American International Group Inc, the world’s biggest insurer, has announced it will replace CEO Martin Sullivan. The news comes after AIG reported record losses due to risky mortgage bets.

Sullivan follows the departure of a wave of Wall Street top execs, including the recent bloodletting at ailing investment bank Lehman Brothers.

“On Wall Street, after Bear Stearns fainted, the other financial firms took smelling salts,” says Bill Bonner in The Daily Reckoning.

Gold rose quietly during trading in the Far East and Europe…and started showing signs of life just before the Comex open in New York. From there, gold rose about $10 to just over $880…and there it sat. And it hasn’t done much since…except decline as soon as the Hong Kong market opened this morning.

Lehman Brothers, the fourth largest US investment bank, is at the centre of a storm of bad news stories.

Shares in the Wall Street powerhouse tumbled 31% last month on the NYSE on expections of heavy Q2 losses and the likelihood that the bank will have to raise cash to cover subprime-related writedowns. However, unlike rival Bear Stearns, the word on the Street is that Lehman will survive.

“On Wall Street, after Bear Stearns fainted, the other financial firms took smelling salts,” says Bill Bonner in The Daily Reckoning.

China is the new Germany. At the end of the Second World War, Germany was an “emerging market.” It was industrializing rapidly and producing brisk economic growth. Today, Germany is a mature “developed market” that grows slowly if it grows at all. Today, China is the new Germany.

We aren’t scared of the peaks – what we are nervous about are the valleys…all the Fed’s hard work can be undone by a single day of trading… The global oil crunch…consumer confidence is out of gas as well – thank goodness for those rebate checks… The anniversary of the “Esperanto Money”…in central banking, the consequence of inertia and inactivity is almost always salutary…and more!