And some Reality Checks for my ER hear!

Page 1 NST Sept 17, 2008:

"The world over,
all governments
are facing similar
challenges...efforts
and rightful actions,
not political rhetoric,
from leaders, are
needed to carry
Malaysians through
this dire period."

-- Raja Dr Nazrin Shah
Raja Muda of Perak



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From The Star Online:

Wednesday September 17, 2008 MYT 11:47:21 AM

US Government bails out AIG with US$85bil loan

WASHINGTON: For the second time this month, the US government intervened to bail out a private financial company, saying the failure of the huge insurer American International Group Inc. would further disrupt markets and threaten the already fragile economy.
The Federal Reserve said Tuesday it would provide up to US$85bil in an emergency, two-year loan to rescue AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued.
In return, the government will get a 79.9% stake in AIG and the right to remove senior management.
The move was similar to the government's seizure on Sept 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as US$100bil over time in each of the companies if needed to keep them from going broke.
Both moves were bound to raise questions about the use of taxpayer money to bail out private firms.
The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.
Although little known off Wall Street, AIG does business with almost every financial institution in the world and insures US$88bil worth of assets including mortgages and corporate loans. Its failure could also "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance,'' the Fed said in a statement.
The decision to help AIG marked a reversal from the government's move over the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc.
Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.
The White House said it backed the Fed's decision Tuesday.
"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy,'' White House spokesman Tony Fratto said.
After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.
"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times.'' said Sen. Charles Schumer, a New York Democrat. "Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse.''
New York officials said the deal helps stave off a fiscal crisis for the state. "Policy holders will be protected, jobs will be saved,'' New York Gov. David Paterson said Tuesday night.
The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.
On Tuesday, the Fed decided to keep its key interest rate steady at 2%, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.
The central bank also pumped US$70bil into the nation's financial system to help ease credit stresses.
In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.
The stock market, which Monday had its worst session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.
AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed.
By late Tuesday, its shares had closed down 20% and another 45% after hours.
The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default.
If AIG could not make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.
The worries were heightened Monday after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts.
Without that money, AIG would have defaulted on its obligations and the buyers of its insurance -- such as banks and other financial companies -- would have found themselves without protection against losses on the debt they hold.
"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions,'' said Timothy Canova, a professor of international economic law at Chapman University School of Law.
"If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next.''
New York-based AIG operates insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services.
Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims.'' -- AP
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From BusinessDay:

Worried policyholders throng AIG's Singapore office


Hundreds of worried policyholders, some hoping to terminate their agreements, lined up today outside the Singapore office of troubled global insurance giant American International Group (AIG).Some said they were unmoved by the US Federal Reserve's announcement of an unprecedented loan of up to $US85 billion ($107 billion) to avert a collapse of AIG, which was expected to lead to a global financial calamity.Pentja, an Indonesian, said he had flown in from Jakarta and gone immediately to join the queue outside the offices of AIG and its wholly-owned subsidiary American International Assurance Company, Limited (AIA).He said he knew about the US rescue plan for AIG but wanted to terminate his three policies anyway. He declined to reveal their value."I prefer to take out the money. I don't mind the loss,'' he said.Karen Choo, of Singapore, was also insistent on withdrawing her funds."I don't feel confident. I'd rather take the money out and invest elsewhere,'' said Choo, who took the day off work to join the queue, which stretched around the office tower in Singapore's financial heart.Choo said she had two policies worth about 100,000 Singapore dollars ($88,000).AIA Singapore says it has more than sufficient capital and reserves to meet obligations to policyholders. It said the funds maintained in Singapore are segregated from AIG. -- AFP

UPDATEd @2.54PM:

From the Malaysian Insider, News Break
to which Desi will sigh relief for now, will add comment later!


Najib is finance minister, Abdullah takes defence
KUALA LUMPUR, Sept 17 - In a minor Cabinet reshuffle today, Prime Minister Datuk Seri Abdullah Ahmad Badawi named his deputy Datuk Seri Najib Abdul Razak as finance minister.
Abdullah, who was the finance minister, will take Najib's defence portfolio.
The swap was announced after today's Cabinet meeting.
Sources said Datuk Seri Nazri Aziz is expected to be named de facto Law Minister to replace Datuk Zaid Ibrahim, who quit this week over the Internal Security Act (ISA) arrests of DAP leader Teresa Kok and two others.


UPDATEd @12.48AM,Thursday September 18, 2008:

When I wrote above "News Break to which Desi will sigh relief for now,..." the sigh of relief was premature! I gave the benefit of the doubt then in my mind that the removal of the Defence portfolio from the DPM was to check potential misuse of the army to serve certain "evel" agenda by someone most under siege within UMNO.

I was "dead wrong". My sole Commenter -- of a fellow "accidental" Blogger hailing back almost a decade ago! -- was more on the spot, hence I reprise here from OldFart's:

"


AND THIS OLD FART'S ASSESSMENT WAS PROVEN LATER BY THE PM'S PRESS CONFERENCE STATEMENT, as implied by the ***HEADLINE and the *******first paragraph in the following report from The Malaysian Insider; the body paragraph containing the first sentence marked ++++ is even more ominous!



***Pak Lah: Anwar is a threat to the economy

PUTRAJAYA, Sept 17 ~ ******* Prime Minister Datuk Seri Abdullah Badawi says opposition leader Datuk Seri Anwar Ibrahim is a threat to the country's economy because of his constantly misleading remarks over investments and promises to topple the government.
Abdullah told reporters at a press conference to announce his swapping of portfolios with Datuk Seri Najib Razak that he also did not see any need in meeting Anwar.
Yesterday, Anwar claimed to have the support of enough Barisan Nasional (BN) MPs for his Pakatan Rakyat (PR) alliance to take over the federal government.
He had also claimed that he had asked the PM for a meeting to discuss a smooth transfer of power, in a letter he sent to Abdullah a day earlier.
Today, the PM denied that any such request was made in the letter.
"It only talks about security and leadership of the country and matters pertaining to the political and moral issues of the country.
"It is just to confuse the people so that they continue to listen to his talk about things that have not happened."
Abdullah said there was "not even a shadow of a mention" about any transfer of power to the opposition in the letter.
He said he had nothing to discuss with Anwar, because "he says one thing but his letter says something else-.
The PM said Anwar's actions had resulted in fund managers giving Malaysia a miss because of the political uncertainties.
++++"He is a threat to our economy and maybe even our security. I will not indicate to you what I plan to do, but what I will do, will be in the interest of the country."
Najib, who was also present at the press conference, pointed out that Anwar had been unable to deliver on many of his promises despite the fact that he knew all along that he did not have the numbers.
"These games about political stability will have an adverse effect on us. Let's not become victims of Anwar's games," said the DPM.