September 18, 2008

The Financial Implosion: Points missed by US media

With the financial implosion taking place within the US banking and insurance industry, a lot of the write ups in the US media are about the impact on the US market with a few comments on the roll over effect on foreign markets.

The decline of AIG could also mean a major loss of private sector support for developing international affairs programs.

Thanks to the Asia Times we can see that the AIG bailout has much deeper implications.

China's imploding US ally
By Richard Komaiko and Chris Stewart

The collapse of US insurance giant AIG and its US$85 billion takeover by the US government on Tuesday takes the US financial crisis right to the heart of China's development as a capitalist country.

AIG, the world's sixth-largest company by assets and biggest insurer, according to the Forbes Global 2000 list for 2007, is one of the few US institutions to be founded in China, its roots dating from 1919 when Cornelius Vander Starr, a veteran of World War I, founded a small insurance company in Shanghai called American Asiatic Underwriters, later to become AIG.

Click here for the rest of the article.

One of the interesting points the article makes is that the future of AIG may not lie in the US government but in the individual policies in Asia. People are cashing them in NOW out of fear of an AIG collapse.

The role AIG leaders have played in US-China relations is also important. The Greenberg chair at the Council of Foreign Affairs is endowed by the CV Starr Foundation, named after the founder of AIG and named after the current CEO of AIG.

No AIG. Potentially less involvement in international affairs.

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