AIG, in combination with the soaring oil price, managed to drag down the US market after it posted a first quarter loss of $7.8 billion on the back of the mortgage-related downturn. And the reality is that they don't know whether they've hit the bottom. AIG is raising $12.5 billion in capital for one reason: to prop up its balance sheet and that's a real indictment of the company.

The reality is that AIG's fortunes won't improve until the US credit and housing markets pick up and no-one knows for sure when that's going to happen. And analysts now warn that the insurer is likely to be in for a period of instability and a management shake-up. "Management capability issues, which have been smoldering for a while, are likely to flare up,'' David Havens, a credit analyst at UBS AG in Stamford, Connecticut, said in a note to investors, reports Bloomberg. "One of AIG's constant weaknesses has been its complexity. It's come back to bite them.''

That might explain why The Street.com's Jim Cramer says that the latest debacle is of Enron proportions. Cramer also wants the Securities and Exchange Commission to investigate. Oh yes, and he wants chief executive officer Martin Sullivan's head.

"This company's in trouble, and not just because of the capital raising. You don't raise capital and raise the dividend,'' writes Cramer. "That's so obvious as to be painful. Clearly, AIG has no idea what it owns, so any amount of capital it raises is pure conjecture. Everyone at the top is over his head. They don't know what they are doing ... I would stay away from anything AIG. If I were them, I would have cut the dividend and raised $20 billion. Why not? Oh, and keeping Marty Sullivan at the top? Hysterically funny."

Fair point. But even if Sullivan goes, this company will need a miracle turnaround in the housing and credit market, not just another leader, to find its way back. Investors shouldn't hold their breath.