A bloody quarter at AIG

Bring back Hank Greenberg. At least when he ran AIG (NYSE: AIG) it was making a lot of money.

In the last quarter, the big insurance operation lost $5.29 billion. The fourth-quarter results "included a pre-tax charge of roughly $11.12 billion from a net unrealized market valuation loss related to the super senior credit default swap portfolio of the company's AIG Financial Products Corp. derivatives unit," according to MarketWatch.

The most remarkable thing about AIG's quarter is that management said 2008 could be a repeat performance, especially if the housing and credit markets stay bad. At this point, that would look like a good bet.

AIG's forecast signals that large banks and brokerage houses, which hold mortgage-based derivative paper like AIG does, are likely to post more big losses, at least in the next couple of quarters. It raises the question about how many of those financial firms will have to raise additional capital.

Warm up the Gulfstream. It is time to fly to Singapore and the Middle East again.

Douglas A. McIntyre is an editor at 247wallst.com