Pull the plug on insurance colossus American International Group (AIG) and let the firm go bankrupt, says billionaire investor Jim Rogers.
Pumping more government money into AIG, which lost $61.66 billion in the fourth quarter of last year — the largest corporate loss in U.S. history — puts the U.S. economy at risk of ruination, Rogers told CNBC in a recent interview.
AIG just received an additional $30 billion in government funding on top of the $150 billion it received last year, and the global company is still foundering.
"Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the whole U.S. goes bankrupt," Rogers said in a CNBC interview.
"AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we'll never start over."
The consequences of increased government debt resulting from bailing out firms like AIG could be calamitous, Rogers predicted.
"You are watching something in front of our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world's most powerful country," said Rogers.
Meanwhile, optimistic and reassuring comments have been issued by AIG CEO Edward Liddy, who insisted his firm was "more stable and secure" than last year but conceded that it may need more of Uncle Sam's cash down the road.
Rogers isn't buying it and challenges the entire bailout program of solving the debt problem with assuming more debt.
"These people are nuts," he said.
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