The world’s biggest insurer, AIG, is going under… if they can’t get some big loans they will surely implode.
This will continue to feed the downward spiral of financial markets and put pressure on every other institution, raise interest rate spreads and continue to force the market in to a state of illiquid volatility.
If you or anyone you know has policies with AIG, you may want to cancel them and move them elsewhere.
Again, I’m afraid this is only the beginning. Washington Mutual will fail and Wachovia will fail or be bought out by a bigger bank by end of the month.
Merrill Lynch’s deal to be purchased by Bank of America is in FLUX. It may not happen. Anyone doing business with Merrill should closely examine how this may impact their accounts. Especially if the deal falls through and Merrill fails.
What happens next is systemic credit risk spreads throughout the system, forcing debt to be much more expensive. All these financials count on cheap money to leverage their operations. This will cause the remaining independent brokers (Goldman Sachs and Morgan Stanley) to have to partner or merge with money center banks. It will consolidate money and power to a few hands. There are about 2000 banks now. At the end of this, there may be less than 1000.
