Abe Mishima

How AIG FP Brought Down the World

The financial history of the late 20th and early 21st centuries will be analyzed thusly. We trusted the stability of our financial system to complex pieces of software, written by PhDs and Masters holders who had not one bit of common sense. They gave these programs to nitwits who had no idea of how to use them. The kind of people who brush off technicalities with statements like, "Don't bother me with the details." Imagine Homer Simpson at the helm of a control board in a nuclear power plant. Makes you shudder, doesn't it? It shouldn't. The software for controlling a nuclear power plant is idiot proof. CDO and CDS modeling software is not. To the extent the NRC regulates nuclear power, there should be a Department of Homeland Financial Security that controls the investment industry. What a shame the disaster had to happen!

How We Could Let AIG Fail, Sort Of

Analyze the books? Are you loopy? CDS contracts are written in legal mumbo jumbo language which few auditors can understand. Even a Harvard MBA and JD major could not figure these out. When Humpty Dumpty and Rube Goldberg set up a wall of bailing wire and chewing gum, there was no wizard who could figure out how to deconstruct the wall. The swaps should be settled for 20 cents on the dollar, and let Uncle Sam take over the mortgage notes. With most of the mortgages hopefully in the USA, they'll be able to slap liens on the properties left and right.