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The Government Bails Out AIG: Was It Worth It?

|Includes: American International Group Inc (AIG)

AIG became the locus of a financial collapse due to its runaway financial products division and its one-sided stance on the enduring health of the mortgage market. Regardless of the causes for AIG's evaporating liquidity and imprudent business practices, the disastrous effects of a collapse could be foreseen. Allowing the collapse of what became a focal point in not only the financial system but also the U.S. economy would have led to a freezing of credit and a total erosion of trust in counterparties throughout the financial system. The Treasury's and Fed's intervention was needed in order to avoid outright depression and the ramifications that come from such economic conditions: the rise of demagogues, the blaming of groups for hardships, the collapse of social and economic order; and the flaring of tensions leading to war... READ MORE