> -----Original Message----- > From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On > Behalf Of Charlie Bell > Sent: Tuesday, September 23, 2008 5:28 PM > To: Killer Bs (David Brin et al) Discussion > Subject: Re: Meltdown > > > On 24/09/2008, at 6:21 AM, Dan M wrote: > > > > The problem was that no-one (including the board of directors of AIG > > knew > > that AIG was insolvent until the day the government intervened. > > That sounds implausible. Someone knew. It's what level they were at > and what they choose to do with the knowledge that's important.
Well, I tried for half an hour to get a link to the article that detailed the AIG Board meeting that got the "take it or leave it" proposal from the US government to swap 80% of its equity for about 80 billion. I'm sorry about that. But, my understanding is that the bundling has become so layered and convoluted that folks really didn't understand what was happening in real time. With the amount of leverage that exists, a perfectly reasonable looking position can fall apart quickly. Most financial houses rely on analytical models that ignore the possibility of Black Swans. My article stated that at 5 PM the board had a plan that would work, at 6 PM a division called saying they had done their latest analysis and they needed 20 billion more, and everything fell apart. I've worked for companies that have been messed up enough so that no one knew what the real balance sheet was for a while. I think AIG was that badly managed. With margin requirements and what not, and AIG's foolish exposure to sub-prime mortgages, a lot can happen in a day. That's scary, at least to me. When I get back, I'll try to find the article and let you decide if you think it is possible. But, I've been chatting with folks who have connections to investment banking, and they've told me that this is the most likely scenario. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
