Snake Eyes for the Taxpayers
I’ve devoted two posts in praise of Joe Nocera for helping the economically challenged (like me) gain a bit of knowledge (I almost said “leverage”) about the mess we’re in.
Now, to show I’m an equal-opportunity-praiser, let us now praise Gretchen Morgenson. She writes in today’s Times about, you guessed it: A.I.G., and concludes:
When you look back with the benefit of hindsight, it is truly amazing how outsized A.I.G.’s insurance commitment was, at $440 billion. After all, in 2005, when A.I.G. put many of these swaps on its books, the market value of the entire company was around $200 billion.
That means the geniuses at A.I.G. who wrote the insurance were willing to bet more than double their company’s value that defaults would not become problematic.
That’s some throw of the dice. Too bad it came up snake eyes for taxpayers.