AIG and DAN Dive Insurance?

[nadwidny]

Whenever I read the local news and get so depressed that I feel like kicking the cat, I just go to CNN or some other American news source and I don't feel so bad because I realize that what is happening to my neighbours to the south sucks worse than what's going on up here.

Well, for a few months anyway because a sneeze down south always results in pneumonia up here.

 

[John_B]

I doubt they were ever regulated.

As I understand this, CDS's came about after the Gramm/Leach/Bliley act allowed them to happen. (Yeah, that Phil Gramm, erstwhile McCain campaign co-chair and chief economic adviser.) It wouldn't have been possible prior to that for AIG to be in this business without that industry deregulation, specifically the repeal of Glass/Steagall (at least the parts that were designed to curtail derivatives as instruments of speculation). So, yes, the CDS's weren't technically deregulated, the industry deregulation made it possible for them to be created and traded in the first place. I stand corrected.

 

[vladimir]

I agree, John B, and I didn't mean to nitpick.

Edit: If I remember correctly, Glass-Steagall would not have curtailed risk-taking by AIG because it is not a bank. Again, I don't intend to nitpick, and I agree with your general sentiment that a generalized laissez-faire fervor in our government contributed to the rise of these derivative markets and to their subsequent abuse.

 

[shoredivr]

Whenever I read the local news and get so depressed that I feel like kicking the cat, I just go to CNN or some other American news source and I don't feel so bad because I realize that what is happening to my neighbours to the south sucks worse than what's going on up here.

Well, for a few months anyway because a sneeze down south always results in pneumonia up here.

True, that.

 

[shoredivr]

As I understand this, CDS's came about after the Gramm/Leach/Bliley act allowed them to happen. (Yeah, that Phil Gramm, erstwhile McCain campaign co-chair and chief economic adviser.) It wouldn't have been possible prior to that for AIG to be in this business without that industry deregulation, specifically the repeal of Glass/Steagall (at least the parts that were designed to curtail derivatives as instruments of speculation). So, yes, the CDS's weren't technically deregulated, the industry deregulation made it possible for them to be created and traded in the first place. I stand corrected.

Thanks for making this clearer.

 

[SkipperJohn]

I didn't even take Economics 1 in college and I could tell the difference. You can't put lipstick on a pig...

well, that settles that. LOL.

The problem is plain and simple. No one put in any regulations when they were needed around 14 years ago (give or take).
People were buying over valued homes and getting more than 100% financing in many cases.
I know a guy who lost his job, then his wife lost hers. They relocated and spend 2 years in an apartment spending their last dime. Then he got a job. a few months later he bought a house. New construction. When he moved in he had a brand new plasma TV and all the fixins. The bank gave him $480,000 for his $440,000 home. He had no $ to put down.
Fast-forward. The value of his house looks more to be around $350,000 (at best). He owes $479,000 (after 5 years of mostly interest-don't really know the true amount but you get the idea). He is considering walking away as he wants to come back to NY & can't sell the house for what he owes on it. He said: "let the bank deal with it".
Part 2 of the problem is the banks were not accountable. Because they did not hold the paper. They sold it off so they could lend anything to anyone.

 

[John_B]

I agree, John B, and I didn't mean to nitpick.

Edit: If I remember correctly, Glass-Steagall would not have curtailed risk-taking by AIG because it is not a bank. Again, I don't intend to nitpick, and I agree with your general sentiment that a generalized laissez-faire fervor in our government contributed to the rise of these derivative markets and to their subsequent abuse.

Thanks for the clarifications!

 

[InTheDrink]

If this is the Basic Scuba Forum, I'm getting kinda nervous about peeking in Advanced, never mind Technical.

 

[Butch103]

If this is the Basic Scuba Forum, I'm getting kinda nervous about peeking in Advanced, never mind Technical.

Then hang on to your knickers!

 

[Randy43068]

If this is the Basic Scuba Forum, I'm getting kinda nervous about peeking in Advanced, never mind Technical.

there are some really, REALLY smart folks around here.