The Shock Doctrine

Disaster Capitalism in Action: insurers

Firms Receiving Bailout Funds Continue Multi-Million Dollar Sports Sponsorships

Justin Rood, ABC News, November 24, 2008

"AIG, Citibank and a number of other federally bailed-out financial institutions have no plans to cancel hundreds of millions of dollars in sports team sponsorships, even as they take billions in taxpayer support, ABC News has found....

"Struggling Citibank just sealed a multi-billion-dollar emergency "backstop" deal with the U.S. government. The financial behemoth, suffering with billions in bad mortgage-related assets on its books, recently shed 53,000 workers and saw its stock price lose over half its value. Yet it's in a 20-year contract to pay the New York Mets $400 million to name the team's new stadium 'Citi Field'....

"Citi isn't alone: Imploding insurance giant AIG is paying the British soccer team Manchester United $125 million for the privilege of having its logo appear on Man U's uniforms. That, despite the fact the firm is standing largely thanks to a $150 billion lifeline from the U.S. Treasury."

Lobbyists Urge Bailout Money for Insurers, Automakers

Edmund L. Andrews and Eric Dash, New York Times, October 25, 2008

"The chase for a piece of the Treasury Department’s $700 billion bailout program intensified Friday as the government considered extending it to include insurance companies as well as banks, and the auto industry stepped up efforts to secure a share of the money....

"The Financial Services Roundtable, a lobbying group for financial services companies, asked the Treasury Department on Friday to open its program to broker-dealers, insurance companies, car companies and financial institutions owned by foreign corporations....

"Although the insurance industry is under pressure because of investment losses, some analysts said they did not understand why insurers needed immediate government help....Virtually all insurers have suffered investment losses, which in turn have driven down their stock prices, sometimes sharply, as investors dumped shares to avoid dilution while companies raise new money. And the credit rating agencies have been reviewing and downgrading many insurers’ debt this month.

"But neither of those trends implies an urgent liquidity crisis that would leave insurers unable to pay claims, analysts said. Insurers are generally considered immune to run-on-the-bank panics because they do not take deposits. Policyholders cannot usually pull out their money without incurring losses."

See also:

Hedge Funds Make Plea for Bailout Cash "Insurance companies, automakers, hedge funds and foreign-owned banks are all making appeals to be included in the rescue package, contending that they need assistance as well."

Private Firefighting is a Booming Business

Malia Wollan, Associated Press, July 15, 2008

"Business is booming for private firefighting companies as drought and soaring temperatures combine to create one of the worst fire seasons in years across the West. Some contractors are even acquiring their own fire engines and flying helicopters.

"But some fire officials question the reliance on private crews, raising doubts about their training and whether they could get in the way of government firefighters. Others are concerned that a trend toward privatization will give protection to the wealthy, but leave other homeowners vulnerable to the flames."

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