Wednesday, March 4, 2009

The Case for Saving A.I.G., by A.I.G

Andrew Sorkin of the New York Times has an article out entitled: The Case for Saving A.I.G., by A.I.G.

In it he quickly tries to put in perspective the potential "economic apocalypse" that would happen if the Government were to let AIG fail.

Selected Excerpts Follow:

“Systemic risk” is a phrase often used to describe the domino effect of one business’s failure on the rest of the economy. We saw the dangers of systemic risk in action when Lehman Brothers failed in September. And we’ve heard a lot from Detroit automobile executives about the systemic risk they say the nation would face should General Motors teeter. But those failures look like summer thundershowers compared with the financial hurricane that a collapse of A.I.G. would represent...

One of the biggest worries, besides the considerable collateral damage to the banking system, is a risk that most people aren’t talking about, perhaps because it’s too scary. This one is probably easier to understand than any kind of financial chicanery: the dangers lurking below A.I.G.’s seemingly stable, highly regulated life insurance business. In the United States, A.I.G. has more than 375 million policies with a face value of $19 trillion.

Even though A.I.G.’s insurance business is regulated by states, there probably would not be enough money to pay out to consumers from what’s known as a guarantee fund. Other regulated insurance companies, which have been weakened by credit losses, would be required to pay money into the fund to cover the shortfall, weakening them further and in some cases bankrupting them.

What’s worse, if A.I.G. failed, many people would be unable to obtain the same insurance from a competitor for the same price. In fact, many people would probably be shut out. “Some life-policy holders may no longer be insurable at commensurate rates or as a result of adverse health situations since the purchase of the original policy,” the document said.

And that is just the effects of the failure of the US life insurance businesses!

Wednesday, February 11, 2009

Did You Know?

We are living in a world of exponential change and this video makes it abundantly clear.

Thursday, February 5, 2009

The Weekender, Like Weekends Are Meaningless if You Are Unemployed

Parody of the ubiqutious NY Times Weekender ad.

I think Paul Rudd is in there somewhere.

[hat tip: The Business Sheet]

Wednesday, January 28, 2009

Just turn off CNBC!

Howard Lindzon of WallStrip fame rants about all the absurdity of the financial media (especially CNBC) and the condition of the big banks.

It get's good at the 2:20 mark.

Just remember to turn off all the nose out there and focus on what you can control.

Tuesday, December 16, 2008

McArdle on Madoff

Megan McArdle who happens to be one of my favorite bloggers for The Atlantic sounds off on her post regarding the Madoff fraud.

How did Bernie Madoff get away with it?

Somehow, even though everyone agreed that this was the sort of thing the SEC should be aggressively rooting out, and the SEC has perfectly adequate resources to investigate high-profile fraud at a 20-person operation, the SEC dropped the ball so hard it's probably even now still falling through the Earth's mantle towards China.

The market failed as badly as the government. The people he bilked weren't unsophisticated consumers of the sort that we assume need regulatory protection. They were extremely rich people, many of them with backgrounds in finance.

The market failed. The government failed. Leaving us with a big WTF? We cannot fix this either by new rules--the SEC hardly needs new rules to make it clearer that you shouldn't fake financial statements while paying current investors out of the funds invested by new ones. Nor by better reliance on private institutions--it's hard to argue that super rich people with considerable financial savvy were somehow blinded by some badly designed government intervention. Everyone just screwed up.
I'd be willing to bet his kids go to jail as well, we will see in the next few weeks. At least we can be sure there will be some great show trials in 2009 with all this financial fraud and drama in the world.

Friday, December 12, 2008

Media I Consume

I have had a couple conversations with people at work about the kind of media we consume on a day to day basis. I was the odd man out when I said that I get most of my information diet from blogs. Perhaps it was just a function of being the youngest in the conversation.

Also many of the older people I work with asked what kind of blogs I read. As you can see it mainly revolves around money, politics and entrepreneurship. Check out some of these blogs when you are feeling like it is time to venture outside the confines of your feed reader!

Anyway, here is a look at my daily information diet (sans friends photo feeds).

Hard Copy Periodicals
- The Atlantic (monthly)
- The Economist (weekly)

- NPR: This I Believe
- WNYC's Radio Lab
- NPR: Planet Money
- NPR: Wait Wait, Don't Tell Me!
- Philosophy Bites
- This American Life
- Stuff You Should Know

Blogs (in alphabetical order)
- A VC
- Adam McFarland's Blog
- Adventures in Capitalism
- Altgate
- Altos Ventures Musings
- AngelBlog Best Practices for Angel Investing
- Advice Headlines
- Ben Casnocha
- Berberian's Blog
- Bill Flagg
- Blog Maverick (Mark Cuban)
- Brazen Careerist by Penelope Trunk
- Carrie in Cambodia
- Dan Pritchard Musings et. all
- Dual Income No Kids
- Employee Evolution
- Escape from Cubicle Nation
- False Precision
- Feld Thoughts
- Get Rich Slowly
- Girl Meets Business
- Go BIG Network Entrepreneur Blog
- James Fallows
- Jeff Maurone
- Knabb - Making a Difference
- Lazy Man and Money
- LifeDev
- Megan McArdle
- Michael Li
- New York Times > Week In Review
- Open Culture
- Personal Finance 101
- PostSecret
- The Art of Manliness
- The Blog of Author Tim Ferriss
- The Digerati Life
- The Dough Roller
- The Entrepreneurial Mind
- Toilet Paper Entrepreneur
- Up and Running
- VC Confidential
- We Need To Be Debt Free

Occasional News Reads
- New York Times
- Engadget

- Random articles posted by people I follow on Twitter