<p>I have no clue about the stock market at this point, but can anyone explain why buy/sell stocks (Lehman Brothers) at 21cents, and Goldman BofA AIG is bad idea? Wouldnt it be a good risk to take since its so low right now???</p>
<p>They are so low for a reason. Lehman is expected to go bankrupt (sinking that 21 cents to 0) and AIG isn't doing much better (many expect they'll go bankrupt. WSJ had an article about it yesterday). Furthermore both Goldman and MS aren't expected to survive as independent banks which is why their stocks are so low. With that said if you can prove one of these things "wrong" and buy the stock up then yes, you'd make money. Say you bought Lehman and for some reason there's a last minute bailout....you're doing pretty well.</p>
<p>major bank/IB stocks are doing well today especially for WaMu, it looks like wamu found a way to get capital to fill up its huge loss these past three qtrs.</p>
<p>with the 85 billion help, AIG stocks might go up... its so low right now.</p>
<p>with the help from the government, we hope to see AIG stocks going up.</p>
<p>The Fed isn't bailing AIG out, it's still going under. They're just giving AIG enough $$ so the company can sell of its assets in an orderly fashion before it goes out of business.</p>
<p>Monkey, why do you say that? If in the long run, AIG will go out of business anyways, why doesn't AIG file bankruptcy now?</p>
<p>Because AIG can't just flood the market with billions of dollars of assets to be got at firesale prices. The Fed loans them enough money to stay afloat and sell of these assets in an orderly manner.</p>
<p>If what you said was true, 85 billions of FED would sink with AIG in case it goes out of business, right? So, FED is wasting their money?
Anyway, IMO, Gov won't let AIG becoming another LEH coz AIG is too big to fall. The collapse of AIG would also relate a lot of serious problems which would made Gov have more jobs to care for.</p>
<p>^^ Not exactly. The fed now essentially controls 80% of AIG. Guess who makes $$ when AIG sells of assets? You guessed it. </p>
<p>The fed, by loaning AIG money, isn't letting it become another Lehman. They are letting AIG sell off and quietly go out as opposed to crashing over a matter of days.</p>
<p>Would you call it a loan then?</p>
<p>Yes and No. No in that the govt wont be guaranteed the $$ back + interest (depending on how much the assets sell for) yes in that the govt will get $$ back (from assets) that very well could equal or exceed the loan amount.</p>
<p>I'm not quite sure why you think AIG shares would rise... The loan becomes an 80+% equity stake, which would theoretically dilute previous shareholder value considerably. Why would the shareholders rejoice at this?</p>
<p>MonkeySee, where are you getting that AIG will eventually bankrupt. Even though FED isnt going to be losing 85 billion, it will still lose ALOT of money in this transaction... if what you said is true. I think that AIG will bounce back but wont be as strong as it used to be.</p>
<p>C-Revs, yes shareholders should not rejoice since it dropped to like 2 dollars from 70 dollars... but Im just implying to people if they bought at like 2 dollars. But like I said, I am not sure how this is working out...</p>
<p>"MonkeySee, where are you getting that AIG will eventually bankrupt. Even though FED isnt going to be losing 85 billion, it will still lose ALOT of money in this transaction... if what you said is true. I think that AIG will bounce back but wont be as strong as it used to be."</p>
<p>Because they're selling off all of their assets, plus the government controls 80% of it. Once the assets are sold off in a timely manner the government wont hold onto it and it'll slowly dissolve into obscurity. Maybe bankrupt wasn't the right word but it isn't staying in business.</p>
<p>yea... we will see if AIG stays in business or not. If you narrow it down, AIG will not "go out" of business.</p>