Tag: American International Group

US sovereign risk downgraded?


Ratings agency Standard & Poor’s has done to the US what it did to AIG 2 ½ years ago. Well, sort of. Unbelievably, it effectively handed over a vote of no confidence in US political leaders to deal with the crazy deficits which have been growing on a massive scale.

Uncle Sam has been pawning to the hilt and is no longer deemed stable by the international bond market. Obama has managed to back Normandy back to the Krauts and Germany and France now rank higher than the Yanks!

I was watching the news a couple of weeks back on this issue and one of the Republican lawmakers was saying she wasn’t going to continue signing off borrowings from China to fund abortions carried out in the US.

This is just one of a range of issues creating a huge divide between the Republicans and Democrats, making approval of budgets increasingly difficult. I have not been folllowing the issues closely so I don’t know if this chasm is what’s causing S&P’s warning.

Maybe we have just witnessed the trigger to bury the greenback as a global currency and usher in the “Red Back” that is the Renminbi as its replacement. Will the Chinese now firmly stake its claim as the No 1 economic powerhouse of the world today?

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The Power of Oui


Another year, another major event or transaction. I joined the company in 2007. In 2008 the meltdown of Wall Street banks scorched. AIG was singed and barely survived. In 2009 the “crown jewels” of AIG, its Asian life insurance business, was packaged up for a float. A very big float. In fact it was too big for associated risks to be palatable. With market exposed to Greece and the rest of the PIGS, going to market was always going to be a touch uncertain. So the big Pru’s overtures come 2010 couldn’t have been better timed. “Transformational” it may promise to be and impressive Mr Tidjane Thiam may look on paper, but the deal is so riddled with hurdles and potholes that it will take every bit of Tidjane’s intelligence and charisma to pull this one through. Already it seems he has been able to reach out to sovereign funds to come alongside to play a role in one form or another, in support of the massive rights issue. Will he be the Obama of insurance, “Oui We Can?” I jokingly sent my colleagues a picture of Tidjane, with a caption “The Power or Oui”. A bit of a send up to the “Power of We” campaign undertaken by AIA recently. I have a feeling that whoever has doubts about whether this deal will carry, probably needs to know Mr Tidjane Thiam a bit more. I think he is the man of the hour. Is Prudential acting against the spirit of its name in acquiring a “brasher, bolder and more brazened” competitor? With Tidjane Thiam swashbuckling away, the power of oui may just carry the day.

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AIG Battered


And so we survived to fight another day. After a very nervy and frantic 2 days, the storm finally calmed for us. For 2 days, we rushed around to put together statements and briefing contents and nervously peeked at rating agencies’ websites. Google chrome would have been useful to provide tabs on different sites simultaneously, including the Federal Reserve site. AIG was under siege and everyone wanted to know if we were going to survive or go down Lehman’s path.

Lehman was a venerable institution. Back in Malaysia with a previous employer, any sales guys who sign up Lehman would be over the moon. But then again the sentiments were the same re Bear Stern. BS went what – 6 months ago now? Now Lehman is gone too. I suppose we get used to it after a while – that big venerable names do go down. Barings’ demise didn’t take long to adjust. But that was because of 1 man’s games. Nick Leeson’s misdemeanours pale into insignificance given the current turmoils of CDS and CDO’s. They promise “the mother of all credit squeeze”, “financial market tsunami” and other economic upheavals of unprecedented proportions. They have brought down huge banks and made the venerable vulnerable.

But not AIG it seems. Not yet anyway. George Soros said the worst is yet to come. We at AIG may have felt that we have just emerged from a storm but Soros thinks the markets are heading into one. Bracing ourselves for a huge hit would be what’s required I guess.

So work has resumed normalcy for now. I have become so tired.

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