Here's the question:
In the event of insurer insolvency (which is the path that AIG is on), the government is obligated to step in and take over the business. Is it better to step in before insolvency or after?
Government intervention is going to happen either way. Does "proactive" intervention mute the huge ripple effect in the market that the failure of a company that employs 116,000 people and insures 74 million people worldwide creates, thereby preventing the need to intervene elsewhere as fallout spreads like a virulent disease?
Pick your poison. One might just temporarily paralyze you, the other will kill you and leave your lawn a toxic waste dump.
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