Notebook: AIG on the Brink
The problems stem from AIG's financial products division, not insurance. But investors are nervous because this is a colossal firm. If it fails, the ripples would travel far and wide through the global economy. Businesses from banks to manufacturers which had insurance could find themselves exposed. An airline, for example, that bought a contract guaranteeing a certain cost for fuel, could suddenly have to pay full price.
There's better news for individuals. Life, auto, and homeowner policies are guaranteed by state funds. So, claims would still be paid up to certain limits. People with retirement annuities also have protection.
AIG is hoping for a bailout from its competitors. If it doesn't get one, fasten your seat belt. The fallout could touch every corner of our economy.