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American International Group, Inc. Message Board

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  • madmonsoon2000 madmonsoon2000 Sep 16, 2008 9:17 PM Flag

    Stockholders screwed, debtholders rewarded

    That may be true but the late shorts got busted too. Chinese and Russian money are very important. If they stop buying our garbage paper, the money supply will be very tight! We have been spending money like a drunken sailor.

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    • sorry to piss off longs here. I feel your pain, because I was long FNM common shares myself. I saw how that went.

      You say this is different. I say, NOT! Think again. Why would anyone offer $85 Big Ones to AIG for nothing?

      Common shares are not "Wiped out" but its close enough. The loan term is that AIG will sell off its assets in the next many days and weeks but not longer, and use that money to pay this "debt" off. The debt is needed because they have bills coming due and don't have free money laying around to pay those dues.

      Simplistically, it's a RUN on AIG and the debt holders want their money back. AIG has strong assets, so it has to sell those now, but it can't sell all of them tonight to raise cash. So it has to borrow this money. And it comes with strings attached....which is that AIG will be dismantled piece by piece and current owners will be diluted to essentially zero, but not quite. If you want to hold on to AIG stock, perhaps it will come back in 5 years, who knows. They better have damn good management for that to happen, that's for sure.

 
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