The Times’s Andrew Ross Sorkin has an interesting column based on an AIG document he got hold of that spells out how the company’s failure would sink us all.

Here’s pretty much all you need to know:

One of the biggest worries, besides the considerable collateral damage to the banking system, is a risk that most people aren’t talking about, perhaps because it’s too scary. This one is probably easier to understand than any kind of financial chicanery: the dangers lurking below A.I.G.’s seemingly stable, highly regulated life insurance business. In the United States, A.I.G. has more than 375 million policies with a face value of $19 trillion.

If policyholders lost faith in A.I.G. and rushed to cash in their policies all at once, the entire insurance industry could falter.

Yeah, $19 trillion. As in bigger than the entire annual output of the United States. I know the old-line insurance companies of AIG are supposedly doing fine, but those kinds of numbers are just too big even without the threat posed by a casino—as Sorkin puts it—like its derivatives business.

Sorkin says the government’s latest bailout plan is actually “quite clever.” I don’t think he really makes the case for that, but he is right on here:

The bad news is that he had every right to press to own 100 percent of A.I.G., and he didn’t take it.

That’s in keeping with the new administration’s philosophy for a financial fix so far it seems, unfortunately. You know something’s wrong when the markets seem to be calling out for nationalization—a strong, sweeping effort—but Geithner and Obama refuse, instead continuing to play patch-it-up.

They’ve only had five weeks, but every day counts.

Ends today: If you'd like to help CJR and win a chance at one of
10 free print subscriptions, take a brief survey for us here.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.