Commodity Trading & Trend Following

Do you remember the statement.. It is the economy,Stupid…Maybe the same words are effecting President Obama’s approval ratings. They are slipping as Americans are worried about the economy. Obamaג€™s approval rating slipped to 59 percent from 64 percent last month. All in all Americans still generally support Obamaג€™s handling of the economy, more questions are cropping up. One of the most pertinet was yesterdays AIG debacle. Obama is scrambling to assure Americans he is extremely aware of public outrage over taxpayer-backed bonuses for AIG executives.

AIG was in the busines of writing derivative contracts and swaps. Last year this aspect of their business has put them at deaths doorstep. In the fall of last year AIG was saved from collapse with a package that grew to $150 billion of bailout money. It has not stopped with, now AIG is seeking another $30 billion in new capital. In conjunction to the firmג€™s third bailout they are seeking all debts to the FED be wiped out.

Isn’t it logical with stocks falling harder than rocks that even the Oracle of Omaha would be impacted.

This is the fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years, on losses from derivative bets tied to stock markets. Berkshireג€™s fourth-quarter net income fell 96 percent to $117 million.The Book value per share, a measure of assets minus liabilities, slipped 9.6 percent for all of 2008, the worst performance under Buffettג€™s career. Both declining values of derivatives and the stock portfolio led to the downturn. Berkshire shares have plunged 44 percent in the past year.

AIG has 2 hard choices to make if they will survive.