Most media reports today attributed the market sell off to the additional funds injected into AIG by the government.
- At CNBC: U.S. stocks were shaken by insurer American International Group posting the largest quarterly loss in history.
- AP/Yahoo Finance: Investors were worried anew about the stability of the financial system after insurer American International Group posted a staggering $62 billion loss for the fourth quarter, the biggest in U.S. corporate history -- and accepted an expanded bailout from the government.
A reader sent me an email with an economic report from BofA/Merrill Lynch written by economist David Rosenberg. The opening paragraph of the report states:
We think of all the major events that happened last week, including all the economic data, the details of the Geithner stress tests, and the Bernanke congressional testimony, the most important in our view was the budget plan unveiled by President Obama on Thursday night. Charles Krauthammer, in his weekend column, said it is “the boldest social democratic manifesto ever issued by a US President”. Clive Crook (page 9 of today’s FT) was even more blunt – “Take this budget at face value, and when Mr. Obama talks about “a new era of responsibility” he does not mean: “We are all in this together”. He means: “The rich are responsible for this mess and it is payback time”. Leftist Democrats are thrilled and rightly so”. What really caught my eye, though, was the appraisal that the New York Times gave the budget plan on the front page of Friday’s edition, specifically the article titled “A Bold Plan Sweeps Away Reagan Ideals” right on the front page.