http://www.reuters.com/…

Troubled insurer American International Group Inc had borrowed $90.3 billion from the U.S. government as of Wednesday, three-quarters of the emergency funds made available to it under a federal rescue plan, the Wall Street Journal reported.

AIG, once the world’s largest insurer before it was hammered by bad bets on mortgages, borrowed a further $7.4 billion from a government loan facility in the last week, the paper said on its website.

The move marked the first time the insurer had borrowed more than the government’s original $85 billion rescue loan, announced on September 16.

Earlier this month, the government gave AIG nearly $38 billion more in fresh cash.

On Thursday, AIG Chief Executive Edward Liddy warned that the $120 billion-plus in emergency federal cash extended to the insurer may not be enough.

Obviously, AIG is perfectly stable.

http://www.lewrockwell.com/…

Today, the Wall Street Journal reports that the ban on short selling is “casting a very wide net.” I just downloaded, into a spreadsheet, the list of companies on the short-sale ban list. There are about 1,000 listings. Is anyone surprised that GM and Ford were added to the list this week? Since the SEC has turned over the job of determining who gets on the list to NYSE and Nasdaq, listed companies are pounding on the doors of NYSE and Nasdaq to be put on the list of “protected companies.”

The original concept supporting the placement of the ban has already been blown to bits. Without setting any formal rules (read: arbitrary rules), the ban was supposed to “protect” banks, savings associations, broker-dealers, investment advisers, and insurance companies. One out of seven of all companies listed on US exchanges are now on The List. Libertarians always know that creeping interventionist tactics, rationalized by authorities, central planners, and the recipients of the intervention as being necessary to quell immediate crises, are always a precursor to long-term (and often permanent) takeovers, by government, of market processes. But occasionally, there is a bright light in this swelling tide of statism:

American Physicians Capital Inc., a provider of medical-malpractice insurance, opted off the list, too. CEO Kevin Clinton said in a statement: “We also believe in free and fair markets.”

Also opting out: Greenlight Capital Re Ltd., a Cayman Islands-based reinsurance company. Vocal short seller David Einhorn is chairman of Greenlight.

“We believe it is in the long-term interest of our company to have the market set an appropriate price for our shares,” the firm said in a statement. “We also do not want investors to feel our stock is the beneficiary of any artificial price support.”

Here is the direct link.

Why is Zale Corp on the list? Is the jewelry market really that fragile?

Merrill Lynch to Be Bought By BofA for $29 a Share

Merrill Lynch, the world’s largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.

Merrill agreed to the BofA sale, which represents a huge premium to its closing price on Friday of $17 a share, after talking to several other potential acquirers, including Morgan Stanley.

Morgan turned down a possible acquisition because it couldn’t examine Merrill’s books in 48 hours, a person close to the matter said.

Merrill plans to make an internal announcement to employees sometime between 8 and 9 am Monday morning.

Merrill came under pressure to find a merger partner came after its liquidity began “evaporating” Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.

Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.

Lehman Brothers Plans to File for Bankruptcy Shortly

CNBC has confirmed press reports that Lehman Brothers is likely to file for bankruptcy protection as soon as Sunday evening.

Among details to be worked out: the accounting treatment for certain derivatives and repurchase positions, an area not currently covered by bankruptcy laws; and the orderly netting out of a variety of securities positions to which Lehman Brothers is contractually obligated.

Federal authorities are expected to be involved in the orderly disposition of Lehman assets if such a filing occurs. Sources knowledgeable about the weekend deliberations tell CNBC that without some government participation in the process, a bankruptcy filing by Lehman Brothers would cause major disruptions in the financial system.

Officials at the Federal Reserve and U.S. Treasury are taking steps to mitigate risk to the system and assure the orderly functioning of the markets tomorrow.

AIG, Facing Liquidity Crunch, Reaches Out to Regulator

Insurer American International Group, working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking short-term financing, media reports said.

Chief Executive Robert Willumstad has reached out to the Fed late on Sunday, according to the Wall Street Journal.

The Fed normally oversees monetary policy and supervision of banks, AIG was seeking the funds as a temporary measure and planned to repay the Fed with the proceeds from asset sales.

AIG officials did not immediately respond to requests for comment.

The company, until recently the world’s biggest insurer by market capitalization, has been attempting to hammer out an emergency strategic plan after its shares fell nearly 50 percent last week on fears it faced a liquidity crisis.

And now we are hearing of another interest rate cut. As if this situation wasn’t scary enough.

Who’s taking bets on the Amero showing up sooner rather than later?

Economist Joe Stiglitz comments in the Financial Times, criticizing Fannie’s and Freddie’s free lunch, but ultimately takes a middle of the road approach.

The NYTimes claims that the Housing Bill Has Something for Nearly Everyone. (What, the check to pay for this thing? How about renters? If we miss a rent payment, we are liable to be EVICTED. Where is our bailout?)

Bloomberg reports that mortgage writedowns will total $1 trillion. (Article quotes a hair brained scheme where the gov’t buys millions of houses and then blows them up to help brace housing prices. At this point, I’m not sure who’s being sarcastic and who’s not. But seriously, if you wanna to see something really blowup, watch that gross national debt ticker, over on the right, after this bill passes.)

Former Republican House Majority Leader, Dick Armey blasts the Republican party in the Wall Street Journal. He advocates a five year phase out of either GSE should they access credit lines from the Federal Reserve or Treasury.

More to come…

http://www.lewrockwell.com/…

Writes Stephen Fairfax: “Today on page A5 of the War Street Journal, the FDIC has a full-page ad. They have the gall to display a $100,000 Series 1934 Gold Certificate, with the words ‘One Hundred Thousand Dollars in Gold’ plainly visible.

“Of course, the FDIC has never paid an atom of gold to any depositor, and was created as part of the gigantic theft and fraud associated with FDR’s gold confiscation. Wikipedia reports that it is still illegal for private citizens to own the gold certificate whose image leads the FDIC propaganda.”

Things like this make it seem more plausible that some of the many conspiracies surrounding the Federal Reserve are true.

http://www.cato-at-liberty.org/…

Not content with a protected near monopoly of the domestic market, American sugar producers are demanding that Congress make their pot of subsidies and protection even sweeter.

Chairman of the House Agriculture Committee, Rep. Colin Peterson (D-Minn.), is pushing language in the latest proposed farm bill that would raise domestic price supports for sugar and mandate that sugar imports be used for ethanol production.

His proposals would virtually lock in an 85 percent share of the U.S. market for domestic sugar beet and cane growers, even though a number of foreign countries can grow sugar more cheaply than most American growers. And by the way, did I mention that Rep. Peterson’s district is among the nation’s top producers of sugar beets?

The Bush administration, to its credit, opposes Peterson’s changes in the farm bill. The sugar industry, of course, loves the idea. A spokesman for the pro-protection American Sugar Alliance told this morning’s Wall Street Journal, “We have an administration that seems more interested in supporting foreign producers, than producers right here in America.”

Notice the sugar industry doesn’t mention American consumers. U.S. agricultural policies should not be about favoring “our” producers over “theirs,” but about advancing such national interests as freedom, prosperity, and a more peaceful world. As we’ve explained in detail at the Center for Trade Policy Studies, the U.S. sugar program favors American sugar producers primarily at the expense of the rest of America. American families pay higher prices at the store, while U.S. producers that use sugar as an input — bakeries, food processors, restaurants, candy makers, etc. — incur higher costs because of our sugar program.

As we read daily in the newspaper about soaring food prices, this Congress is the verge of passing a farm bill designed explicitly to raise domestic food prices.

::sigh::

They cause the high sugar prices in the first place. They cause the high prices of milk. The high prices of wheat and corn and soy beans. They deflate the money and cause prices in general to rise. The people of world and particularly the American public suffers so that the few sugar manufacturers my thrive.

And when the people start to revolt they will ignorantly run to the government to fix the problem not realizing they caused it in the first place.