So When Did AIG Become FDIC Insured Anyways?

170 billion since the beginning of this crisis. We’ve been told AIG is “too large to fail.” It’s becoming we’ve lost too much money for it to fail. Any wish that people would generate income off this “investment” (keep in mind the nice ole days of October 2008) has for me has passed away. Let’s recall what AIG do to enter such trouble. It wasn’t health insurance or providing your grandmother with an annuity, nor their airplane leasing business. It had been their Credit Default Swaps (CDS), fundamentally insurance with an investment, such as a corporate bond or mortgage-backed security.

Say you purchased some debt of GM (because you wouldn’t want to buy one of their cars), thus lendig them money to use (they actually need it), nevertheless, you were afraid they might default. A Credit could be got by you Default Swap, a contract where you the customer would pay a little fee to protect that relationship to owner (like AIG), and if the business defaulted paying the connection you obtain a payment back again. Basically insurance on the bond, but the key being its not regulated. There have been no guidelines over how much cash a seller of CDS needed on hand to protect loss, as there are in controlled insurance.

Indeed, there were no guidelines that you even experienced to really own a relationship of the company you were buying, if you thought a company would fail you could wager against it. So, there have been more CDS than the underlying assets these were insuring. As I pointed out, CDS’s weren’t regulated.

200,000 roughly. But these credit default swaps that AIG and other banks were making were not regulated like insurance companies, or banks, rather than FDIC covered. Like buying stock, which risk the CDS will fail. But somehow, we (or at least the federal government) offers this mentality that we can’t let AIG fail because each one of these credit default swaps would fail. That would be terrible if people lost money on the bad investments. Investors should have been aware these were buying unregulated insurance and could lose. This raises another question, which could be a post in itself. These large banks (I will not name them) that keep getting bailout money, why doesn’t the normal FDIC process apply here? The accounts are FDIC-insured, so even though the account can be failed by them holders would be protected.

Having recognized early the advantages of China’s One Belt, One Road (OBOR) push, Singapore has actively backed it and is well-positioned to make benefits from it, Home Affairs and Law Minister K. Last night Shanmugam said in a lecture. Singapore’s edge lies in its good governance, the rule of law, its educated workforce and its own respected financial port and centre, he said.

Singapore in addition has been an “active proponent” of China’s growth since its opening-up, and was an early on supporter of the China-led Asian Infrastructure Investment Bank or investment company, which money Belt and Road tasks. One Belt, One Road – unveiled by President Xi Jinping in 2013 – seeks to enhance links between Asia, Europe and Africa by building roads, railway and other infrastructure in a network of projects covering more than 60 countries. He cited statistics that demonstrated Singapore has already been benefiting: 30 per cent of China’s Belt and Road investments in all countries are in Singapore. In exchange, Singapore’s investments in China account for 85 % of total Belt and Road investments there by all countries.

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Mr Shanmugam’s speech, at an Asia Competitiveness Institute forum, was the latest in a series of remarks by Singapore’s leaders to get China’s bet to recreate the Silk Road. The Republic was one of three South-east Asian countries whose heads of government did not attend the Belt and Road Forum in Beijing in-may, causing some to improve questions about bilateral ties. But observers say relations are on an even keel, with a June announcement that Chinese Premier Li Keqiang will be going to Singapore.

In a wide-ranging conversation, Mr Shanmugam also placed the Belt and Road Initiative in the context of shifting geopolitics. China, said the former foreign minister, was likely to continue its rise as a superpower, despite domestic problems like corruption and an ageing population. Even though america has not gone into actual decrease, the comparative positions of both countries shall change.

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