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AIG

Fuzzy AIG math

October 28, 2009

A bit of out-of-context math from a recent Bloomberg article on AIG: The Federal Reserve Bank of New York, the regional Fed office with special responsibility for Wall Street, opened an $85 billion credit line for New York-based AIG. That bought it 77.9 percent of AIG and effective control of the insurer. The government’s commitment to [...]

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CNBC thinks Taleb is a bad trader

June 17, 2009

More on Taleb: CNBC is running a piece called "Swan Song: Why Nassim Taleb is Still Wrong." The crux of the argument seems to be this paragraph: Arguing against Taleb is a little embarrassing; who among us wants to side with the plodders when for the price of a paperback you can join the elect? [...]

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The CDS made me do it

May 1, 2009

The Chrysler debacle has given rise to another CDS-related claim: these dastardly products permit scenarios in which bondholders are willing to put a company into bankruptcy by distorting the investors' incentives.  If the bondholders own a lot of CDS, then bankruptcy is more profitable than ongoing operations or restructuring. There are two major problems with [...]

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The Man who Broke the CDS?

March 24, 2009

George Soros has written an opinion in today's WSJ calling for the regulation - and elimination - of CDS. He notes that CDS are instruments which allow speculation on default: What makes [CDS] toxic is that such speculation can be self-validating. I find his nature-of-the-security argument severely lacking: The negative effect is reinforced by the [...]

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