

The Man Who Crashed the World (AIG) - jakarta
http://www.scribd.com/doc/17017708/vf-article

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thomasmallen
Eh, why not. Pages took so long to load, so let's see if my host holds up to
their unlimited bandwidth promise.

<http://www.703designs.com/sites/default/files/article.pdf>

 _Awaits threatening email._

If you read this comment after today, expect the link to be dead.

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schizoidboy
It would be nice to have something like antiscribd.com.

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thomasmallen
Yea, Scribd was aggravating enough in this case for me to return from a half-
year hiatus...I imagine the demand is strong for such a thing!

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christofd
nice article (this is more or less a summary for myself to remember the
highlights):

-AIG FP was created in 1987 when Howard Sosin, former Drexel Burnham, created a model on how to value and trade interest-rate swaps

-The company to make money insuring these transactions could not be a bank (which would be bound by law to hoard unreasonable amounts of collateral), but needed AAA status: thus... an insurance company

-AIG stops sub-prime mortgage insurance business in 2005 after realizing that 95% of their mortgage-related portfolio is sub-prime

-Other firms instead jump into the lucrative market after 2004/2005... Wall Street underwrites 1.6 trillion $ in sub-prime and 1.2 trillion in Alt-A mortgages from 2004-2007

-AIG is bound by contract to provide collateral in case they lose AAA rating; as such legacy business (built up until 2005) traps them into bleeding collateral in the 2008 crash on their sub-prime credit default swap business

-In result AIG runs out of capital reserves to provide collateral

-By comparison, no money is lost on their corporate credit default swap business

