Watching clips from The Big Short made me wistful for the glory days of late 2008 and early 2009. Let’s take a look at a good example from that era: AIG International.
Until the year 2000, this was one of the safest, steadiest, winningest stocks. It was pretty much the NVDA of its day.
Into the new millennium, however, things started looking bumpy. Nothing catastrophic, but the “always up” nature of the stock had changed.
This, with virtually no warning, the rampant corruption, fraud, and overly aggressive bets came to light, and all holy hell broke loose. The chart below, by the way, is precisely what today’s market would look like if the full truth were known, but – – nope – – lifetime highs every day.
If I had the happy role of being absolute dictator in late 2008, I would have offered $0 in help to all these firms, which would have driven them all into bankruptcy. I would have also welcomed the public to watch on national television the public executions of – – oh, let’s say – – the top 500 executives from the financial industry, like this shrew below, who was in charge of AIG during the catastrophe.
Instead, of course, the government threw trillions at the criminals and “saved” the financial system. Since then, AIG has basically been flopping around like a dying fish, still public, but a shadow of its former grand self. Again, it SHOULD have gone bankrupt, but it was kept afloat just like all the other should-have-died firms like JP Morgan and Goldman Sachs.
There will come a day when the wipeout makes the Financial Crisis look minor by comparison. Whether that happens next week or twenty years from now, no one knows, because that day of reckoning is something the politicians MUST avoid in order to save their own wretched skins.
The nation’s last, best chance to save itself was 2008, but it was too weak to do so. Cowardice reigned. Thus, when the next wipeout happens, there will be no such opportunity. It will be the end.
