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Investors, Markets Anxious Despite AIG Bailout


A U.S. government takeover of the world's biggest insurance company has not stemmed the concerns of investors who are worried that the worst of the financial crisis may not be over.

The Bush administration's 85-billion-dollar emergency loan to American International Group (AIG) was not enough to keep major stock indexes from falling between four and five percent in the United States, more than three percent in Hong Kong, and losing around two percent in Europe.

The U.S. central bank authorized the AIG loan late Tuesday to prevent a "disorderly failure" of the insurance giant that could make troubled financial markets worse. AIG nearly collapsed after major losses in the housing crisis. Continuing worries about the health of other financial companies hurt the two biggest U.S. securities firms Wednesday. By the close of trading, the price of Goldman Sachs stock fell 17 percent while Morgan Stanley was off 26 percent.

Banks also remain concerned, and their reluctance to lend money could hamper the flow of loans needed to keep the economy flowing smoothly. Central banks in Europe, Asia, and the United States have tried to keep loans flowing by putting billions of dollars into financial markets.

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