Showing posts from December, 2009

AIG CFO resigns over pay

In what is the most ridiculous move yet in this ongoing saga, the CFO of AIG is resigning over pay. That dumb thing thinks she is not paid enough? For presiding over the GS fiasco? For being the turkey of the industry? the laughing stock of a generation?

It is a national embarrassment to begin with. These people have no shame.

I think she, and most of the AIG staff, should be trialled and sentenced to reimburse their W2 gains. What arrogance and incompetence. She should be tarred, feathered up and leave town without making noise. She is a poster boy (or girl as it were) for the mediocrity that makes up a lot of corporate america today. Weak, stupid, despicable, aberrant and somehow feeling entitled to the good life. Good riddance, I can't wait for the whole lot of them to leave.

Synthetic CDO's: weapons of mass destruction

There is a good Christmas piece over at the NYT. It goes into the role Goldman had in creating these opaque securities, designing them knowing they would blow up and then shorting them, for fun and gain, making a killing when the markets tanked. One of the problems was that the damage got multiplied. The article mentions a 6x on these instruments (naked to non?)

Synthetic CDO's
Regular CDO's are a just a way to package debt securities and market them in tranches. The senior tranches will carry a AAA rating, by design. Synthetic CDO's are CDO made of exotic "assets". Such asset can be the BBB tranche left from a previous CDO deal or a naked CDS. A CDS is an insurance against default, it will pay a yearly premium to the holder of the contract and oblige him to pay out the notional value of the bond on default. A naked CDS is when you buy the protection without owning the underlying asset, effectively speculating on its default.

By packaging these contracts in…