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Bahamas Minster of State for Finance Zhivargo Laing attributed the collapse of American International Group (AIG) to globalization
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Laing Blames AIG On Globalization:
By TAMARA McKENZIE -
Nassau, Bahamas:


After American International Group (AIG) – one of the world’s most prominent insurance companies – had to be bailed out of massive debt on Wednesday by the Federal Reserve Bank of America, Minster of State for Finance Zhivargo Laing attributed the collapse to globalization.

"It was globalization that put AIG in a position to have such a global impact in terms of the insurance business and it was globalization that brought the risk inherent with having such an impactful company run the risk of being defaulted and rescued by the Federal Reserve Board," Minister Laing posited Wednesday.

"It also speaks to the twin realities of globalization because it provides enormous opportunities for businesses, but at the same time, it also poses significant risks that have to be properly managed."

Laing’s remarks came while addressing members of the Bahamas Chamber of Commerce as they officially announced their upcoming Globalization Conference scheduled to begin on October 3.

The conference is expected to address issues related to competiveness, access to finance, and the implications of membership or non-membership in international trade agreements amongst others.

On Wednesday, AIG Stocks fell to their lowest levels in three years after the Federal Reserve agreed to lend up to $85 billion to the ailing company that provides insurance against complex financial instruments, including mortgage-backed securities.

Over the past nine months, according to international reports, AIG has reported $18 billion worth of losses on guarantees that it wrote on mortgage-backed securities, and earlier this week, the company’s shares fell 43.28 percent amid fears that a £42 billion rescue package might fail to materialise.

The Fed's move on Wednesday was designed to prevent the nation's credit system from freezing.

But Minister Laing said AIG had become such a significant player in the international financial system that the U.S. Federal Reserve Board felt compelled to rescue it; otherwise it would put the international financial system in jeopardy.

Meanwhile, the state minister of finance said Bahamian businesses must be able to access the kind of financing that makes it possible to extend into and take advantage of other markets.

He said there are far too many Bahamian companies who are not knowledgeable when it comes to tapping other sources of financing to expand their business.

"Earlier this year when we had some discussions with the Inter-American Development Bank, it was the intention of the Bank and the Ministry of Finance to host a seminar that would bring together the various kinds of funding entities that are available across the world, so that they can make themselves known to Bahamian business concerns and see the gamut of funding opportunities available…and we expect to host that seminar at some point," Laing said.

The Minister of State for Finance said despite the economic challenges that the Bahamas may face, he is of the firm view that globalization holds many opportunities for the further growth and development of the country.

"I am [also] of the firm view that the best days of this country are not behind it but ahead of it, and we have not yet tapped into that optimal creativity and innovative spirit that we have as a people," Laing said.

"There are far too many pieces of information still yet to be used in the furtherance of our own growth and development, and that is why we should spend more of our energy devising solutions to our problems as opposed to describing problems which we know by now as experts."

September 18, 2008

September 18, 2008 | 4:24 PM Comments  0 comments

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