Monday, November 10, 2008


They Federal Government has announced a new infusion of cash into AIG. Previously they had placed 80+ billion dollars in the form of loans, this time around they have injected $40 billion directly into the company by purchasing equity. This equity was purchased as part of to $700 billion Bailout which was passed earlier this year. This move highlights that the we are not out of trouble. The markets are certainly more stable but AIG is a crucial part of the puzzle which needs to be stable before we are out of the woods. At first it was deemed necessary to provide a "bridge loan" to AIG to give them time to sell off parts of the company to raise capital. Months later nothing is sold off and the government is becoming a partial owner.

As part of the new arrangement, the Federal Reserve is reducing a $85 billion loan it had made available to AIG to $60 billion. The Fed also is replacing a separate $37.8 billion loan to the insurance company with a $52 billion aid package.
The actions were needed to "keep the company strong and facilitate its ability to complete its restructuring process successfully," the government said.
It marked the first time money from the $700 billion bailout package Congress enacted last month has gone to any company other than a bank.

Emerging Markets are opening stronger this morning and I look for this to continue as we have a holiday here in the U.S. today. The Euro is slightly better bid and I am also looking for a move back to 1.3100-3200 by the end of the week.

Good Luck and Good Currency Trading.

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9:04 AM  

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