Reply #108: Actually, they were; no, they did not

[Tansy_Gold]

There was an article posted in SMW several months ago that examined the whole AIG situation. IIRC that was exactly what the AIG officials said: they never expected/imagined anyone would ever default and they had essentially cornered the market on CDS. They put all their money on black, and it came up red.

Of course, the way I understand it, all it took was one of the counterparties to default and the whole tapestry of bets unraveled. Since AIG owed on all of them, they were screwed.

And the point of it all was from the beginning that these were BETS, they were not investments at all. As with any bet, someone gets to win and someone has to lose. This whole fiasco has been an attempt to alter the basic laws of nature so that EVERYBODY wins all the time. When that proved not to be true, they -- AIG, Merrill, B of A, Citi, all of them -- weren't willing to be the losers on their own bets, so they pulled in a bunch of suckers off the street (the govt/taxpayers) to play one last double or nothing.

They still haven't grasped the fundamentals of economics: there's much more to an economy than the bets placed on the stock market. All the fixing, all the bailouts, all the cosmetic surgery won't fix a single thing. There is no there there, no economy, no generation of wealth, no nothing.

Denninger may be right.


Tansy Gold