Home » AIG: for want of a shoe—and some common sense

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AIG: for want of a shoe—and some common sense — 7 Comments

  1. As I’ve admitted before, I’m no financial expert. It seems to me, however, that AIG’s problem are at least partially the result of two factors I just yesterday did some reading and writing on: First, the repeal of Glass-Steagall which repeal allowed insurance and investment banking to commingle. Second, the at-best incompetent rating agencies: surely even if AIG started off AAA once it became clear what risks they were taking someone should have down-graded them – before the crisis hit the fan, not after.

    Wasn’t this problem exactly what the original TARP was supposed to be about? The government was going to buy all those toxic assets (like CDS) so as to remove their poison from the financial system. That might not have been any cheaper than bailing and re-bailing and re-re-bailing AIG (what’s $250B among friends?) but surely it would have been cheaper than bailing and re-bailing AIG plus Citi plus BofA plus goodness knows who else.

  2. And how is it that people were so stupid as to buy (literally) into it? Once again (we’ve heard this many times before, but it never ceases to amaze me): they thought housing prices would always go up, so the bills would never come due.

    Because they’re geniuses, neo. At least they think so. It turns out that they were fools and naifs, because they believed their own bullsh!t, and never thought to question the prevailing dogma that everyone in the industry apparently believed. They personify the term sophomoric, literally “foolishly wise.” Over to you, Mitsu.

    Of course, “global warming” predictions are good as gold, because, as liberals never tire of telling us, “everyone” involved with climate research believes that too. So despite the inherently much greater flakiness of the field, we should believe the secret computer models and implement hardy leftist chestnuts as policies. Please.

  3. What had happened to the AIG management that could have prevented this? See this, for example,

    Had Greenberg been there, history would have been different.

  4. I work with Insurance companies in the day job and when this whole mess with AIG first came to the forefront, the rumuors were that if the Gov did not bail these people out, the european banks would have toppled like a stack of dominoes putting at risk even some of the countries themselves. So, I find this believable.

    As for JC’s comment, I believe that if Greenberg had still been in charge it would not have been as rampant but they still would have been at risk.

  5. I can’t make myself read the entire NYT piece by one Joe Nocera. It has the usual trigger verbiage early on: “hubris…greed…scam….” They make me doubt whatever conclusions he may reach. He failed to blame Cheney, though, so I guess that’s progress.

    Re hubris, greed, and scams, see Obama and the Dems.

  6. It doesn’t help that the ratings agencies gave good ratings to a lot of that debt. It’s like running a race where the course marshals send you down the wrong path–you go the wrong way, but you do it in good faith.

    Not all the players in the debacle were malicious money-grubbers whose greed outpaced their sanity.

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