Skip to comments.AIG: Adventures in Geopolitics
Posted on 03/19/2009 11:28:52 AM PDT by BeaPlourde
We are very concerned about the economic developments in the U.S. economy, the Chinese leader told reporters late last week. We have lent a huge amount of money to the United States and of course were concerned about the security of our assets and, to be honest, I am a little bit worried.
In the rarefied and reserved world of public diplomacy, this is a smackdown. Its like your banker calling you into his corner office and saying: Cool it on the spending. Now.
(Excerpt) Read more at globalpost.com ...
Won’t work on Obama.
His team are masters of deflection. Example, the way they coopted the “anti-nationalization” misunderstanding to demonize finishing off AIG and bad banks in favor of paying off the gazillionaires and foreigners threatening not to pay anymore for US tax cuts.
So very true :(
You do know that AIG started it’s business in china, don’t you.
I didn’t know that it started in China, but I guess we have Mao to thank for making it our mess.
So AIG went to elaborate lengths to set up a shell company in Barbados, where capital requirements and regulation was minimal compared to the U.S., where American regulators couldnt readily discover AIG's involvement and where, as an added incentive, it could move money out of reach of U.S. taxes. Some high-level corporate executives were persuaded to front for a company into which AIG could "cede" insurance.
Goldman Sachs and Robert Rubin Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton's Treasury Secretary and is now chairman of the executive committee of Citigroup. A confidential memorandum, (which Goldman Sachs ordered investors not to copy and to return on demand) told why the company was formed. "AIG's interest in creating the Company is to create a reinsurance facility which will permit its U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirements. The statutory requirements in Barbados are less restrictive."
A no-risk deal was offered by Goldman Sachs to selected investors who lent their names and credibility in exchange for guaranteed return of $25,125 in the first year and $45,225 each subsequent year. They were L. Donald Horne, chairman of Mennen Company; Charles Locke, chairman of Morton Thiokol; Kenneth Pontikes, former chairman of Comdisco; David Reynolds, chairman of Reynolds Metals; John Richman, former chairman of Kraft; and Samuel Zell, chairman of Itel Corporation. They didnt have to put up any money: they got financing from Sanwa Bank of Chicago secured by the Coral Re shares, a guarantee of enough dividends from Coral Re to cover the interest, and agreement they could hand off the shares and debt whenever they chose.
American International Group, AIG was founded in 1919 by Cornelius Starr who established the agency in Shanghai, China. The business took off and was very successful in Asia. Later, Starr expanded the company to Latin America, Europe, and the Middle East. It is fascinating how many in the media are portraying AIG as some homegrown company when in fact, it didnt start branching out seriously into the U.S. until 1962, nearly 43 years later. http://www.mybudget360.com/american-international-group-aig-founded-in-shanghai-china-in-1919-who-are-we-bailing-out-here/