AIG Plus/And Government Accountability

First of all, before anyone gets all jiggy about the idea of the Goverment selling some of OUR gold to pay off Treasury debt, I would first like to see evidence other than a book-entry on the Treasury financial statement that the gold even is there to be sold.  Until that happens, all else is a waste of brain cells.

Stay away from AIG stock.  If what I think happened did happen, this stock is eventually going to go back to zero and the company is going to hit the wall again.  Interestingly, I saw a news report a couple days ago that the insurance regulators had not even audited AIG's main insurance units prior to this stock sale.  THAT is reason enough alone to stay as far away from this as possible.  I wouldn't be surprised if many of you get calls from your favorite stock-pusher looking to sell you on why AIG is "cheap" here.

In a nutshell, this is what I believe went down:  Based on the way it's trading I suspect that the Govt forced the underwriters to take down a lot that stock as payback for all the money Geithner transferred to the Street over the last 2 1/2 years.  Big ipos like this never get hammered out of the gate unless they didn't fully placed.  And that might have entailed underwriting desks placing blocks of the stock with "good" accounts so they could break syndicate with the understanding that the buyer could flip it back at cost at the break.  We used to do that with really crappy junk bond deals.  What this means is that the underwriters are looking at any trading losses from choking down more stock than there was demand as part of the "cost" of earning the $385 million in underwriting fees (your tax money, that is).  Now the stock jockeys at the big underwriters are doing a "Boiler Room" and pressuring the stockbrokers unload this stock on the public.  In an ideal underwriting, the underwriters actually run a short in the new issue and use the bidding power to make the stock perform well at least for a day.  The fact that this stock is tanking tells me all I need to know about how this deal was orchestrated.

If you think I'm nuts, one of my colleagues who I ran this by remarked: "that explanation is probably as close to the truth about how this deal was executed as we'll ever get."  I don't even have to go through the financials after observing AIG's operations over the past 2 1/2 years to know that it will hit the wall again.

In terms of Government transparency and accountability, take a look at this 7 minute preview to a Frontline project in the making.  It looks like the Government/Defense Dept is spending billions of taxpayer money with absolutely no accountabilty or public knowledge.  If this doesn't scare the bee-jeezus out of you about what his going on in our country with regard to the Government-creep toward totalitarianism, then you are fated to be one of Warren Buffet's "serfs" (recall he said a few years ago that ths was going to become a country of "serfs"):  http://projects.washingtonpost.com/top-secret-america/articles/frontline-video/

This video reflects Orwell's "Big Brother" vision perfectly. It is utterly horrifying to me.  This is what founding fathers like Thomas Jefferson were most worried about when they warned the citizens against letting the military complex take control of the system - looks like We're already there, dude.