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Fed offers $85B in return for 80% stake in AIG


Seems like we can avoid another scene like that in AIA Singapore again. 

No rate cut was made. The Federal Reserve is readying a loan of $85B to AIG, in exchange for an 80% stake in the insurer. Barclays is buying some of Lehman's assets, where the US bankruptcy judge approves "automatic stay" status for JP Morgan to continue providing trade-clearing advances to Lehman's broker-dealer unit. WAMU is also up 16% due to talks of fresh interest from a large institution. 

Thus, has all these events salvaged the turbulence in Asia, and create a positive spur of sentiment for the international markets? Let's take a quick snapshot in early Asia and US closing markets in the morning.

All Ordinaries  Australia 4,843.4 8:28AM SGT Up43.600 (0.91%)
Nikkei 225 Japan 11,830.34 8:28AM SGT   Up220.62 (1.90%)
KOSPI  Korea 1,425.59 8:48 AM SGT   Up37.84 (2.73%)
S&P 500 US 1,213.59 Up20.89 (1.75%)
DJIA 11,059.02 Up141.51 (1.30%)
Nasdaq 100 1,724.08  Up18.62 (1.09%)


As mentioned on my earlier posts, the move of nationalising more private sectors into public sectors may mean that the longer term growth outlook for the US may be dampened for the longer term. In my opinion, this nationalization of AIG may be for good as it is natural that money making institutions will be not be sold, where only companies that are in losses will be sold in the name of privatisation. With AIG having a globally omnipresent diverse structure with a trilion dollars worth in assets, it could be one lucrative asset for the government to generate revenues. 

Lastly, I wonder if they may continue to sponsor Manchester United in 2009 again. ;) 
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