Dan M <[EMAIL PROTECTED]>
> 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.
Yes, and if that is the case -- if the leverage is so high that a one-hour
or one-day fluctuation can bankrupt you -- then you are insolvent by any
practical measure. Whether some line in a model wanders up and down
through the zero line over a period of hours or days does not make a
practical difference. ("Look, we're solvent! Wait, now we're insolvent....
no, look, it's coming up, just a little more...")
It is nearly certain that many people at AIG knew that they had no margin
of safety from insolvency, and that random fluctuations over the next hours
or days would bankrupt them if they did not get acquired or bailed out.
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