Thursday, March 26, 2009
Sunday, March 22, 2009
Joseph J. Cassano, president of AIG's financial products division and its financial products guru and the man behind the ultimate downfall of AIG was himself a personal favorite of Maurice "Hank" Greenberg, the former CEO of AIG and the man credited with building up AIG into a global powerhouse. He admired Cassano's aggressiveness even if he didn't understand exactly what it was that he did.
Cassano began his fateful tenure at AIG in 2000 and reigned as the president of AIG's financial products division until late 2008. Reportedly, Cassano is said to have told management that he, Cassano would run his shop and they, management would run their shop and that neither should ever involve itself with the other. In effect, Cassano had a virtual free hand in running his division for eight years and he apparently made good use of that freedom.
Cassano's division has its roots dating back to 1987 when a handful of traders from Drexel Burnham Lambert, the same firm that spawned disgraced junk bomb trader Michael Milliken, eventually migrated over to AIG and successfully won Greenberg over to their high-flying ways of doing business.
Credit Cassano with taking former U.S. Treasury Secretary Hank Paulson's former firm's (Goldman Sachs) practice of purchasing insurance on the investments they made and applying that same technique upon assuming control of the financial products division at AIG. During his eight-year tenure, Cassano's department sold huge amounts of insurance - credit-default swaps (CDS's)to prospective investors anxious to cover their losses on the risky investment instruments they held known as collateralized debt obligations (CDO's). Investors had every reason to be nervous about these CDO's as they were merely bundles of different types of loans - some good - some horrible - all wrapped up together in one investment instrument.
Unfortunately for AIG and the rest of the planet, Cassano's division gladly took in the hefty monthly premiums they charged for insuring these risky CDO's but in reality AIG provided no real insurance for these companies as the assets kept on hand by AIG for such purpose were only a mere fraction of the total amount of assets at risk.
Cassano's division packaged these CDO's in layers of loans with the top layer being the most credit-worthy. These were then shopped around to the credit rating agencies like Moody's and Standard & Poors and based upon just the top layer's credit-worthiness - a AAA-rating was literally assigned to the ENTIRE CDO - the bad layers notwithstanding.
To complete the economic catastrophe this entire operation was managed by the little known federal agency Office of Thrift Supervision (OTS) that was nowhere equipped to play such a role. In fact a GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!
These CDO's turned out to be very profitable for AIG as it in turn extended a steady stream of credit-default swaps insurance to provide the supposed insurance to safeguard these CDO's. By 2005 AIG's profit from this line of financial products had risen to $3.2 billion, up from $773 million in 1999.
However, in February 2008 AIG posted a $11.5 billion annual loss and Cassano resigned shortly afterwards. In spite of this, he was able to keep $34 million in bonuses and in addition he continued to collect $1 million a month in consultant fees until the end of September 2008. During his eight years at AIG, Cassano earned $280 million. Over the past seven years, his unit's employees were paid a total of $3.5 billion. Yes, that's a "b" for billion!
The unit itself was a very small part of AIG, comprised of no more than 400 employees. Needless to say there was no oversight or supervision of any kind. The looseness of financial control was such that just a few weeks before the bailout in 2008 when senior executives at AIG were questioned by outside consultants about how much exposure AIG had to the residential-mortgage these very same executives were unable to supply that information.
Joseph J. Cassano is my nomination for Schmuck of the Century. He had help along the way but he, more than any other single individual, put in place the scenario for our current financial cesspool.
Posted by Pete Newcome at 5:33 PM
Wednesday, March 11, 2009
Check out the Video of the Organ Music Guy @ Wendy's. They've come a long way from "Show Me The Beef" to now it's - "Show Me The Beat".
Yes, Virginia - there is a free lunch somewhere in America - (or at least free music to go with that lunch).
81-year old Gil Glad, a former elementary school teacher and principal is now playing organ music at the Wendy's in Grand Island, Nebraska Monday through Saturday from 10:00 a.m. to 1:00 p.m. On Sunday, he's back playing for the lunch time crowd at the Wendy's in his hometown of Central City, Nebraska.
Posted by Pete Newcome at 2:27 PM
Tuesday, March 10, 2009
CHUCK NORRIS - FOR PRESIDENT OF TEXAS!
ARMED INSURRECTION - BY THE RIGHT WING-NUTS IS AFOOT!
CAN YOU BLAME THEM, THE COUNTRY'S GOING TO HELL IN A HAND BASKET, OR A TISKET-TASKET.
No, I ain't making this up. Apparently, from Philly.com is the following "excerpt". Yes, I've lifted the whole thing from that site - for your viewing pleasure (or displeasure as the case may be).
NOTE: The video is something I just threw in for further amusement - the intended excerpt is merely the highlighted text that follows the video.
So to quote from that site VERBATIM..................
"That was fast. It was just one year ago that right-wing martial arts guru Chuck Norris was a sought-after "get" for the GOP presidential candidates like Mike Huckabee, who paraded the star of "Walker, Texas Ranger" around the nation after the anti-abortion actor endorsed him in the primaries.
But now it's 2009, Barack Obama is in the White House, and the inventor of chun kuk do is preaching the martial art of insurrection against the U.S. government. He also wants to run for -- and no, I'm not making this up -- "the president of Texas.":
The call by some right wing leaders for rebellion and for the military to refuse the commander in chief’s orders is joined by Chuck Norris who claims that thousands of right wing cell groups have organized and are ready for a second American Revolution. During an appearance on the Glen Beck radio show he promised that if things get any worse from his point of view he may “run for president of Texas.” The martial artist/actor/activist claims that Texas was never formally a part of the United States in the first place and that if rebellion is to come through secession Texas would lead the way.
Norris really comes close to crossing a line with this:
Norris claims that; “Thousands of cell groups will be united around the country in solidarity over the concerns for our nation.” The right wing cells will meet during a live telecast, "We Surround Them," on Friday March 13 at 5 p.m.
He closes with the words of Sam Houston followed by a plug for his next martial arts event.
“We view ourselves on the eve of battle." "
All I can say is, "Say it ain't so, Chuck!"
Sleep tight everybody, Chuck's taking control, everything's going to be okie-dokie. Welcome to the Kung-Fu Constitutional Insurrection.
Posted by Pete Newcome at 4:32 PM
Monday, March 9, 2009
In case you haven't heard, the Republican Party has gone the way of the Edsel.
When you get to the point of having the RNC Chairman [Michael Steel] trying to hold on to his turf from the likes of a fat radio personality pig [Rush Lintbag] only to apologize to him for daring to stand up to him, well it's time to write the obituary for the GOP.
Rush wants to see Obama fail. Rush wants to see everything fail, including the Republican party. He will get his wish. Rush personifies everything afflicting the conservative movement and the process of self-cannibalization has just begun.
We have a major realignment taking place in this country and because of the dire straits we find ourselves in - economically - the time is ripe for a complete upheaval of the conservative movement and the corporate status quo as we have come to know it in our lifetime.
How low can the Dow go - pretty low, apparently. How big can the implosions be among the corporate elites - apparently humongous. Even such a premiere company like GE is reputedly on the verge of being the next AIG fatality.
Capitalism has proven itself to be incapable of sustaining itself by subscribing exclusively to the profit motive. It has too many inherent contradictions that will prevent it from escaping the punishing effects of what is going on today.
So what does this bode for the future. Quite simply: a mixed economy, equal parts public sector spending and private/individual consumer spending. The 2/3 consumer - 1/3 government spending model of the past will not hold up any longer. Our world is simply way too complicated and interconnected to continue any longer with a consumer-driven economy. It must be an equal partnership between the public sector and the private sector.
Which leads the discussion back to where this post began, the death of the Republican Party. If there is any one guiding principle espoused by that party it is the notion of free enterprise - or the free market. This concept has morphed unalterably and the mixed economy model is here to stay. The Republican party - as we know it - will fade away and be replaced in time by another competing voice.
When your philosophy gets shoved down your throat you don't have a leg to stand on. That is where the GOP find themselves today and there is nothing that can revive that party. You can't make a silk purse out of a sow's ear.
Rush can bray all he wants but he only drives home the point of Republican/conservative obsolescence ever so emphatically. But then this should not be all that surprising for the Republican party has never really been about governing at all but rather the accumulation and exercise of raw, naked power for the monied class.
The money changers have been toppled and with it their mouthpiece - Republicanism.
Posted by Pete Newcome at 9:32 PM