Friday, September 26, 2008

US Federal Reserve loan resuscitates Insurance giant AIG…crisis looms large on Morgan and Goldman.

The chaos spread after the Lehman Brothers filing for bankruptcy protection has caused enough ripples and with the breakdown of AIG it could have spelt doom for the US financial market and its ripples could have affected the World Economy.
With fears unabated on the ability of Investment banks access to liquidity, the Goldman Sachs and Morgan Stanley shares dropped by 10 and 18 percent and were giant losers.
The other financial Institutions hit by this fallout are Wachovia, Citigroup one of the biggest US bank. Also the stock of Washington Mutual fell sharply. These falls comes after AIG was taken over US Federal.
The Federal Authorities pumped in $85 billion in the AIG lifeline for the period of two years with a committed stake of 79.9 percent equity.
The decision came two days after the US authorities let Investment bankers Lehman Brothers into bankruptcy court. Unlike Lehman brothers AIG was considered to be more important as its collapse can trigger a fall in the global economy.
In the course AIG would have to pay a steep rate of Interest that is 8.5 percent and above, equaling the current rate of 11.4 percent.
The AIG being the premier sponsor of Manchester United, it means the US taxpayers money going to the English premier league.

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