Endgame |
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The Fed has engineered a controlled explosion, stepping in to avoid AIG’s bankruptcy, extending to the insurer a USD85bn 2-year loan and assuming an 80% stake in the company. The loan is at a punitive Libor plus 8.5%, which makes it extremely clear that this is not a subsidy extended to keep the company afloat, but rather a stranglehold that makes AIG unviable while ensuring that its obligations will be met—indeed, the plan implies that AIG will gradually divest assets to repay the loan. This
Filed under: Fundamental
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