AIG Insurance, Financial meltdown, TSX, TSX-V lows, DJ below 11,000, what's next?

The outlook sure is bleak! As many have said, the night is often darkest right before sunrise. Just how many more banks and financial corporations at this point is difficult to gauge, unfortunately.

Believe in your convictions that physical commodities cannot be created out of thin air like Fed's bailout money and you will be well rewarded.

The tailwind of yesterday's brutal news of LEHman's bankrupcy and Bank of America (BAC) acquisition of Merrill Lynch (MER) was AIG, the Insurance Giant's rumor of insolvency.

For your background:

American International Group, Inc. (AIG) (NYSE: AIG, TYO: 8685, ISEQ: AIN) is a major American insurance corporation based in New York City. The UK headquarters are located on Fenchurch Street in London, England, UK, Continental Europe operations are based in La Defense, Paris and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest company in the world. It became a component of the Dow Jones Industrial Average on April 8, 2004. As of March 16, 2007, AIG Investments, a division of AIG, completed the purchase of 100% of the stock of P&O Ports North America from Dubai-based DP World.

This was a company that had revenues of $110 billion in 2007, and ended yesterday's closing at a paltry $7.7 billion market cap.

If you think the implication of the disruption of the largest insurance corporations of the world only affects the wealthy and the Wall Streeters, think again! Imagine all the long term care policies this would wipe out, the pension benefits, group benefits, and even more that were sold by aggressive salespeople over the years for AIG. With a company that made $44 billion in insurance premiums in 2007, the collateral damage would be far more tremendous than say, a premium investment bank like Lehman Brothers.

Thus, it was expected that some sort of Fed bailout would be proposed. As I'm typing this entry out, this came across the feed.

The man who built AIG into a global insurance empire has appealed to the US government to save the company, describing it as a "national treasure" which merely needs a temporary helping hand to survive.

Hank Greenberg, who was chief executive of AIG from 1967 until 2005, warned of reverberations around the world if the insurance company fails to pull off a last-minute deal to avert bankruptcy. He spoke out as the Federal Reserve continues efforts to broker a bail-out for the troubled firm. "Given some time, they could raise more funds and sell assets," Greenberg told CNBC television. "That would be in our national interests, let alone the interests of the 100,000 people who work at AIG."

The 83-year-old insurance tycoon, who quit in an accounting scandal three years ago, insisted that AIG is fundamentally sound but has a temporary cashflow crisis. "It's a healthy company financially except for liquidity," said Greenberg. "No organisation around the world has the spread of risk that AIG does. It's a company that opens markets - letting it go down would be a dramatic mistake."

AIG's credit rating was downgraded by Standard & Poor's, Moody's and Fitch late on Monday which has triggered contractual obligations requiring it to come up with some $14.5bn in extra collateral to satisfy trading partners.

Let's hope for many regular 9-5 hard working folks in the US that he is right! But wait, if the Feds step in some more again, where's the money coming from? Oh wait...

Gold's holding nicely and likely to move up, I'd keep watch on the various gold juniors.

Doug Casey and International Speculator, a publication with records of 200%+ picks has initiated a buy recommendation on one of our favorites Minera Andes this month. If you had to pick one newsletter writer to listen to - Doug Casey would be many people's choice. With the additional resource ore at Los Azules, MAI is a screaming buy.

...companies, like Minera Andes, that are suffering a temporary price setback in what he calls a bull cycle. The message is the cheaper they get, the better the bargain. Even with gold at $800, well down from its $1,000 highs earlier this year, the writer continues his theme of dire economic warning. His answer is to take refuge in precious metals and the companies that explore for them -- especially the ones on his buy list. He says if America's finance system crumbles, that would launch the price of gold "to the moon," and the prices of Speculator buys well beyond.

Keep in mind he's also picked up shares himself of TNR based only on the Alaskan properties. Now that he's building a golf resort in Argentina, he's clearly ok with the political and economics stability of the region, wouldn't you agree?

It's a long-standing tradition at Casey Research that we eat our own cooking, so we've bought a lot of property in Argentina in the last few years. But frankly, I wasn't looking for a bunch more trading sardines; that's what stock certificates are for. I really wanted something I could personally use and enjoy. What we did, therefore, was buy 1,200 acres on the edge of the town of Cafayate, in the south of Salta.

Like San Martin de los Andes in Patagonia, Cafayate is going to become another Aspen. Or maybe the resort town of Taos, New Mexico, is a better analog. Located in a huge bowl, surrounded by the high Andes, it's quaint and picturesque. Especially since it's the center of a large wine region. So the area is really more like a "Taos meets Napa."

What we're doing on this land is putting in a world-class golf course, spa, health club, vineyard, equestrian facilities, and, in fact, lifestyle amenities of all types. A library, billiard room, cigar bar – you get the idea. Since good workers go for $200 a month, costs will be low, and services will be excellent. My personal vision is to take the best features from developments I know all over the world and put them together here.

I think we've got the right place, the right idea, and the right time. I also think the cost will be right. I expect it will, initially, go for something like 10%-20% of what something similar – but not even close to as nice – would go for in the U.S.

I hope early buyers will be successful people of a libertarian character; no jerks need apply. Then, as soon as possible, we're going to raise prices as high as possible to keep out the riff-raff.

So that's the story right now. For traveling or an outright real estate purchase, Argentina, all things considered, is my favorite place in the world.

Regards,

Doug Casey