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Old 03-03-2009, 07:12 AM
 
3,269 posts, read 8,729,729 times
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American International Group should be allowed to go bankrupt because keeping it and other sick financials alive on government support risks ruining the US economy, legendary investor Jim Rogers told CNBC Tuesday.

Jim Rogers: Let AIG Go Bankrupt, Not America - Financials * Europe * News * Story - CNBC.com
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Old 03-03-2009, 08:03 AM
 
Location: Castle Hills
1,129 posts, read 2,286,134 times
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He is 100% right. We can't keep giving billions and billions of dollars to these companies.
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Old 03-03-2009, 08:05 AM
 
10,485 posts, read 22,572,552 times
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I agree
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Old 03-03-2009, 08:29 AM
 
Location: RV Park
7,543 posts, read 11,561,355 times
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The argument (not that I totally agree with it) is that AIG has 74 million customers around the world, and that not giving them more now would mean a systemic failure costing many times more.

We're screwed, so we're committing what I call "domino sins"; mistakes that have to be made to cover the mistakes made before them.
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Old 03-03-2009, 09:11 AM
 
5,092 posts, read 9,610,205 times
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Quote:
Originally Posted by little elmer View Post
The argument (not that I totally agree with it) is that AIG has 74 million customers around the world, and that not giving them more now would mean a systemic failure costing many times more.

We're screwed, so we're committing what I call "domino sins"; mistakes that have to be made to cover the mistakes made before them.
Plenty of other insurance companies that would love to help out those 74 million customers. Sinking AIG would help out those companies' sales and make the industry healthier overall. And at this point those other insurance companies who are paying taxes, etc. are having to underwrite their incompetent competitor -- AIG. Ahhh, Corporate Socialism hits the Corporate Folks -- gotta love it.

Bigger picture, mho is there is something hiding beneath the water line on with this iceberg. Dunno yet what it is but there is a whole lot more hidden in what is going than what we are seeing.
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Old 03-03-2009, 09:27 AM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by little elmer View Post
The argument (not that I totally agree with it) is that AIG has 74 million customers around the world, and that not giving them more now would mean a systemic failure costing many times more.

We're screwed, so we're committing what I call "domino sins"; mistakes that have to be made to cover the mistakes made before them.

Hi little elmer,

That assumes that we actually need the financial system. Think about those 2 words "financial system". All it is is a system and its a failed system. We need more credit?. Yeah, thats what we need, more debt. We need to circulate treasuries.
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Old 03-03-2009, 09:56 AM
 
Location: down south
514 posts, read 1,407,241 times
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Quote:
Originally Posted by Philip T View Post
Plenty of other insurance companies that would love to help out those 74 million customers. Sinking AIG would help out those companies' sales and make the industry healthier overall. And at this point those other insurance companies who are paying taxes, etc. are having to underwrite their incompetent competitor -- AIG. Ahhh, Corporate Socialism hits the Corporate Folks -- gotta love it.

Bigger picture, mho is there is something hiding beneath the water line on with this iceberg. Dunno yet what it is but there is a whole lot more hidden in what is going than what we are seeing.
It's not your average joes who bought a life insurance from AIG the government is worrying about. That part of AIG is actually quite healthy and profitable. The "systematic risk" stems from the fact that lots of asset on the books of financial institutions across the world are insured by AIG. Why do you think AIG need so much money so many times? It's because when toxic asset/opaque financial derivatives held by companies like Citi, bank of America, HSBC, etc. lose value, quite often it's AIG who has to dip into its pocket to cover the losses. If housing prices keeps rising, AIG would never have had to actually pay it, but with everything collapsing down, AIG could not keep up with the insurance payment on its own, that's why the government has to step in, otherwise, you would have the whole western financial system crash down like a deck of cards because once the "insurers" disappear, lots of seemly "healthy" asset held by the banks, not just banks in the US, would suddenly become worthless, believe me, even after all the write-downs and recapitalization, there are still A LOTS of stuff on the banks' book that would have been worthless had the government chosen to sit on the sideline and let the only thing that kept the "stuff" from becoming worthless craps, namely AIG's insurnace, go. They thought letting lehman brothers go wouldn't induce sysmatic risk, they were obviously wrong, but even back then, they knew how interwined AIG is with the world financial system, when Henry Paulson briefed the congressional leaders, chances are the worst case scenario that scared the sh*t out of congressional leaders from both parties was the domino effect an AIG collapse would have brought to the stability of god knows how many banks and the whole system as a whole.
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Old 03-03-2009, 10:54 AM
 
17,750 posts, read 15,043,922 times
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Quote:
Originally Posted by eatfastnoodle View Post
It's not your average joes who bought a life insurance from AIG the government is worrying about. That part of AIG is actually quite healthy and profitable. The "systematic risk" stems from the fact that lots of asset on the books of financial institutions across the world are insured by AIG. Why do you think AIG need so much money so many times? It's because when toxic asset/opaque financial derivatives held by companies like Citi, bank of America, HSBC, etc. lose value, quite often it's AIG who has to dip into its pocket to cover the losses. If housing prices keeps rising, AIG would never have had to actually pay it, but with everything collapsing down, AIG could not keep up with the insurance payment on its own, that's why the government has to step in, otherwise, you would have the whole western financial system crash down like a deck of cards because once the "insurers" disappear, lots of seemly "healthy" asset held by the banks, not just banks in the US, would suddenly become worthless, believe me, even after all the write-downs and recapitalization, there are still A LOTS of stuff on the banks' book that would have been worthless had the government chosen to sit on the sideline and let the only thing that kept the "stuff" from becoming worthless craps, namely AIG's insurnace, go. They thought letting lehman brothers go wouldn't induce sysmatic risk, they were obviously wrong, but even back then, they knew how interwined AIG is with the world financial system, when Henry Paulson briefed the congressional leaders, chances are the worst case scenario that scared the sh*t out of congressional leaders from both parties was the domino effect an AIG collapse would have brought to the stability of god knows how many banks and the whole system as a whole.
Greetings eatfastnoodle,

The life insurance of the average joe is solvent. That is exactly right. That is the purpose of bankruptcy protection. AIG is bankrupt and it needs to operate what actually is not broken and dump the rest. The equity and bond holder however should be wiped clean.
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Old 03-03-2009, 11:00 AM
 
22,770 posts, read 25,218,368 times
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Quote:
Originally Posted by eatfastnoodle View Post
because once the "insurers" disappear, lots of seemly "healthy" asset held by the banks, not just banks in the US, would suddenly become worthless.
Can you explain this in more detail?

If AIG's insurance products "disappear", then what assets become suddenly worthless, and how?
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Old 03-03-2009, 11:34 AM
 
48,519 posts, read 81,113,623 times
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That is what so many economist say. That if AIG goes it could takeout the markets. Think 90% unempoloymentt and another great depression.They say the big three going under and all the related industires would be nothing because of the extent of AIG businesss which is only not person insurance. I'm don't really know myself.
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