retakeournation
Member
- Joined
- Mar 15, 2009
- Messages
- 9
Why AIG Can and Can’t Fail
The debate rages; do we, or can we let AIG fail? What will be the consequences? AIG is a complex wild animal that you have to break down to really understand what it is that they exactly do.
I think most folks, when they think AIG, they think insurance; and they would be correct. There is more than one type of insurance. You have standard lines insurance, which is the insurance that you and I buy: car insurance, home insurance, life insurance etc. Then you have Surplus Lines Insurance. This is the crème de la crap of insurance but it is the cash cow of insurance. For the most part because it is stuff that is uninsurable. It’s construction projects, crane operators, hospitals, doctors, food, big wind, big flood, big earthquake, big business. Are you getting the picture? Then you have Financial Insurance or Re-Insurance. I loan someone Ten Billion dollars and then I say, well I don’t want to lose Ten Billion dollars so I’m going to transfer risk and buy insurance / re-insurance on it. I’m willing to lose One Billion, so what I’ll do is hedge my bet and pay One Billion to have an Insurance company insure the whole ten.
First let’s look at why AIG can fail when it comes to Standard Lines Insurance. In insurance the key word is capacity and at the moment there is plenty of it. Liberty Mutual, Allstate, Berkshire Hathaway, Safeco, State Farm, the list goes on and on. AIG has always been successful for one reason and surprise; it’s not because of Hank Greenburg. It’s because they had always been the cheapest kids on the block. But everyone who bought AIG insurance because it was cheap is paying for it now. I don’t need to see Hank Greenburg on T.V. anymore. I want to see Warren Buffet, Bill Berkley and the other successful insurance men and women who have done things right and I want to hear the interviewer ask them: “Can AIG Fail”? Trust me, you will be enlightened quickly. If you have an AIG Standard Lines Policy it can be replaced and replaced happily.
On to Surplus Lines Insurance. For decades AIG has been the company that would find a way to write the un-writable. Insure the un-insurable and not just here but around the world and they would do it cheap. If you are in business, you have to have insurance. Some businesses kill people on a regular basis. Not on purpose of course, but because bad things happen. Take for instance long haul truckers. Many companies have excellent safety programs and risk managers in place, but nonetheless divers still fall asleep behind the wheel. Drivers still have a couple of drinks and get behind the wheel. What happens next? The truck jack-knifes in a busy freeway tunnel, blows up and kills 20 people and leaves 20 more seriously burned or injured at 2 A.M. in the morning. Guess what the insurance company is doing? Writing a check for probably a minimum of Forty Million dollars or for however much in limits they exposed themselves to. How much money did the insurance company get for that $40 Million they have to pay out? Probably somewhere in the neighborhood of $2 Million dollars. The upside for the insurance company…Hopefully they have 200 other long haul truckers that they also received $2 Million dollars from this year who will be lucky and not have a loss.
If we let AIG fail, what happens to all of these insured’s who have AIG policies? Well in insurance as I mentioned previously there is such a thing as capacity. How much is out there? We don’t know, but I think there is quite a bit. Everyone loves Warren Buffet. Obama loves Warren Buffet. Everyone only thinks of Warren Buffet as an investment Guru. He’s not just an investment Guru; he is also an Insurance Guru. Another one is Bill Berkley; perhaps one of the smartest men in our country when it comes to business and politics and someone who has effectively run one of the most successful insurance companies in the world. You want answers America? Start e-mailing Cavuto, Beck, O’Reilly, Hannity, Limbaugh etc. and beg them to get these men on their programs and ask them one question, “can we allow AIG to fail”, and let them answer. I guarantee that what they have to say will shock you.
Finally, financial insurance. The mortgage crisis. Toxic Assets. Credit De-fault Swaps. Let me give you an example. Your best friend, who by the way is your best friend, needs to borrow $20. He’s your friend, but he’s a bum. You know you’re never going to get your $20 back and furthermore, he’ll be back next week to borrow $20 more. Do you give it to him? If you’re smart, hell no. Do you really think that these business people with Ivy League educations didn’t really know that the housing bubble was going to burst? Were these bankers and insurance folks so stupid, that they really thought that a family making $100,000 a year could afford a 1,800 sq. ft. home for $1 Million dollars? Were they really that stupid to think that the home was worth $1 Million dollars? Perhaps they were. Or perhaps they took the bonus money they made over the “good” years and they have moved to Guam. Ultimately though this is no ones fault except for the American’s who bought these homes and sold their souls to the credit devil. If you make $100,000 a year, you take home about $65,000 after taxes. You buy a $1 Million dollar home that you put 10% down on, so your mortgage is $900,000. At a minimum you should figure that your house payment would be $9,000 a month with taxes. But you are only bringing home $5,625 a month. Where was your disconnect? You’re going to tell me that you got swindled into taking that mortgage? If you did we need to fire every math teacher in America who taught you from Kindergarten all the way through college! The insurance companies like AIG who bought these assets deserve to fail for investing in your stupidity. AMERICA, WAKE UP AND TAKE RESPONSIBILITY!
Businesses don’t need bailouts. Unfortunately the American people need the bailouts. President Obama, it’s not your responsibility to run our companies. It’s your responsibility to protect our people; especially the village idiots. And let me be the first to apologize on behalf of my fellow American’s who were idiots. Let’s keep this simple. Take back the Trillions that are being spent on rat research and other earmarks and purchase the toxic mortgages. Let the government hold the mortgages and rent these homes back to the people who are living in them or sell them to people who can afford to live in them and move the people who can’t into homes that they can afford. Is it fair? No! But what else are we going to do? Let’s keep the government in the people business though and out of the business world and perhaps with a little bit of bearable pain and suffering capitalism will prevail!
So back to the original question; can we let AIG fail? I don’t know. I think that only China can answer that question. Get ready for the most prolific part of my whole message. AIG is the largest insurer in all of Asia. Asia is the largest lender to the U.S.A. I hope that I’m wrong, but I have a sneaky suspicion that we have a clause in our lending papers with China that says AIG doesn’t fail. I’m not smart enough to carry the ball on this one, but there are people who are. Beck, Limbaugh, Hannity, O’Reilly, Coulter, Morris are you listening, are your eyes open? Help us out here!
The debate rages; do we, or can we let AIG fail? What will be the consequences? AIG is a complex wild animal that you have to break down to really understand what it is that they exactly do.
I think most folks, when they think AIG, they think insurance; and they would be correct. There is more than one type of insurance. You have standard lines insurance, which is the insurance that you and I buy: car insurance, home insurance, life insurance etc. Then you have Surplus Lines Insurance. This is the crème de la crap of insurance but it is the cash cow of insurance. For the most part because it is stuff that is uninsurable. It’s construction projects, crane operators, hospitals, doctors, food, big wind, big flood, big earthquake, big business. Are you getting the picture? Then you have Financial Insurance or Re-Insurance. I loan someone Ten Billion dollars and then I say, well I don’t want to lose Ten Billion dollars so I’m going to transfer risk and buy insurance / re-insurance on it. I’m willing to lose One Billion, so what I’ll do is hedge my bet and pay One Billion to have an Insurance company insure the whole ten.
First let’s look at why AIG can fail when it comes to Standard Lines Insurance. In insurance the key word is capacity and at the moment there is plenty of it. Liberty Mutual, Allstate, Berkshire Hathaway, Safeco, State Farm, the list goes on and on. AIG has always been successful for one reason and surprise; it’s not because of Hank Greenburg. It’s because they had always been the cheapest kids on the block. But everyone who bought AIG insurance because it was cheap is paying for it now. I don’t need to see Hank Greenburg on T.V. anymore. I want to see Warren Buffet, Bill Berkley and the other successful insurance men and women who have done things right and I want to hear the interviewer ask them: “Can AIG Fail”? Trust me, you will be enlightened quickly. If you have an AIG Standard Lines Policy it can be replaced and replaced happily.
On to Surplus Lines Insurance. For decades AIG has been the company that would find a way to write the un-writable. Insure the un-insurable and not just here but around the world and they would do it cheap. If you are in business, you have to have insurance. Some businesses kill people on a regular basis. Not on purpose of course, but because bad things happen. Take for instance long haul truckers. Many companies have excellent safety programs and risk managers in place, but nonetheless divers still fall asleep behind the wheel. Drivers still have a couple of drinks and get behind the wheel. What happens next? The truck jack-knifes in a busy freeway tunnel, blows up and kills 20 people and leaves 20 more seriously burned or injured at 2 A.M. in the morning. Guess what the insurance company is doing? Writing a check for probably a minimum of Forty Million dollars or for however much in limits they exposed themselves to. How much money did the insurance company get for that $40 Million they have to pay out? Probably somewhere in the neighborhood of $2 Million dollars. The upside for the insurance company…Hopefully they have 200 other long haul truckers that they also received $2 Million dollars from this year who will be lucky and not have a loss.
If we let AIG fail, what happens to all of these insured’s who have AIG policies? Well in insurance as I mentioned previously there is such a thing as capacity. How much is out there? We don’t know, but I think there is quite a bit. Everyone loves Warren Buffet. Obama loves Warren Buffet. Everyone only thinks of Warren Buffet as an investment Guru. He’s not just an investment Guru; he is also an Insurance Guru. Another one is Bill Berkley; perhaps one of the smartest men in our country when it comes to business and politics and someone who has effectively run one of the most successful insurance companies in the world. You want answers America? Start e-mailing Cavuto, Beck, O’Reilly, Hannity, Limbaugh etc. and beg them to get these men on their programs and ask them one question, “can we allow AIG to fail”, and let them answer. I guarantee that what they have to say will shock you.
Finally, financial insurance. The mortgage crisis. Toxic Assets. Credit De-fault Swaps. Let me give you an example. Your best friend, who by the way is your best friend, needs to borrow $20. He’s your friend, but he’s a bum. You know you’re never going to get your $20 back and furthermore, he’ll be back next week to borrow $20 more. Do you give it to him? If you’re smart, hell no. Do you really think that these business people with Ivy League educations didn’t really know that the housing bubble was going to burst? Were these bankers and insurance folks so stupid, that they really thought that a family making $100,000 a year could afford a 1,800 sq. ft. home for $1 Million dollars? Were they really that stupid to think that the home was worth $1 Million dollars? Perhaps they were. Or perhaps they took the bonus money they made over the “good” years and they have moved to Guam. Ultimately though this is no ones fault except for the American’s who bought these homes and sold their souls to the credit devil. If you make $100,000 a year, you take home about $65,000 after taxes. You buy a $1 Million dollar home that you put 10% down on, so your mortgage is $900,000. At a minimum you should figure that your house payment would be $9,000 a month with taxes. But you are only bringing home $5,625 a month. Where was your disconnect? You’re going to tell me that you got swindled into taking that mortgage? If you did we need to fire every math teacher in America who taught you from Kindergarten all the way through college! The insurance companies like AIG who bought these assets deserve to fail for investing in your stupidity. AMERICA, WAKE UP AND TAKE RESPONSIBILITY!
Businesses don’t need bailouts. Unfortunately the American people need the bailouts. President Obama, it’s not your responsibility to run our companies. It’s your responsibility to protect our people; especially the village idiots. And let me be the first to apologize on behalf of my fellow American’s who were idiots. Let’s keep this simple. Take back the Trillions that are being spent on rat research and other earmarks and purchase the toxic mortgages. Let the government hold the mortgages and rent these homes back to the people who are living in them or sell them to people who can afford to live in them and move the people who can’t into homes that they can afford. Is it fair? No! But what else are we going to do? Let’s keep the government in the people business though and out of the business world and perhaps with a little bit of bearable pain and suffering capitalism will prevail!
So back to the original question; can we let AIG fail? I don’t know. I think that only China can answer that question. Get ready for the most prolific part of my whole message. AIG is the largest insurer in all of Asia. Asia is the largest lender to the U.S.A. I hope that I’m wrong, but I have a sneaky suspicion that we have a clause in our lending papers with China that says AIG doesn’t fail. I’m not smart enough to carry the ball on this one, but there are people who are. Beck, Limbaugh, Hannity, O’Reilly, Coulter, Morris are you listening, are your eyes open? Help us out here!
