They talked about a controlled bankruptcy for the auto industry and that is all that this would be.
Is the gist of your argument that it is too complicated to figure it out and so let's just pay it all out?
Here's a clue. You worked in the industry and that is why you _believe_ they have to be paid. They don't.
All we should be hearing at AIG today is, "Show me you own the mortgage or get the fuck out."
It really isn't that simple my friend.
no, it is not the gist of it being too complicated so "let's just pay it all out".
CDO's, CDS and MBS are too complicated too explain here. Not the importance of bailing out AIG.
It is not a question of complication, it is a question of the repayment of the money given to AIG, which is a very fundamentally sound business under the mountain of shit that the financial arm put the whole company into.
It is not a question of me working in the field.
I did not work in AIG's field. I was not in insurance. AIG was a diversified company, that took a big hit because of its derivatives trading arm
it is not a question of me being in the industry and you not being there.
AIG's failure would affect you just as much as it would me.
The reason why they must be paid is incorrect. they are not being "paid."
The money is being given to them because they are a financial intermediary. the 150 billion that has been given to them so far, comes in and goes out just as quickly to the counterparties...it is providing liquidity, to a sector that was frozen and locked up.
AIG has 74 million insurance policies in 130 countries worldwide and they cover so many different products, services and industries, that their failure would be catastrophic.
They still have solid, profitable companies that are not only profitable, but are vital.
Also, the money is not just thrown down the toilet. much of the bailout money has very specific terms for repayment of taxpayers, inclduing preferred stock and very high dividends.
The government is counting on the fact that once it can clear off the toxic assets, there are some very solid and important core businesses that have always created large profits.
AIG is a company with over a trillion dollars in assets and it cannot be allowed to fail, because the chaos that would ensue to all those who are linked to AIG would be massive and devastating.
American Banks rely on AIG to back over 300 billion in assets through the derivatives they underwrote.
there are so many people and companies worldwide that have exposure to AIG, that its failure would be even more devastating then what we have already seen.
Imagine Lehman Brothers, then multiply it by 50.
AIG provides insurance against financial instruments such as mortgage backed securities failing...so what happens, when companies like European and american banks who have bought that insurance against these securities failing, are no longer being paid the insurance now that all those products have failed?
Catastrophe.
When Lehman, Goldman Sachs, Morgan Stanley and many other institutions wrote down billions in debts and losses, who do you think payed out the insurance on that?
What happens when the firms still losing money or others who are insured against fire or floods have to collect, (the reason for insurance) if AIG collapses and cannot pay those monies? They are left busted as well and then think what happens.
AIG is/was the largest insurance company on earth. It insures not just people, but massive institutions.
Its failure is not an option, regardless of whether one was in its particular industry or not.
It would be the largest financial disaster in history.
I say it again.
Catastrophe.
The entire insurance market would be utterly destroyed. AIG is directly or indirectly involved in every major insurance bond in some way.
there subsidiaries and agents are massive and global and everywhere, and in everything.
the exposure of people and institutions that hold AIG's 70 million insurance policies...i say that again...70 *MILLION* policies, would be left completely exposed.
The fact is, that no matter the price of the bailout of AIG, it is a pittance compared to what the cost of its collapse would be.
Its failure is a risk to our entire financial system, and by effect that of the world as well.
I cannot emphasize strongly enough again, just how enormous and devastating the collapse of AIG could be.
It has ties to almost every major financial firm in the world, as a counterparty and insurer etc.
this is not GM, or Chrysler or Ford whose impact are tiny in comparison
this is/was the largest global insurance conglomerate.
it would be catastrophic.
i say it again
Catastrophic.