How Do You Lose $62 Billion?
Discussion
Mat Hammond said:
By writing credit protection at ludicrously low ratesThree ways:
1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
off_again said:
Three ways:
1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
Don't think any of the above applies to AIG1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
NoelWatson said:
off_again said:
Three ways:
1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
Don't think any of the above applies to AIG1) Buying what you think are assets but subsequently turn out to be worthless
2) Agreeing to credit to someone / something that is now never going to pay up
3) Agreeing to cover insurance that everyone is going to claim on
Add to that, its not just a liability but an exposure to further debts and loans and it suddenly spirals out of control. Easily done, given the previous couple of years.
Now, if you would care to explain CDS's then we might be back on track again....
By putting off valuation.
I'm sure a lot of us have done it here, with lesser amounts obviously.
Instead of accepting that your house is now worth x -20% and those funds and shares you own have dropped between 30 and 60%. In you mind you still value them at their previous peaks.
There comes a time when you have to put realistic new values on your assets as unpleasant as it may be.
That's
my day, I usually try not to think about it.
I'm sure a lot of us have done it here, with lesser amounts obviously.
Instead of accepting that your house is now worth x -20% and those funds and shares you own have dropped between 30 and 60%. In you mind you still value them at their previous peaks.
There comes a time when you have to put realistic new values on your assets as unpleasant as it may be.
That's
my day, I usually try not to think about it.Mat Hammond said:
Do you think they are still paying bonuses?
I don't think they are......... however should they be?Their investments division is obviously the problem with AIG. But AIG are huge with lots of business units.
So imagine you are part of a BU that have been highly profitable within AIG - and lets say you were an underwriters assistant with targets for the year. You make your targets, your BU makes it's targets and therefore a huge profit. Should that person get their bonus?
No doubt that AIG as a whole have not done well - it has been in the papers for everyone to read! But if you read into what has happened it looks to me that they have got involved in something they did not understand (or were negligent) with their investments - but their core business does not seem to be an issue.
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