Private Sector Won't Save AIG

Did you hear that? That’s the sound of billions of dollars in market cap leaving AIG.

CNBC: A brief stock rally inspired by hopes that the government would step in to bail out American International Group quickly fell flat as uncertainty returned over what would happen to the insurance giant.

The major indexes turned mildly positive following a CNBC report that an AIG bailout was back on the table during a New York Fed meeting on the company. CNBC separately reported that a private sector rescue is “definitively dead.” Stocks moved flat to slightly negative amid rampant speculation that has surrounded the talks to save the company.

AIG shares earlier tumbled as much as 45 per cent as worries grew that the nation’s leading insurer would be unable to secure fresh capital after a new round of downgrades. The stock halved its loss briefly, but again plunged.

Some were predicting that AIG was down to its last day to find capital or face bankrutpcy.

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