Sunday, September 28, 2008

AIG: Bullishit Balance Sheet

"It is hard for us without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions."

-Joseph J. Cassano, 
 former AIG insurance executive
August 2007

The day after Cassano uttered that sentenced, he should have fired and the books examined.

By creating this hybrid product these criminals were able to skirt the insurance regulators. The bottom line was this was an a re-insurance product.

What does that mean? Insurance companies rarely assume all of their risk. Depending on the nature of the risk, re-insurance companies buy the coverage at a certain level. For example, after claim reaches $500,000 a re-insurance carrier starts paying. This is all seamless transaction to the paying customer.

AIG as usual was playing by their own rules. Well, the rest of us have to play industry rules and regulations. What entity was created to make a ton of money without reporting their activities. This was done to intentionally. Isn't intent a criteria for pressing charges?

The feds are looking into what brought our economy to the brink of collapse. My hope is a whistle blower will emerge to assist with the investigation.

Cassano should be rooming with the boys from Enron and WorldCom.

But we should really need to look at our societal values. Clearly, we learned nothing from the dotcom mess. McMansions, multi-properties, easy credit brought us all to this point.

Our priorities are fucked up. Our human and physical infrastructures are woefully underfunded. I make a decent buck and pay a lot of taxes. Spending our tax dollars wisely should be an issue. 

When a bridge collapses, it does not discriminated by party affiliation. When our kids are not prepared to compete in this global economy who pays? Everybody. 

Outsourcing jobs has become the norm. What drives my company is Revenue by Employee. By outsourcing entry level jobs,  the immediate result is improved margins.

Let's look at the long term implications.  A person learned or business from the ground up. By performing these funky tasks one learned the business. Remember apprenticeships or internships? Well folks, these are gone. If you don't have an expertise, staff development simply does not occur.

In the dark ages of the '80s, insurance companies hired college graduates and put them through internal schools. This included, knowing what do with all of the silverware in a restaurant. It was an investment in you and their future. 

What is critical, you were given an opportunity. Hell, a clerk with a high school diploma who worked smart would be given an chase to work his or her way up.

My God what if anything have we learned from recent events?

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