Why do you think AIG blew up?

[AngryAmish]

We all know that the vast majority of AIG is fine (life and casualty insurance and the like) but they lost the company due to these credit default swaps.

The question is why AIG let a relatively small group of investment "professionals" make bets that lost the company. And why these guys made those bets that blew up the company.

Everyone is greedy. Many other people on Wall Street (and everywhere else) are greedy yet they did not blow up their companies.

I claim to know why they did it - I am a Nassim Nicholas Taleb disciple. But I want to hear others.

[Tommy_J]

1. They failed to consider the possibility

of a systemic failure in their risk assessments?

[blm]

2. Same reason Enron did - they cooked the books so much the house burned down.

.

[AngryAmish]

3. This is wrong

The answer is in post 1 above. They did not do it intentionally. They were just blind to the risks they were taking.

Their models did not take into account the amount of risk they were taking on. They did not understand it.

Actually the uglier and more dangerous reason is that they could not understand their risks. Because of the way their brains are made. And it is not their brains - it is everyone's brains.

And we are barely starting to understand why our brains are made this way.

[Demeter]

4. Not Blind. They Knew the Risks, Just As They New Uncle $ugar Would Cover Their Naked

shorts.

[blm]

5. That's pretty gentle analysis. I might have agreed with you two decades ago, but not now.

Once you see the grip of the fascist agenda that was obvious in S&L crimes and BCCI matters and then note that official DC did everything it could to protect the guilty and deepsix what was learned, it's hard to go back to pretending the principle people involved were just making innocent mistakes and missed calculations.

[librechik]

6. It was blatant collusive fraud, and the DOJ and the SEC should be all over this

Cassano in London is the culprit to squeeze.

Can they continue to pretend to be this incompetent? The joists are shattering!