Monday, March 2, 2009

Aig

AIG failure would be disastrous for global markets

While putting more taxpayer money at risk is unlikely to be palatable in the current economic environment, analysts said the U.S. government had little choice. Without government intervention, AIG's expected losses would prompt credit ratings downgrades -- triggering even more debilitating losses for the insurer, and its trading partners. "The government really does not have the option of letting AIG totally blow up," said Robert Haines, senior insurance analyst at CreditSights, AIG's foray into the roughly $28.5 trillion credit default swap market left it heavily exposed to losses on toxic mortgage assets that it had guaranteed against default.

Posted by devo @ 10:05 AM (3085 views)
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4 thoughts on “Aig

  • Backingermany says:

    Sorry to be off topic, but how can I receive a password? It says here mail the webmaster, but what address does the webmaster have?

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  • Well, duh, thanks for the “heads up”.

    Glimpses of the obvious.

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  • “Over time, however, some analysts say the U.S. government may find that an orderly failure of AIG is the only way to stop the financial bleeding.”

    i.e. It may be a solvency issue rather than a liquidity one, at some point one must stop throwing money into the pit and address the cause!

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  • So the commercial decision to insure a group of loans was made, and that decision was wrong.
    It happens, as in the Lloyds ‘names’ events in the past.
    So if the insurer cannot meet the liabilities arising, and has retained the risk, then the insurance is void- the insurer is ‘bust’.

    Tell me again why we the taxpayers become liable?

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