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AIG: Too Big to Fail
CNBC.com | September 16, 2008 | 06:39 PM EDT

If ever there were an institution too big to fail, Cramer said it’s AIG.

In fact, he thinks the Dow could drop another 1,000 points if the government doesn’t help save the company. If that help doesn’t arrive by Wednesday morning, the market could give back any gains made in Tuesday trading – gains had only, Cramer believes, because of reports of a possible Washington intervention – and then drop another 500 points on top of Monday’s loss.

“The sheer number of individuals and businesses that depend on this company is so monumental,” Cramer said, “that I think it's safe to say the whole financial world might seize up if AIG looks likes it’s going to go under.”

Yes, Cramer thinks the situation is that serious. Federal Reserve Chairman Ben Bernanke never mentioned any of this in the central bank’s interest-rate announcement Tuesday afternoon. Instead he towed the usual fear-of-inflation line and kept rates unchanged at 2%. Strange, though, that Alan Greenspan took rates down to 1% five years ago, and the situation wasn’t half as bad then as it is now.

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