What could you buy with AIG's record-smashing $62 billion loss?

CNN's Peter Wilkinson has been running the numbers on AIG's record-smashing $62 billion quarterly loss, the largest corporate loss in history (AIG lost about $460,000 per minute in the last quarter). In addition to being sufficient to carpet an area the size of Baghdad in $1 bills, $62 billion is enough to:
1. It could pay off the combined national debts of China, Australia, Mexico and Ukraine, according to 2008 estimates by the CIA Factbook, and still have plenty left over for a good night out.

3. Britain's Queen Elizabeth II might not be moving any time soon, but the money could buy 46 Buckingham Palaces, according to a 2008 estimate of its market value by the Daily Telegraph newspaper. And still leave some remaining to buy her weekend retreat, Windsor Castle.

9. AIG lost $460,000 per minute -- which would pay about half the annual pension of former RBS chief executive Fred Goodwin.

What would AIG's $62 billion loss buy?

(Image: Money squircles 1, a Creative Commons Attribution-ShareAlike image from Greefus Groinks's Flickr stream)


  1. Sigh.

    So, I should have gone into banking so I could make shitloads of money, and then go bankrupt, and then make even more money…

  2. AIG cannot be ostracised.
    It’s tentacles reach into every facet of contemporary financial markets..
    It is one of the linchpins of capitalism as it has come to be.
    Does the American government allow the house of cards to fold?
    The fallout would be significant.
    Painful even, for what has become, in the vernacular “main street”.
    Without a solution to the enormous leveraged greed created – we wait upon the piper to play the tune.

  3. If I understand correctly (and I probably don´t as I am in no way an “expert”) AIG is an insurer against bank failures. Meaning that if banks or financial institutions fail it pays the creditors a percentage of its loss. That in turn means as posters above have pointed out – its one of the base cards in the house of cards – you pull it out and it all collapses pretty much immediately. Now I am in favor of a quick total collapse instead of dragging this dead corpse with us any longer. Then we can focus on a nice rebuild of society thereafter – but the powers that be will try to hold the status quo until a point where the collapse will be much more severe especially for the already poor and that might end in war and that makes me mad as hell. There is no mathematical way out of this crisis with the current underlying capitalistic theory that is based on debt. Either you invalidate base arithmetics or the current system. I guess the fundies would take care of the first – but they have been voted out of power – so there is only one logical conclusion – but then again human kind is not logical.

  4. If I ran my personal finances this way I would have to fall on a sword or something. Quite frankly the ineptitude is beyond comprehension. These are the same people who INSURE and sell the concept of SECURITY and future PLANNING.

    It is all one big joke. Why should taxpayers be paying for this?

  5. Oh Reginald, I award you a gold star for #5.

    (BB you really need to implement some sort of system.)

  6. While it *is* fun to think about just how much 62 gigadollars is in real terms, there is something that I find disingenuous about these kinds of examples. I mean, it’s not like AIG “lost” this money in the sense that they had it in a big pile and now that pile is now gone. The money is “gone” because some “things” (like financial instruments, and houses) have lost value, so it’s not like this money could have been used for something else anyway.

  7. I’m going on a three year orgiastic worldwide bender. A cocktail of illegal and prescription drugs will keep me alive whilst it simultaneously kills me. I will eat in every 3 star Michelin star restaurant on earth, and every KFC. I will drink absurd bottled waters flown from the least convenient corners of the world, and pay all my staff minimum wage.

    I will buy an absurd flat in the centre of every major city, the excess and lack of class will be galling. An infinity pool overlooking O’Connell Bridge, great white sharks-leather sofas, golden urinals in every bedroom, vibrating see-through water beds with piranhas.

    Next, hybrid pets- I see your wolfhound and raise you my cat-horse. Its the next logical step for genetic modification.

    My house parties will be legendary. Lady Gaga will rub shoulders (and crotches) with Princess Michael of Kent and Donald Rumsfeld. I will have sex with absolutely everyone featured in OK! Magazine, with no exceptions.

    I like the idea of making celebs fight as well. A gladitorial contest would be most gratifying, plus we could make some alterations to them before hand to max out our pleasure-

    Peter Mandelson, minus his thumbs, vs a polar bear, on PCP, with chainsaws implanted in place of its paws.

    I’d find a way to revive Travis the Chimp, and enter that f****r into the UFC. I’m fairly sure that Travis vs Brock Lesnar would sell the most Pay Per Views in the history of pay TV.

    then I’d pause for breath, and realise I’d only spent a tiny fraction of my gargantuan wealth, a have a little cry for humanity, before wearily climbing back onto my cat-horse and going out again, for one last meta-party.

  8. 5. The world’s 10 top-earning celebrities, including J.K. Rowling, Oprah Winfrey and 50 Cent, would only have to work for 40 years to repay AIG’s losses.

    However, some of these people are no longer young. They may not live another 40 years. Let’s take the top 20 instead. Together, they’ll have to work maybe 25 years.

    So how about it? Let’s enslave the top 20 celebrities and put them to work paying this off. While slavery is not a good thing, we must look at this in perspective. 20 rich people, 6 billion hard working people and the well-being of the entire world’s economy. Is this not worth it, to bend the rules just this once? It’s for a good cause.

  9. @7: the point isn’t that AIG could have “spent that money more wisely” — the point is that if we bail them out to the sum of $62B, this will be the cost to US.

  10. Aww … I forgot to ask the question. How was this 62 billion lost?

    Was the payout on the insurance claims so high (higher than 62 billion) as to cause this 62 loss, after you nett off the income? Can we get a list of who had received these payouts, and how much the received?

    Or was this a paper loss, caused by a loss in value of investments? What were these investments? How much was invested in what? Can we expect the value of these investments to rebound in value in the next 5, 10, 50 years? Or are they expected to fall further in value, or are completely worthless now?

  11. Credit default swaps. There are still a shit load of claims that have not been met, and that’s where the money is being spent. Insurance is for everyone and everything! Oh yeah!

  12. $62bn?
    and counting.
    the end game sum is unknown
    collateral damage is required.

    AIG is one piece in the puzzle.

    monetarily, we could provide free education and helath care for every human on the planet by the time this is over.

    but this “funny money” (i.e pyramid scheme) – does not give education or health care.

    so … do we recognise “weatlh” as worthless?

    or carry on?

  13. All money is funny money, Even gold and silver. Its value is only what someone places on it at any one time. A perfect analogy: stuck in the desert and someone offers you three gold bars or a three bottles of water: if you’re sans water, the gold bars are nothing to you. As someone pointed out, AIG didn’t lose the money, it lost its value based on a number of factors. Government can bail it out because money’s value is based on the promise of the government that it is valuable.

    To answer the question, what would I do with 62 billion? Robot sharks to fight the zombie Travis the Chimp and Brock Lesnar.

  14. >10. If you exchanged the $62 billion losses for dollar bills the cash would carpet an estimated 595 square kilometers — the same approximate area occupied by Baghdad.< Didn't we already do that with our taxes?

  15. If we manage to weather this crisis, though it will probably go back to business as usual, I would like to see such huge entities broken down so that the entire economy cannot be held hostage again. Otherwise the invisible hand of the “free” market is just picking all of our pockets under the guise of “too big to fail,” revealing it for the total farce it is. So far it is only the smaller banks that are actually doing what the stimulus and bailouts were intended to do: putting money back into their communities. (-2nd column on the page.) Since the government could effectively own these banks when the dust settles, it should have the power to create a bunch of micro banks, so the only questions is whether O has the balls.

    I still say the bailouts should have gone to the people, who’d be spending and investing it like crazy, avoiding foreclosures and devaluation. We’d already be headed out of our “recession”, but that was too simple an answer, right?

    The collective noun for bankers is a “wunch.”

    Oh, and Andybooth@9: FTW!

  16. Don’t wanna get all Mother Theresa but you can easily buy every poor family in this WORLD a home.

  17. What is infuriating is that they won’t divulge the names of the people and institutions to whom they’re paying all that money, citing “privacy”. US taxpayers pretty much own AIG now, shouldn’t we know?

  18. I kind of forgot the most obvious one:

    $62 billion could buy …

    … about 0.1% of the >$50 trillion of the outstanding credit default swaps.

    Watch this place, there are more zeros to come.

  19. Perhaps /some/ money would be good towards building one of these arcologies or automated farms we keep seeing theorized in boingboing posts. The kind that make food into abundance and give it away for free?

    You know, so that if the financial economy ever collapses to the point of kaput-ness, at least we’ll all still have food, water, clothing, and shelter.

    Just a little planning ahead.

  20. Look, since at least the beginning of the 20th century the top < 1% that own all the worlds banks engineer economic collapses, starve the economy by pocketing the bailout money and refusing to reinvest, back a man like Hitler, start a world war, and then make the loans to governments to first build the war machines followed by the lucrative contracts to rebuild all that was destroyed.

    That is why AIG is not divulging any names, because they are literally funneling this money into the overlord class. If you think this is tinfoil talk, you do not know your economic history.

  21. So what exactly would be the consequences of letting them burn? Would it cost more than the untold billions we’ve already poured down them?

  22. How about “start a new bank founded on sound financial practices?” Seems to me that’s exactly what we should be doing right now. Let the faulty institutions fail, allow their shareholders to take a hit, and spend the money to start some new banks that aren’t already buried in mountains of bad debt.

    I know that’s not gonna happen, but I can dream.

    Also: hoverbikes.


    I use to be angry about all this bail out too , but now, after much consideration, I arrived at the conclusion that if we’re part of the economy then we’re basically on the same sinking boat or the cancer metastasize and you can’t just cut it out (pick your analogy). If AIG goes down, no one will talk of the great depression b/c it will be nothing compare to the hurt we’ll be in.

    AIG is basically an insurer of failing/useless things. Imagine the insurance company cannot stop insuring a driver when he crashes. The good news is that, after the term ends the insurer is free to change the terms/re-negotiate/cancel etc. The crap that AIG insures has terms that will expire too. I heard since the gov’t took over till now, a good portion of those contacts have expired and many are due to expire.

    I think the gov’t is basically buying time for all the madness to unwind. if we’re not patient, we may be adding salt to the wound.

  24. @30:

    The consequences are getting less and less each day, which is why the governments are waiting as long as possible if they should actually let anyone fail.

    The problem is of course, that doing nothing is doing more and more damage and in the end it would have been easier and cheaper to just let them fail fast and concentrate on what is Obama is claiming to do – rebuilding.

    Right now, nobody is rebuilding anything, right now, we’re in the stage of real fast decay. (Of mostly virtual assets, but the impact on the real ones are getting worse and are curiously mostly a function of time and not the amount of lost money – hence the desire to let finance fail fast and end the crisis quickly).

  25. Arg! That’s what I get for using a < ... My first paragraph was (roughly): Look, since at least the beginning of the 20th century the < 1% (really a couple handfuls of families) that own the banks deliberately engineer an economic crisis, which they perpetuate and deepen by refusing to (re)invest any money (even when billions are handed to them by the feds explicitly for this purpose), then they either back someone like Hitler to force a war or use their considerable (unstoppable?) influence to exacerbate the crises to the same effect. War means first the loans for the war machines and then loans for the reconstruction afterward, making the banks ever more powerful. This is the biggest putsch yet, and despite the advanced stage of info availability, the general public seems woefully uninformed about the fact that this collapse was deliberate, down to the timing.

  26. Obama’s gutting spending on schools and public healthcare, and diverting it to the military, the wars in the mid-east, wall street, and to paying interest on the debt (rapidly expanding due to military spend and wall street give-aways).
    No difference from Bush, other than the media “tone”:

    Without a difference in policy, there will be no difference in outcome: the goal is to impoverish the Boomer’s retirement, just as Vietnam-war inflation in the 70s-80s served to impoverish the retirement years of the “greatest generation”.


    ‘”How about “start a new bank founded on sound financial practices?”‘

    You’re talking crazy talk there. Sound financial practices do not insure that a small minority of elites are able to run the show no matter how destructive and clumsy they are.

  28. Double grar! Love how the preview option destroys your HTML characters…

    My first paragraph was (roughly):

    Look, since at least the beginning of the 20th century the ≷ 1% (really a couple handfuls of families) that own the banks deliberately engineer an economic crisis, which they perpetuate and deepen by refusing to (re)invest any money (even when billions are handed to them by the feds explicitly for this purpose), then they either back someone like Hitler to force a war or use their considerable (unstoppable?) influence to exacerbate the crises to the same effect.

    War means first the loans for the war machines and then loans for the reconstruction afterward, making the banks ever more powerful. This is the biggest putsch yet, and despite the advanced stage of info availability, the general public seems woefully uninformed about the fact that this collapse was deliberate, down to the timing.

  29. You can buy one (1) prevention of a financial meltdown due to systemic cascading counterparty losses for another day. Included with this purchase is the prevention/delay/minimization of another Great Depression.

  30. Looks like the rate of inflation change over the past 50 years is 625.6%. So if we add a time machine into this question we would need to change the amount to $435 billion.

  31. That is an easy question, I would start robbing banks. I would have more than enough to pay off any cops should I get caught!

  32. What this loss actually did buy was the ability for companies and in a large part CONSUMERS (that’s right folks, you and me) the ability to buy lots of crap. It started with subprime borrowers but has now extended to all sorts of borrowers with having borrowed too much money. AIG just made it easy for those people and companies to borrow. Hence, if anyone is wondering how this happened and where that money went, it went into your house and other stuff you and the company that hired you bought.

  33. @ #35:

    I know people in insurance. AIG has RE-SIGNED contracts even during this mess. How? They lowered the hell out of their prices.
    Many businesses are willing to take the risk in order to save some on premium, and the knowledge that since AIG will get saved, if they do have a claim, it should get paid..

  34. Well item 1 is somewhere between misleading and completely wrong. National public debt for Australia as of the last fiscal year was nothing. Current account deficit is around $20 billion, which is what they might be using, but given that China hasn’t had a current account deficit in over 15 years (and has been 100 billion+ in the black every year for the past five), that means that can’t be right. We haven’t even started on Mexico or Ukraine yet. So take the whole thing with a large dose of salt, or just generally ignore it as being as meaningless as every other attempt to quantify the unimaginable (which it is, the human imagination doesn’t work with numbers this large, people can’t even reliably figure out how many people turn up to large street rallies…with aerial photos…and computers…and too much time on their hands).

  35. I almost forgot to say:

    I’d use the money to back a (re)new city based on participatory economics. (#1 Pick for “Deep Funding” is NO, LA. That’s just my opinion).

    Pay money to grow crops of all kinds. Bulldoze old buildings and build completely new high tech and (re)de-centralized housing. It is the twenty first century and I don’t see any reason why there are not experimental arcologies and friendly neighborhood cannabis competitions/rivalries. Important distinctions in value that recentralize our wealth to our surroundings and what we bring inside of them, alleviating the endless pressure of rich people shaking the stock market around like a little fat heartless white kid’s piggy bank for destruction money.

    I’d settle for federal funding for local farming.

  36. AIG bought my car insurance company last year. Now they’ve got their hand out for a bailout from our social corporate welfare state. Let that be a lesson to them.

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