Wow. How do you let your business run on such a razor thin edge? This artThis article by the NY Times says that AIG will have to come up with $14-18 billion of cash upon a single step ratings downgrade. The article also states that a person "close to the firm" said AIG may survive a mere 48-72 hours if a downgrade were to occur. The implications of that are mindboggling. This is a world-caliber company.
I imagine Buffett is licking his chops. He runs the only other world-caliber re-insurer and the opportunity to either buy AIG on the cheap or take business from it while it languishes justify every dollar of capital he has kept close to the Omaha headquarters over the past six years. Has there ever been a greater investing genius - he warned us years ago about "financial weapons of mass destruction" (derivatives) and sold Freddie after it started expanding from its G-fee business. As equity markets ran up over these past few years, he has husbanded cash more and more aggressively and now it appears that Berkshire's time has come. Amazing.
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