The so-called “bailout” of American International Group!

The U.S government is taking a viable company with a short-term liquidity squeeze and using that as an excuse to almost completely destroy shareholder value. The Fed could have simply issued a “bridge loan”; but instead, they insisted on a complete takeover. And small investors are getting SCREWED again.

Lehman Brothers. Merrill Lynch. AIG. The financial system is near total collapse. And the market could crash all the way down to Dow 8,000. AIG got caught in the “perfect storm.” I’m talking about the most successful insurance company on the planet, caught in the maelstrom of the subprime mess.

In the long term, most of AIG’s assets are fine. But short-term – as is happening throughout the financial industry – no one really knows how to value all the derivatives on its books. And if no one knows what they’re worth, government “mark to market” rules demand that these assets be valued at virtually nothing.

That’s why AIG’s credit ratings got slashed, which sent carrying costs soaring and pushed the company to the edge of bankruptcy. So in stepped the government – and wiped out billions in shareholder value.