now, gave it to them. How much you ask? 

$37.8 billion. 

Yes, that is on top of the $85 billion in September. 

“The bottom line is, they need more liquidity than they thought,” said Mark Lane, an analyst for William Balir & Co. 

You just can’t make this S#%@ up! When will the government learn their lesson? When will someone make some solid decisions? Just say “no!” – even a four-year-old knows that! 

Don’t get me wrong; I don’t blame the government – exclusively – for the economic downturn. Frankly, we are all to blame. We, as a country, have been living in excess and mixed up priorities for some time. 

What we do going forward is key to our future and I have yet to see a fundamentally sound decision being made in the last month. I mentioned in my first AIG post that they would most likely need more money and here we are. Matter of fact, I am going to say it again; I highly suspect this STILL will not be the end of it. Companies like this seem to always keep coming back to the government trough (I hope I am wrong). 

***Be a Part of the Conversation and ADD A COMMENT***

Until this week, it would have been unheard of for the government to bail out an insurance company. Oh, how times have changed…. 

The government is about to do just that. 

Regulators know with Bear Stearns and Lehman (who filed bankruptcy on Friday) going under the financial world does not end. If AIG was to go under? Well, the damages are far reaching and, in some ways, no one really wants to even crunch the numbers. 

The deal? The government will lend AIG $85 billion dollars and receive a 79.9% equity stake. 

The upside, if there is one, is the government finally has a chance to find alternative methods (other than direct taxing) to pay down the deficit. Once AIG turns the corner and starts making money, so will the government (much like Fannie Mae and Freddie Mac). The downside is that I highly suspect this will be nowhere near the amount of money that AIG ends up needing. 

In the meantime, I am going to see if I can start a company, get overwhelmed with greed, make millions, then have the government come bail me out! 

***Be a Part of the Conversation and ADD A COMMENT***