AIG In Controlled Bankruptcy!

The ``punitive'' interest rate on the two-year loan ``makes it extremely clear that this is not a subsidy extended to keep the company afloat but rather a stranglehold that makes AIG unviable while ensuring that its obligations will be met,'' said Marco Annunziata, an analyst at UniCredit SpA, in a note to clients. ``This is to all extents and purposes a controlled bankruptcy.''

Yes, dear gold bugs the recent US85Billion loan from Fed extended to AIG for two years at interest rate of 11% ( give a big cry #*#@* ), with Feds market interest rate is at 2%, daylight robbery if you want to said it.

It was very clear the Feds is not "bailing out" as we thought so few hours back, as news coming in it is very clear what the Feds want is an orderly manner of selling AIG assets to cover losses it's incurred in the credit default swaps market. If AIG is to files for bankruptcy now, all it's assets will be put under hammer or force fire sells which will drive down even further it's core values assets.

At 11%p.a rates, spreads is definitely very high for comfort. Whichever way the AIG group it's toast for good having more then US400billion in derivatives holding in it's balance sheet plus another US57billion in securities tied up with sub prime mortgages back up by only US1.1Trillion in assets. Two years from now AIG will definitely cease to exist, it's assets will be strip off and sell off to the open market first to repay the US85billion loan @ 11% rates and then to it's debtors and etc.

How on earth a major company like AIG involved in such high leverage in derivatives market only can answered in one word GREED! If AIG allows to fail today it will cost the entire market a minimum sum of US180Billion, well this is where greed will leads you too eventually.

On realisation the shareholders will be wipe out eventually, AIG shares drop around 50% today, investors it's dumping AIG shares lock stock and barrel. GAME OVER FOR AIG!

DJIA drops another 3% (time of blogging ), but yellow metal rise more then 6%( give a big cry.....hurray I told you so! ).



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