We all know that we are in very difficult times at the moment, the economy is at its lowest point and people are losing their jobs, left, right and centre. But there are a few companies that are suffering quite a bit and one of them is in fact AIG and the banks.
AIG was probably one of the first companies to get a bail out by the government of around $85 billion and then in November 2008 they got given even more totalling it up to $150 billion. But things do not seem to be getting any better for the company as they are now asking for another $30 billion investment of new capital after having quarterly losses of around $61 billion.
But how long can these bailouts last? How much of the tax payer's money are they going to give away? What I do not understand is why companies are like this? We have banks going in to huge amounts of debt because they did not manage themselves correctly, that is not my problem it's theirs. Look at HSBC they haven't made a huge profit but they still made a profit simply because they have managed their finances better.
The government keep on bailing out companies like AIG, amid fears that if they do fold then it would threaten the world financial system. But how is giving nearly $200 billion to a company any better? I am sure that that $200 billion could have instead be used to get former AIG employees back into work and into a stable company.
In the long run what are companies going to learn if they keep on getting bailed out? They just won't care if they are collapsing because they know the government is there to bail them out. The credit crunch is here for a reason and its here to rid of companies that are not performing well. If AIG did end up collapsing then it would probably pave the way for a new company to rise, one that is not in debt and that is making a healthy overall profit.
Summing up the government were right to help the company once, AIG did offer a great service and product to the world, but maybe their time is up and no matter how much money gets pumped into the business it will still fail because that's how its meant to be, if the world has taught us one thing, it is that you cannot change fate.
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