WHY IS AIG SO IMPORTANT?
Joe Nocera, NY Times - These exotic instruments [that AIG sold] acted as a form of insurance for the securities. In effect, AIG was saying that if, by some remote chance (ha!) those mortgage-backed securities suffered losses, the company would be on the hook for the losses.
Why would Wall Street and the banks go for this? Because it shifted the risk of default from themselves to AIG. . . What was in it for AIG? Lucrative fees, naturally. But it also saw the fees as risk-free money; surely it would never have to actually pay up. . .
A huge part of the company's credit default swap business was designed, quite simply, to allow banks to make their balance sheets look safer than they actually were. . . The less risky the assets, obviously, the lower the regulatory capital requirement. How did banks get their risk measures low? Why, they bought AIG's credit default swaps, of course! The swaps meant that the risk of loss was transferred to AIG. . . which meant minimal capital requirements, which the banks all wanted so they could increase their leverage and buy yet more "risk-free" assets.
So, in other words, AIG served as a way for banks to appear to take the risks of their most risky investments (i.e. risky mortgages) off their books through "insurance," therefore allowing them to leverage themselves even more. And AIG effectively bought the risk (i.e. insured it against loss), believing that the housing bubble would never burst and thus that it would never have to pay out insurance benefits on losses.
David Sirota, Open Left - This is why AIG is called too big to fail: because if it simply defaults on its obligations, it will destroy all of the investments [and] assets it was purporting to insure. And there is just a massive amount of those all throughout the economy. . . Any institution that is allowed to become so foundational to the whole economy should be at least partially nationalized - not temporarily, but permanently. AIG is about the best example of this.
posted by TPR | 12:14 PM
4 Comments:
DECONSTRUCTING AIG
http://www.fromthewilderness.com/free/ciadrugs/part_2.html
Someone has pulled off the most elaborate heist in world history. I remember it being said that if you made the crime big enough, and in plain sight, you would not be able to convince anyone that it ever happened. That's exactly what has happened here with AIG and the banking industry in general. The sheer brilliance of it is mind boggling. Create and sell fraudulent securities on a scale so huge that you can blackmail nations to hand over additional trillions to keep you from bringing down the world economy. BRILLIANT! It actually worked. And no world leaders that I know of are willing to call the bluff. Once the banking system announced "Checkmate!", it was pretty much "Game Over." The sad part about all of this is that the world economy will crash anyway at some point. The greatest nation goes down in world history as the greatest sucka of all time. BRILLIANT!
The Mad Scientist.
I think that person that made the observation that the person that conducts or perpetrates the really big, right out in the open CRIME, tends to just get away with it, and yes, this whole f'ing game plan by A.I.G. and Geithner/O'bombya, was orchestrated to finalize the "looting of the cash drawer" and finish the nation off, once and for f'ing all.
will there be anyone smart enough to figure out WE HAVE ALL BEEN SUCKERED, or more adroitly; "you ALL HAVE BEEN SUCKERED" because I saw what this O'bombya was long ago, and knew that he was not going to rock the thieve's boat by doing anything like stopping the criminality.
Look for lots of MADOFF money in Israeli bank accounts, and look for lots of A.I.G. looted money in offshore banks as well.
if I believed in a 'god' I would have to say; "goddamn, you politician's working for the Rothschilds and the Bilderbergers are GOOD THIEVES, but we'll just let HISTORY be the judge on that one, eh?
What goes around does not come around. The bookmakers at AIG will continue to be bailed out by us taxpayers. They made the bets they could not cover. We picked up the tab. We underwrote their gamble.
Post a Comment
<< Home