AIG and all that,

[TSR2]

So AIG gets another 30 BILLION dollars. on top of the Billions they have already received. Christ thats a lot of money,
Whats the cause of AIGs collapse, simple, stupid management, re CREDIT DEFAULT SWOPS, or CDIs,
In THE 80S/90S these CDIs were fashioned, AIG took over the risk of a company failure by offering insurance against the clients customers defaulting on there debts, a small premium was charged by AIG for this cover, All went well as the claims were only small compared to the revenue generated, profits were high enabling very high salaries / bonuses to AIG people, and being able to Sponser Man United for instance,
It all unravelled in the current Credit Crunch, many companies defaulted on their loans so AIG was hit with enormous claims which they were unable to meet, never expecting such an event, ( really! I thought insurance companies did anticipate such things) but not AIG, its an empty shell. The Fed stepped in to rescue reluctantly, ,the effect if they did not would be catastrophic, for AIG supported 55 % of the worlds economy,

[barbaro]

There's a thread on this elsewhere under "bailout" and "stimulus" and "greated rippoff" if you care.