Shorter Peter Boockvar:

“With the American Int’l Group (stk actually trading higher pre markett) now being one step closer to be renamed Absolute Involvement by Government and a huge capital raise by HSBC, one of the better capitalized global banks, there is no place to hide except in China whose market was little changed.

Also, more uncertainty with Western Europe’s approach with the deteriorating situation with countries in Eastern Europe is raising the bar of questions for the whole EU as a financial aid plan for the region was denied.

The Euro is just shy of its lowest level vs the $ since Nov in response. Global bond markets are the main beneficiary of the equity weakness today. As the US consumer shifts its focus to saving from spending, the Jan income/spending #’s and the savings rate will be out at 8:30am.

Also of great importance will be the Feb ISM # at 10am and is expected to fall almost 2 pts to 34, the 2nd lowest reading since 1980.”


Jan Income unexpectedly rose .4% vs expectations of a decline of .2%. Income was boosted by “special factors” such as COLA increases and more pay to govt workers and military personnel. Excluding these and other special factors, Income rose .2%, still better than estimates. Spending rose .6%, .2% more than forecasted and with a .2% gain in the PCE, REAL spending rose .4%. As a result of the income #, the savings rate rose to 5% from 3.9%, and is now at the highest April ’95 and would still be in the 4%+ range even taking out the one time adjustment boosts to income. The savings rate is likely headed towards the 8-10% range and roughly speaking, for every 1% pt increase, its about $100b in less spending. This will be a painful process but a necessary adjustment for the long term health of our economy.

Category: Bailouts, Derivatives

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Absolute Involvement by Govt (AIG)”

  1. william9 says:

    or “All-In Government”? :)

  2. rktbrkr says:

    After the first gov investment it’s impossible to stop because that would be admitting a mistake and it’s far easier to keep printing money, even the change of philosophically opposed admins doesn’t change this.

    The next flurry should be when BAC and WFC recognize the magnitude of their 1Q 09 losses

  3. franklin411 says:

    Thanks for the Baker article. I think it’s hilarious that the people who created this mess, which has caused more damage to the United States than Osama bin Ladin or any terrorist attack to date, are the same ones who are trying to tell us what to do now to fix the problem.

  4. snapshot says:

    Check out Chris Whalen’s comments at the end of this article.

  5. Greg0658 says:

    I’m serious

    maybe we should start thinking of The Plan to switch to Brownbacks with “In Truth We Trust” and a blue globe logo replacing the pyramid

  6. willid3 says:

    how do we get a rise in income? in a recession????? that sounds like spinning some thing like the rise in benefits to make numbers up.

  7. leftback says:

    Willid said: “how do we get a rise in income? in a recession?????”

    Must have been all those retention bonuses to the folks at AIG FP up in Wilton. You know the guys who called up Tiny Tim and said “Pay the bonuses or we take down GS”.

    Today feels very bottom-y, in a short-term sense, what with Uncle Warren making his “shambles” comment and the prospect of bank bailouts from here to eternity. I imagine New York resembling Alaska this morning hasn’t helped the mood, especially among those still holding fatally hemorrhaging instruments.

    I have been making money short gold, which seems oddly incongruent with the market action. You would have to suspect that desperately deleveraging hedgies are throwing themselves out of their one story buildings in Greenwich this morning only to make a gentle smooshing sound in the snow.

  8. franklin411 says:

    Thanks for the link snapshot, but I actually found the Krugman column (I noticed it on the page you linked to) more interesting:

    Still, much of the global saving glut did end up in America. Why?

    Bernanke cited “the depth and sophistication of the country’s financial markets (which, among other things, have allowed households easy access to housing wealth).” Depth, yes. But sophistication? Well, you could say that American bankers, empowered by a quarter-century of deregulatory zeal, led the world in finding sophisticated ways to enrich themselves by hiding risk and fooling investors.

    And wide-open, loosely regulated financial systems characterized many of the other recipients of large capital inflows. This may explain the almost eerie correlation between conservative praise two or three years ago and economic disaster today. “Reforms have made Iceland a Nordic tiger,” declared a paper from the Cato Institute. “How Ireland Became the Celtic Tiger” was the title of one Heritage Foundation article; “The Estonian Economic Miracle” was the title of another. All three nations are in deep crisis now.

  9. try2bamused says:

    It’s as if the policy makers can’t help but pour more money into the AIG black hole. This is all part of much larger process that is global in scope and can only be resolved by time and price.

    Nothing goes up forever – not real estate, not stocks, not interest-compounding debt. The latter has hit the proverbial asymptotic wall. The centuries-old system built around it is now finished.

    Kick back, grab a cold one, and enjoy a ride for the ages.

  10. CNBC Sucks says:

    I have retired from this blog more times than Ali and Jordan retired from their careers combined, but when I see something that totally pisses me off, I have to write something, and this TOTALLY PISSES ME OFF: The government hired PIMCO to advise it on BofA.

    Are you f’n kidding me? That is like putting the fox in charge of the henhouse. Or putting a bunch of Nazis in charge of Jewish settlement in Israel after WWII. Are you f’n kidding me? That John Bolton look-alike and the Mohammed fellow and Bill Gross? Are you f’n kidding me?

    Look, I want Obama to succeed and win re-election in 2012. We NEED him. But this is a BS move. I know Geithner is a f*ck and hopefully the rich will effectively pay the tab, but PIMCO?

    You put clowns like these to fix your economy and the economy will just continue to go down and down and down. I was hoping Obama would not see Dow 5K, but if his government hires PIMCO to fix an overleveraged economy, we might see a 3-spot!

  11. Credit-Default Swaps to get new pricing… 20 Mar.

    Wonder what (if anything) it means for ETFs…

  12. Cybernaught says:

    I think we might see that 3-spot. Clearly Obama’s change was about equality all around…including financial losses. But don’t worry. After your suicide attempt fails, your medical costs will be covered by govt insurance.

  13. Steve Barry says:

    My major sell reiteration last Sunday was quite timely…target remains 5000 on Dow within a month or so. I will refine the target as sentiment picture crystallizes. My sub-call to wait to buy miners also hit the mark…GDX down almost 20% in about a week. When market is washed out, I may cover shorts and go long the miners…but too early to say for sure. You all will be second to know (after myself).

  14. Steve Barry says:

    Buffet using derivatives after warning about them…now appearing Monday on CNBC for 3 hours answering questions…anybody still think this is guy still has it?

  15. KingGeithner says:

    Does anyone know if it would be possible for the government to cancel all of AIG”s CDS contracts and refund the premiums paid with interest? It would be like taking a giant eraser to much of AIG’s problems.

    A lot of the parties who purchased CDS did not even hold the bonds that the CDS’s were supposed to be insuring.

  16. vaughn says:

    i’m trying to think of a nice way to say “fuck AIG”……..but i can’t.
    As to cnbc sucks “we need O to win in 2012″, at this point i strongly disagree. We NEED to re-animate Jefferson….but we can’t.