BS: $100 million bonuses to AIG execs

Subject: RE: BS: $100 million bonuses to AIG execs
From: GUEST,DannyC
Date: 24 Mar 09 - 10:08 PM

Matt Taibbi, the author of the Rolling Stone article "The Big Takeover" (see above link) is a guest tonight on The Rachel Maddow Show (USA Cable - MSNBC).

Subject: RE: BS: $100 million bonuses to AIG execs
From: Q (Frank Staplin)
Date: 24 Mar 09 - 11:02 PM

An AIG group (Maritime General Agency) is a big insurer for marinas, yacht clubs and commercial and private yacht owners; in line with these services it would not be unusual for them to support yachting and to own one themselves and participate in yachting events. Good advertising!

Subject: RE: BS: $100 million bonuses to AIG execs
From: GUEST,heric
Date: 24 Mar 09 - 11:34 PM

Thanks DannyC for that remakable Taibbi primer. But:

"When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And . . . AIG did[n't]."

That . . . just . . . doesn't . . . sit . . . right.

I can't say what's wrong, but I keep coming back to that point. I think something - something big - is missing in relation to those two sentences.

I understand that they were essentially unregulated, but this is the world's largest insurer with a long, long history. It employs uncounted actuarial and risk geniuses. Insurers set reserves as job 1. Sure, it's a regulatory requirement, but to think they would lose total control over risk concepts, like an unsupervised kid drinking himself to death on Coca-Cola, is just, well, too hard to swallow.

Similarly, going to town insuring people or entities with no insurable interest presents the same phenomenon.

My guess is that the answer comes from the short, four or five question list written up by Spitzer in Slate:

"What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

Why weren't the counterparties immediately and fully disclosed?"

They used to say the counterparty make up wasn't disclosed because it would be too scary, and shatter the world markets. But some also said that the CDS market largely balanced out, so that it is not in reality a several $trillions issue.

Who are those remaining CDS creditors out there? Why don't we know?

Subject: RE: BS: $100 million bonuses to AIG execs
From: GUEST,DannyC
Date: 24 Mar 09 - 11:42 PM

Liddy made the admission before the House that the AIG brand has been damaged too severely to operate under the AIG name going forward. Under this scenario, the company has squandered any advertising benefits from prior affiliations and/or advertising initiatives.

Taibbi made a good point on MSNBC... that "too big to fail" logically translates into "too big to exist". So, we're back to busting robber barons and enacting anti-monopoly legislation. The Roosevelts' sagacity shines like a distant beacon thru a fog of short-sighted greed.

Liddy refused to name names. There are legitimate concerns about the personal safety of the bonus beneficiaries and their families.

Subject: RE: BS: $100 million bonuses to AIG execs
From: Donuel
Date: 24 Mar 09 - 11:53 PM

Hey were all 80% owners right?

I think if a whole buncha folks went on board the AIG yacht and her out for a weekend its not like were stealin.

Besides its the AIG yacht. They company changed their name to AIU.
Its like borrowing the trash they threw out.

Subject: RE: BS: $100 million bonuses to AIG execs
From: GUEST,DannyC
Date: 25 Mar 09 - 12:13 AM

My read (I am no expert --- look, I'm reading Rolling Stone articles to gain insight) on the investment bank/insurance company differentiator is that the investment bank is compelled by regulations/regulators to account for their exposure in a CDS arrangement - so they buy a hedge to show a limit of their exposure.

I take it that the insurance cos. did not incur the same regulatory governance and so could write as much business as they could find - with no oversight (@ $500 Billion, it looks like they were successful in finding loads of exposure --- $64 Billion in sub-prime loans - for f#*k's sake). Perhaps AIG could only operate like this due to the weakness and scarcity of resources within the Office of Thrift Supervision (AIG had apparantly manipulated the system to fall under the weak OTS's governance.)

There are some 19th Century German philosophers who confidently predicted that these sort of cataclysms would eventually occur under our current economic structures... we'll see if the West can or will recover.

<< Thanks DannyC for that remakable Taibbi primer. But:

"When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And . . . AIG did[n't]."

That . . . just . . . doesn't . . . sit . . . right.

I can't say what's wrong, but I keep coming back to that point. I think something - something big - is missing in relation to those two sentences. >>

Subject: RE: BS: $100 million bonuses to AIG execs
From: Barry Finn
Date: 25 Mar 09 - 02:19 AM

Heric, thanks for the boat ride. I couldn''t finish it though, halfway through I bailed

Barry

Subject: RE: BS: $100 million bonuses to AIG execs
From: heric
Date: 26 Mar 09 - 04:16 PM

While the Standard & Poor's 500 Index is recording its best monthly rally in 17 years, Roubini predicted it will not be sustained as the U.S. economy will continue to contract through this year and investors will start "discriminating" between solvent and insolvent financial companies.

"People are going to be surprised to the downside," Roubini said.

The government is conducting stress tests of banks to determine how much more capital each will need. Roubini said once those were completed it will be evident that some banks will need to be taken over and have their good and bad assets separated before being returned to the private sector.

Geithner's Plan

Critics of Geithner's plan including Krugman, a professor at Princeton University, say the government should take over banks loaded with devalued assets, remove their top management, and dispose of the toxic securities. Sweden adopted the temporary nationalization approach in the 1990s.

Roubini, who also runs his own economics consultancy, estimates a total of $3.6 trillion of loan and securities losses in the U.S., including writedowns on $10.84 trillion of securities and losses on a total of $12.37 trillion of unsecuritized loans.

With "deflationary forces" lingering for as long as three years, Roubini said U.S. government bond yields were going to remain relatively low and that American house prices would fall as much as 20 percent more in the next 18 months. While the dollar will benefit as investors seek safe havens, it will ultimately decline as the U.S. trade deficit has to shrink, he said.

Subject: RE: BS: $100 million bonuses to AIG execs
From: Q (Frank Staplin)
Date: 26 Mar 09 - 05:23 PM

Ups and downs will continue, but look for recovery in 2010. It will be led by the execs who are being denigrated now.