A few months ago I sold a computer memory module to an octogenarian and promised him that the product carries a lifetime warranty. I assured him that should it fail, he can always come to our store and exchange it for another. To this the man in his eighties replied with a smile, “Whose life are you talking about here?” Is it his life, the product’s life, or the store’s life?
While at that time we enjoyed it as a joke, I couldn’t help think of it when AIG was on the brink of failure this week. When an insurance company offers life insurance the prospective client rarely think of the company’s life. We take it for granted and go about paying premiums religiously month after month. And remember AIG was targeting aged customers with no medical, guaranteed acceptance.
When it says on its web site ‘The strength to be there‘, I couldn’t help laughing.
American Taxpayers have to give life to AIG before they can take life out of it. I capitalized ‘T’ in taxpayers with full intent. They deserve all the credit and sympathy.
Did you to notice business is news now-a-days? Or should I say bailout is news? Not celebrity scandals, not terrorism, not hurricanes (hurricanes? they come and go, what’s so big about them. Gas stations are looking to hurricane news more than the guys in Texas, who are on the line of sight). Even the news about incumbent President has taken a backseat!!
I wonder whether Beijing Olympics would have got the coverage it deserved, if these bailouts happened prior to or during the Olympics. Conspiracy theorists may come out with the theory that they were holding out until after the Olympics. Who knows?
Bear Stearns, Freddie Mac and Fannie Mae, now AIG and what next? Sorry Lehman, we don’t have the money and we need to borrow to bail out the next most ‘deserving’ corporation.
Where do we draw the line? On sand of course.
If cure concerns you, we need to say no to the financial specialists who design ever more complex financial instruments (mortgage-backed securities (MBS) and collateralized debt obligations (CDO), credit default swaps (CDS) etc). They are there to take home fat cash bonuses or make history for themselves. Even the banks were/are at a loss to know who owes to whom, and how much.
Incidentally I was intrigued to read this article ‘More Subprime loans now’ and came out convinced as to why the principles of microfinance should go mainstream. If the article’s recommendation, “We need loan officers with a banker’s head, a social worker’s heart, and the stamina of a distance runner,” is implemented on a large scale then we will have transparent deals.
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