......way relevant to the value of the US dollar; which impacts how $ilver is priced. As financials tumble and debt ratings get crushed, more and more pressure is exerted on the paper system.
That means more liquidity is needed.
Lower interest rates.
Commodities and hard assets increase.
AIG stock tumbles on heightened CDO concerns
Auditor questions valuation of derivatives; ratings agency eyes downgrade
By Alistair Barr, MarketWatch
Last update: 12:23 p.m. EST Feb. 11, 2008
SAN FRANCISCO (MarketWatch)
-- American International Group shares fell as much as 11% on Monday after the insurer's auditor questioned how the company values some of its derivatives.
PricewaterhouseCoopers LLC said AIG had a material weakness in its internal control over financial reporting and oversight related to the valuation of a derivatives portfolio owned by AIG Financial Products Corp., a unit of AIG, the company said in a regulatory filing.
AIG disagreed, saying it has appropriate controls and procedures in place to value such exposures. But Fitch Ratings said it may cut AIG's AA ratings in light of the disclosure.
The problems are centered on collateralized debt obligations, complex securities that are partly backed by mortgage securities. As house prices have fallen and delinquencies and foreclosures surge, the market value on these securities have dropped sharply.
AIG Financial Products has a large exposure to these securities. The unit's credit derivatives portfolio had a net notional exposure of $505 billion at the end of September.
More than $62 billion of that was related to CDOs, mainly backed by subprime U.S. residential mortgage-backed securities, Fitch said.
"The announcement highlights the greater risk associated with AIG, and also has increased investors skepticism," Alain Karaoglan, an analyst at Banc of America Securities, wrote in a note to investors.
AIG shares, a component of the Dow Jones Industrial Average
DJIA, fell 11% to $45.02 during afternoon trading.
