You are a complete idiot. AIG wrote insurance in the form of CDS to the tune of $447 BILLION. They also sold insurance on CDO's, pools of subprime mortgages, pools of Alt-A mortgages, prime mortgage pools and CLO's. Yeah, those were some "bad" investment decisions all right - - - and they were all tied to a form of selling derivative insurance. http://www.moneymorning.com/2008/09/22/credit-default-swaps-2/ Congratulations. You are now on IGNORE.
Landis82, YOU'RE a complete idiot for saying Clinton had no choice but to sign legislation repealing Glass-Steagall because it was in the FY01 appropriations bill. No president with principles who understood the repercussions would sign something that destructive into law just for convenience.
I believe that your example and the 5:1 ratios that you are using are far too simplistic for purposes of realistic appraisal. I would suggest that the $500,000 house was not in nearly a nice area ( school districts, lower crime rates, services and amenities, organized recreation, smaller commutes to metro area, etc. ) than the home that was going for $1,000,000 As a result, the $500,000 home is more likely to go for under $100,000 while the $1,000,000 home does not depreciate nearly as much. I've already observed this in a metro area in California where the longer "commute" home (3,800 square feet) that went for $800,000 at the peak, is now going for $350,000 even though it was built less than 10 years ago. Thus, the guy in the lower priced home will never be able to raise enough equity out of his existing home in order to purchase your so-called $1,000,000 that doesn't wind-up depreciating as much as you think, because of the area and demographics. Trust me, this is happening right now in California where your version of the $500,000 home is only 45 minutes away from the $1,000,000 home. Meanwhile, the $1,000,000 home is still going for $800,000
lol, your sources speak for themselves. Your source is a broke floor trader who has now become contributing editor of "Money Morning"? Impressive... As a matter of fact AIG's biggest losses DID NOT stem from bad investments in CDSs. And just because AIG wrote CDSs DOES NOT MEAN they remained completely unhedged against such risk, in fact they were very well hedged against adverse CDS moves. You are confusing CDS, CDOs, subprime investments and a lot more. A pity you put me on ignore because you will not even be aware of your ignorance and will rather make yourself an idiot to the next guy. Man, this guy's arrogance has no limits....amazing.....but he seems to be the loudest out there to beg for government money....no....wait.....he is actually asking for us to share into his bad investment decisions......
http://www.cfo.com/article.cfm/12280060/c_12280236?f=home_todayinfinance "But since AIG had issued credit-default swaps covering more than $440 billion in bondsâfar more than it could afford to coverâwhat was designed to be tool for hedging became a risk to the entire financial system." Alan Rappeport of CFO.com - - - Sept. 2008 currently a reporter for the Financial Times in New York, with a Master's degree from the London School of Economics AIG posts their results next Monday, March 2nd and is expected ( according to David Faber at CNBC ) to report a $60 billion loss. Let's see what their "current" numbers are.
a) I thought you put me on ignore, apparently not so ;-) b) again, what one editor has to write to support his point means nothing. Nobody ever denied AIG used CDSs instruments (and even AIG did not get close to failure because of CDSs, if you ever looked at their balance sheets and foot notes then you would know that). However, the main point was that CDSs were not the devils that brought down the economy, it was overstretched consumers who lived beyond their means LIKE YOU. People like you who now scream and think they are entitled for everyone else to share your pain that was self-inflicted. Go and beg elsewhere!!!
I will make this as clear as possible, even for the mentally challenged such as yourself. Consumer debt did in fact double from $7 Trillion in 2000 to $14 Trillion in 2008, without much gain whatsoever in wages. That having been said, the default rate on this debt has been reported by Fitch Ratings Agency at 6.84% at the end of 2008. But leave it to you to think that nearly $65 TRILLION in CDS EXPOSURE did not ravage the balance sheets of our Banking system, not too mention facilitate an environment of a "frozen" credit market. The percentage and amount of consumer debt in default compared to the toxic nature of CDS exposure isn't even close. Not by a million miles! But I'm not surprised that you are unable to realize this . . . and continue to BLAME the CONSUMER for this recent Banking crisis . . . it is clear to anyone who reads my post that you failed Basic Math.
buddy, you are talking about NOTIONALS, that does not mean anything other than you getting impressed about numbers with a lot of digits. An example so that you understand it: When you put on a stock position your notional may be 1,000,000 but thats not what your risk is. Your risk is what you assume to lose in a normal environment and as a stress test you can figure out what you at a max stand to lose if all hell breaks lose. The notional of a CDS is not the risk you carry on the book, especially not when you conveniently omit the hedge, which is bonds that stand against it. Again, nobody claimed AIG did not lose from its CDS positions BUT this is not that killed the company and forced it into government arms. You are increadibly naive!!!