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Ginger

How will it affect the economy if AIG goes under?

Jeff:

it will be bad.. but we can sale it in parts. we will alot of smaller company

Ginger:

That is what they have been trying to do. However, it is easier to sell assets than it is to sell liabilities.

Mac....Of Moot and Mac:

AIG is the worlds largest insurance company.......Corporations and individuals are covered under various policies.............Being the worlds largest, it would have an adverse affect on these policies to be enforced if the company went under.............there would be an enormous amount of collateral damage if these companies and individuals lost their insurance umbrella..............

Ginger:

Thank you for your answer. You seem to be well aware that the failure of AIG would trigger several other failures.

Muttin':

Better than throwing it on a life raft.

Ginger:

Thank you for your response.

Ginger:

But..... how will it effect the economy?

Muttin':

It would be very bad. But how else do you stop it? This is why Monopolies are a bad thing. They get to big and powerful. If they fail it costs. But its necessary in order to better further the economy with new smaller businesses which when they fail there isn't so much destruction.

Ginger:

Thank you. Yes. Too big IS too big! It is a costly lesson. Let's hope we learned it well.

Russ:

too big to fail, too big to exist.

Sheldon:

It will just be billions more we can use to bail out other companies. God forbid if we did anything beneficial with that money.

Sheldon:

Well, it is a hard lesson to swallow. AIG has been extremely irresponsible and made horrible decisions that led to them teetering on the edge of failure. They are a very large company with clients in many countries, and they are the world's largest insurance company. They have gotten too big and too powerful. If AIG were to go under, yes, it would have an big negative effect on our economy. But, the thing is, more companies would take over and become more responsible. And we would learn from the mistakes.

Ginger:

Thank you for your answer.

Jim:

It would be painful, but new and more responsible companies would emerge to fill the void.

Throwing money into the void just prolongs the pain.

Ginger:

But what would be the effect upon our current economy?

Rick:

skully i don't think you quite understand how big AIG is. They are the worlds largest insurance company. the next largest is 1/67th it's size.

Goodbye, Cruel World:

Probably a lot less than one might think. One would have to examine the impact on the company's statements according to insurance laws and regulations rather than the one used for investors. One would then have to back out the purposeful overstatement of liabilities on that statement to see if the company is still viable.

In addition, the insurance industry has agreements and state run funds (funded by assessments on insurance companies) to keep the policyholders protected. When an insurance company is going down the tubes, sometimes profitable blocks are sold off, giving a bit more money for those stuck with the rest of the business.

Often the customers get less than what the salesman told them but the contracts have guarantees that the regulators try to make sure are honored.

I strongly suspect the whole bailout/stimulus fiasco has been politically motivated with funds going to the politically connected rather than more logical ways of tackling the issues.

Russ:

one more hundred billion dollar bailout.

?SugarBabe:

Considering all the people being paid bonuses with the bail out money, I guess you could equate it to being screwed but not kissed.

Ginger:

The question concerned how it would affect the economy if AIG went under.

Rick:

they have such a giant world presence. It will severely injure many nations economies.

Ginger:

Thank you. Good point. Maybe some of those other nations could chip in.

Russ:

hello, ginger.
I am less concerned with individual policy holders, as they are already government protected, but if you really look carefully, you will see many re-insurance agreements by its subsidiaries, that could lead to serious consequences , not only here, but throughout the world. I have read their annual statement of 2006...I see the possibilities. Again we have to think globally, as this whole problem is global.

Ginger:

Thank you for your answer, Russ. Yes, the whole world is watch AIG.

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