AIG should have been allowed to fail, and I don't think it would have caused as much chaos as we actually got. The insurance parts of AIG (regulated by the states) were good, it was the financial products division (regulated by the feds) that double dipped and failed. The states would have dealt with the insurance parts in a better manner than the fed.
GM should have been allowed to go into bankruptcy (given the Feds wanted to kill Buick, the best seller for GM in China) and dig out themselves.
[edit] although Iceland's bank and AIG are totally different scenarios
The insurance part needs to run collaboratively across the whole country at least for the economies of scale to kick in. AIG are still a recognisable brand, and an insurance company of that scale is an incredible asset for a society to have (as are Allianz and AXA, etc...)
Also, large insurance companies are incredibly complex, and take a very long time to build up. It would be very silly to let something like that go under for short-sighted reasons.
>Also, large insurance companies are incredibly complex, and take a very long time to build up. It would be very silly to let something like that go under for short-sighted reasons.
I agree. AIG shouldn't have been so short-sighted. But since they were, they deserve to fail like every other business who doesn't adequately plan for the future.
"insurance company of that scale is an incredible asset for a society to have"
Not when it means keeping the ill-handled, tax payer killing investment company. It failed and we did a massive disservice to the tax payers by keeping it open.
GM should have been allowed to go into bankruptcy (given the Feds wanted to kill Buick, the best seller for GM in China) and dig out themselves.
[edit] although Iceland's bank and AIG are totally different scenarios