That's how all this is working, folks. Common stockholders have been getting royally screwed over by all these "bailouts." Bailouts for whom, ask yourself that question! Your ownership of this company just got diluted by 80% with the stroke of a pen, so who is it that is getting "bailed out" here? Not you and I, that's for sure!
In FNM and FRE, the same thing happened. Read the AP report from earlier this afternoon. The government bailed out foreign banks from China and Russia that bought billions worth of FNM/FRE debt, and shareholders were bag holders...
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.
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.
Anyone upset that the common is wiped out has ZERO understanding of how common, pfd & bonds work, Or how the market works as a whole.
The common gets wiped out FIRST EVERY TIME.
Basics, man , basics.
You're a moron. The reason Paulson saved it is because EVERY 401k in the nation has a piece of AIG in it. When you learn someting about the markets come back and pay us a visit. It may be 10 years.