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AIG : Outrage Grows Over The Impossible to Understand March 16, 2009

Posted by aetiusromulous in Economics, news, politics, Video, YouTube.
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Public Weighs In on Infinite Complexity

 AIG is an insurance company. Insurance companies are among the oldest of financial institutions, and they make scads of money by understanding the risks they take balancing premiums against potential payouts. They have become very good at it over the centuries, and a good insurance company makes a whole lot of money. AIG is a good insurance company with over 78 million policies to its credit.

AIG, it turns out, may not have been a great investment company, but after all, good investment company has become somewhat an oxymoron of late. Be that as it may, it turns out that a very small, very discreet group of mega sophisticated AIG employees – about 375 in total – with virtually no understanding of the company’s core business (insurance), went rogue with the companies considerable assets and dove headlong into the weird and wooly world of finance derivatives. And the rest, as they say, is history.

AIG is indeed way too big to collapse as they are the worlds principle insurance company. Not just America’s, but the world. Over on the insurance side, where generations of hard working and pretty honest (for insurance salesman anyways) employees have done nothing to cause the mess, there is no justification for vilifying or demolishing their work. And yet, AIG is insolvent, and the responsibility of Americans to deal with. And the Americans are pissed.

The whole business has so far done nothing but befuddle the average American taxpayer, and befuddlement in America leads to anger. That anger may finally have rested on a target after months of confusion over who to blame and how to exact revenge.

AIG. It’s short, catchy, and easy to remember.

So AIG it is.

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Comments»

1. CB - March 17, 2009

This is really a story about a fox in the henhouse, a circus and it’s sideshow.

This is back door support opened by the Fed for AIG through which they directly fed these foreign banks nearly $100 billion (without a bill from Congress?!?). I don’t think the Fed has the legal authority to appropriate funds in this manner. Also, this latest information is only through the end of 2008. It doesn’t include AIG’s demands for more gov’t cheese since the new year began. Yikes. Not sure about the legalities, any thoughts?

In any event, the biggest abuser of this country’s system, as it turns out, is the US Federal government itself. We have a central bank designated to protect the banking system, but what we really have is a fox-guarding-the-henhouse system of banking. While I am outraged by the AIG bonus news, I am beginning to think this story is just a lame sideshow at the circus.


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