Taibbi breaks down AIG

[Lleauaric~EW]

The Big Takeover : Rolling Stone

If you want to understand what the fuck just happened, this piece by Matt Taibbi is epic fucking journalism. Its hard to make such a complex and horrifying thing completely understandable, but Taibbi does it here.

Felt this was worth its own thread as the Obama thread is really fucking random and it would be nice to have one focused on AIG and how fucked we are.

[Designz]

Damn it, the economy is so complicated. No decently educated person can understand anything that's going on. This is why we're all going to get taken over and not even know it! We're already going to be paying the salaries of these crooks.

[Sabolin]

Thank you for posting this. It is a very interesting read.

[Azrayne]

Yeah great article, though most of the financial details went over my head, it was a very interesting insight.

[Juvarisx]

Jesus Christ they all need to be in jail

[OneofOne]

Well, between watching Sicko tonight, and reading this... I'm kind of at a loss for words. Where's the JD when you need it?

[Dumar]

this is a great article, and it's EXACTLY what i've been talking about in these threads. people blaming 'irresponsible homeowners' for this mess is nothing but thinktank spin. this article exposes a lot of what has been really going on. hopefully people will become more educated.

[ToeMissile]

Originally Posted by Dumar

this is a great article, and it's EXACTLY what i've been talking about in these threads. people blaming 'irresponsible homeowners' for this mess is nothing but thinktank spin. this article exposes a lot of what has been really going on. hopefully people will become more educated.

Though far from responsible for the situation as a whole, there certainly are homeowners who have been irresponsible. Buying a home is one of those times you need to read the fine print.

[Danth]

"Buying a home is one of those times you need to read the fine print."

Indeed. When my wife and I bought our house a couple years back, I made sure to carefully read every single page of the documentation. The banker was visibly agitated at my doing so. Sure enough, I came across an "accident" where our mortgage payments would have been considerably higher than they were supposed to be. Somehow the property taxes had been entered for double amounts. The real estate agent also attempted to keep a $500 'good faith' deposit that was meant to be refunded upon completion of the transaction--took threats of legal action to get it back. This industry is full of dishonest scumbags. I trust used car salesmen more.

Danth

[Dumar]

i don't mean to be mean, but you're ignorant. maybe not ignorant in general, but ignorant of the finances that got us in this position. 'irresponsible homeowners' doesn't matter because the banks wanted to over leverage their positions to the point they did. it doesn't matter if bob joe is the responsible guy and only got a 1 bdrm house and told the bank no. the bank would've went to sally beth and gave her the loan then. after which they would package it up with low-risk ones and sell it off. other banks would take insurance on this too. what you're basically saying with that statement is that no one in america should take bank's money. it doesn't make sense.

it's thinktank propaganda to divert blame is all it is.

[AngryGerbil]

Six years Dumar. And you finally say something I can agree with.

Wanna be BFFs?

[Erronius]

That article just killed my early-morning wood before I had a chance to rub one out.

FML.

[Lucane Darkseraphim]

I choose to quote myself from two earlier threads.

There is no grand difficulty in understanding CDS, CDO, MBS, etc.

The reason that IBanks stockpiled up on MBS or that AIG underwrote CDS all day long was not because they did not understand the risks, but rather that the risks did not matter. These companies are run by people whose salaries are based upon annual profits, not upon whether or not their actions risk insolvency in five years.

Want to go make millions of dollars? Open a hedge fund, collect $100M and throw it into Chase Manhattan. At the beginning of the year write a shit ton of puts and collect the premiums, and don't forget the 2% on your bank deposit too. Take your 2/20 and never re-invest a penny into your own fund. Do this indefinitely until a bear market occurs and your fund collapses. Your investors are 100% wiped out, your counterparties will receive maybe 10 cents on the dollar, but you will leave with ~$10M that is untouchable. This is a problem.

Know what the bigger problem was though? The investors being wiped out was not it. The outrageously dangerous effect of this comes from the counterparties being screwed. They purchased those puts as insurance against a market downturn. Just because financial insurance is called hedging does not not make it insurance.

Insurance works precisely because it is guaranteed. Amongst numerous other things, derivatives have failed because they are an unguaranteed form of insurance.

(implying that derivatives need heavier regulation)

And with regards to the horrible writing style of the author:

I know that when I want to read something academically relevant and thought provoking, I reach for my latest copy of Rolling Stone.

[Mario Speedwagon]

Originally Posted by Danth

"Buying a home is one of those times you need to read the fine print."

Indeed. When my wife and I bought our house a couple years back, I made sure to carefully read every single page of the documentation. The banker was visibly agitated at my doing so. Sure enough, I came across an "accident" where our mortgage payments would have been considerably higher than they were supposed to be. Somehow the property taxes had been entered for double amounts. The real estate agent also attempted to keep a $500 'good faith' deposit that was meant to be refunded upon completion of the transaction--took threats of legal action to get it back. This industry is full of dishonest scumbags. I trust used car salesmen more.

Danth

I disagree.


Danth

[Himeo]

Outrageous!