Comments on: AIG: America’s Insurance Giant

By: Bond newbie

Bond newbie — Mon, 29 Sep 2008 01:36:10 +0000

@3 Manto:

Any stake 80% or greater must be consolidated on the Government’s balance sheet. Note this is why CBO director Orszag is pushing to consolidate FNM and FRE. NYT Dealbook had a post about this.

By: HOA Insurer

HOA Insurer — Fri, 19 Sep 2008 18:37:14 +0000

Ed Liddy is a good choice with a solid track record

By: winslow

winslow — Thu, 18 Sep 2008 16:04:09 +0000

Excellent!
As much as I dislike government intervention, it is now obvious this was needed on a regulatory basis

By: Walt French

Walt French — Thu, 18 Sep 2008 04:22:32 +0000

99.5% of what?

It seems that with daily mark-to-markets increasingly the rule (or equivalently, rolling a high percentage of one’s assets each day), one in two hundred means you’d be caught out once or twice a year.

I heard tell of a bond fund that had what seemed to be a negative seventy sigma (!) event today; there ain’t enough nines to say how impossible that is. But even 99.5% protection won’t help if the business is so brittle that the off chance takes down the company, rather than triggering some non-fatal outcome such as giving up a division.

By: Mark

Mark — Wed, 17 Sep 2008 20:53:59 +0000

“Never finance illiquid assets with liquid liabilities.”

While there are many facets to this mess, this might be the most succinct articulation of the problem I have read yet. Thanks.

By: Milt

Milt — Wed, 17 Sep 2008 15:37:32 +0000

Hi David.

What do you make of gold’s breakout performance so far today?

At one time you once owned a gold miner when you first started writing for RM. I’m curious on your views on gold.

By: James Cullen

James Cullen — Wed, 17 Sep 2008 13:33:48 +0000

“The first job of risk control is to assure sufficient liquidity under 99.5% of all scenarios.”

While I completely understand what you’re trying to convey about the importance of maintaining adequate liquidity, don’t you think that this scenario is that 0.5% black swan, and thus capable of sinking the ship?

By: Rich

Rich — Wed, 17 Sep 2008 13:28:05 +0000

David,

Sorry if this is a n00b question, but where can the average investor research for ratings triggers in bonds?

Thanks,
Rich

By: Manto

Manto — Wed, 17 Sep 2008 13:17:23 +0000

anyone know the rationale for 79.9%? what is the reason for this limit (also applied to GSEs) – have not seen an explanation for it anywhere.

By: Jay Weinstein

Jay Weinstein — Wed, 17 Sep 2008 13:07:43 +0000

I would be interested in your non-financial musings on the future of the republic. It is something I have thought about and wouldn’t be surprised if it becomes a reality over the next 30-50 years.