What if AIG Collapsed in 2008?

As it says above, what if during the crux of the financial crisis in 2008, AIG, like Lehman Brothers failed for reasons.

Would their have been a global bank run?
 
Do you mean failing or making default on the CDS speculators ?

First option is known : global financial meltdown like in the 1930's.

Second option is much more interesting : banksters and vulture funds are f...d off.
 
Do you mean failing or making default on the CDS speculators ?

First option is known : global financial meltdown like in the 1930's.

Second option is much more interesting : banksters and vulture funds are f...d off.

There is a third option: complete collapse of small business, responsible for almost all economic growth in first-world nations (think multinational corporations have your back? They are interested in offshoring for the cheapest buck).

AIG does provide a service -- commercial underwriting, absolutely critical for business. It is not just Wall Street or the 5000 employee publicly owned companies that would suffer. All the 200-300 man companies would go under, because you can't operate a business without insurance without being personally liable.
 

Coulsdon Eagle

Monthly Donor
It wasn't a question of insolvency but liquidity. AIG had the money on paper to cover their debts but most were tied up in the state insurance companies, and there was no way the superintendents would let those reserves leave the state and upset all those registered voters. AIG actually paid back the Fed in advance of the expected date + interest.

AIG wasn't too big to fail; it was too big to be allowed to fail. Several European banks and some US equivalents would have been staring down the barrel.
 
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