Nowhere Near the Sound of Cannon

Not that it's a bad philosophy, "buy[ing] at the sound of cannon" - purportedly said first by Mayer Amschel Rothschild, fka Mayer Amschel Bauer - is a risky proposition.

My current owners were perfectly happy to pay above-prime interest rates when they initially purchased me some twenty years ago. That may seem stupid, that may be unwise and wasteful in the eyes of some who could get loans at subprime interest rates or who could afford an inexpensive purchase with cash...but stodgy safety and a long-term relationship with a bank can eventually appear wise...even though nowadays it depends upon the long-term healthiness of the bank itself.

Consider the following when considering Rothschilds statement...when are we hearing cannon-fire?

"On September 16, 2008, American International Group, Inc. (“AIG”) issued a press release announcing it has entered into a revolving credit facility with the Federal Reserve Bank of New York (“NY Reserve Bank”).

Under the terms of the revolving credit facility, AIG may borrow up to $85 billion from the NY Reserve Bank. AIG’s borrowings under the revolving credit facility bear interest, for each day, at a rate per annum equal to three-month Libor plus 8.50%. The revolving credit facility has a 24-month term and is secured by a pledge of all of the assets of AIG and its Material Subsidiaries. The revolving credit facility contains affirmative and negative covenants, including a covenant to pay down the facility with the proceeds of asset sales by AIG.

In connection with the revolving credit facility, AIG issued a warrant to the Board of Governors of the Federal Reserve (“Federal Reserve”) that permits the Federal Reserve, subject to shareholder approval, to obtain up to 79.9% of the outstanding common stock of AIG (after taking into account the exercise of the warrant). AIG anticipates calling a special meeting for such purpose as promptly as practicable."

source

..HF.