Comments on: AIG and Arbitrage http://firedoglake.com/2009/03/08/aig-and-arbitrage/ Firedoglake weblog Fri, 17 Feb 2012 05:45:59 -0600 hourly 1 http://wordpress.org/?v=3.1.2 By: bobschacht http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850986 bobschacht Mon, 09 Mar 2009 01:06:14 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850986 <p>Please excuse if this has already been posted, but there’s more on the topic of this thread here:</p> <blockquote><p><strong>Who Got AIG’s Bailout Billions?</strong><br /><a href="http://www.truthout.org/030809F" rel="nofollow">http://www.truthout.org/030809F</a><br /> Tondai Reinhold, Reuters: “Where, oh where, did AIG’s bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published. The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the US government has poured into American International Group Inc since last fall has been paid to at least two dozen US and foreign financial institutions.”</p></blockquote> <p>Bob in HI</p> Please excuse if this has already been posted, but there’s more on the topic of this thread here:

Who Got AIG’s Bailout Billions?
http://www.truthout.org/030809F
Tondai Reinhold, Reuters: “Where, oh where, did AIG’s bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published. The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the US government has poured into American International Group Inc since last fall has been paid to at least two dozen US and foreign financial institutions.”

Bob in HI

]]> By: libbyliberal http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850983 libbyliberal Mon, 09 Mar 2009 00:53:43 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850983 <p>@26 … about AIG handling Congressional pensions…SNOPES SAYS FALSE… ANGRY FALSE RUMOR</p> @26 … about AIG handling Congressional pensions…SNOPES SAYS FALSE… ANGRY FALSE RUMOR

]]> By: HubrisSonic http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850982 HubrisSonic Mon, 09 Mar 2009 00:51:47 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850982 <p>well done.</p> well done.

]]> By: libbyliberal http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850981 libbyliberal Mon, 09 Mar 2009 00:48:53 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850981 <p>Got an email forward about how AIG handles the Congresspeople’s pensions. Maybe I better check out snopes. Is this a conflict of interest I wonder? Or just anger-mongering of the emailing citizenry? Anybody know?</p> Got an email forward about how AIG handles the Congresspeople’s pensions. Maybe I better check out snopes. Is this a conflict of interest I wonder? Or just anger-mongering of the emailing citizenry? Anybody know?

]]> By: masaccio http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850816 masaccio Sun, 08 Mar 2009 19:17:08 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850816 <p>Thanks, good to be here.</p> Thanks, good to be here.

]]> By: oldgold http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850815 oldgold Sun, 08 Mar 2009 19:16:50 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850815 <p>The other lecture they missed was: “Don’t Bet the Damn Company.”</p> The other lecture they missed was: “Don’t Bet the Damn Company.”

]]> By: masaccio http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850814 masaccio Sun, 08 Mar 2009 19:14:40 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850814 <p>Thanks for fleshing it out. That is very helpful.</p> Thanks for fleshing it out. That is very helpful.

]]> By: gorobei9 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850812 gorobei9 Sun, 08 Mar 2009 19:09:49 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850812 <p>You almost got it right…</p> <p>y-r-S is the arbitrage (a small. mathematically certain fixed profit.) </p> <p>The person on the other side of the trade does not “evaluate things differently,” though. They can see the exact same thee numbers for y, r, and S. So why do they paid money to make the trade? Well, y and r are constants, while S can vary over time, so they are betting that S will increase over time (i.e. the underlying company’s condition will worsen over time.) Note the the arbitrageur doesn’t care what happens to S (that’s why it’s called arbitrage.)</p> <p>Why does the buyer want to be long S? There are some valid business reasons, but the most common answer is that they can get huge leverage (10-1 or more) on the underlying company. Compare that to a vanilla stock transaction where you max out around 3-1.</p> You almost got it right…

y-r-S is the arbitrage (a small. mathematically certain fixed profit.)

The person on the other side of the trade does not “evaluate things differently,” though. They can see the exact same thee numbers for y, r, and S. So why do they paid money to make the trade? Well, y and r are constants, while S can vary over time, so they are betting that S will increase over time (i.e. the underlying company’s condition will worsen over time.) Note the the arbitrageur doesn’t care what happens to S (that’s why it’s called arbitrage.)

Why does the buyer want to be long S? There are some valid business reasons, but the most common answer is that they can get huge leverage (10-1 or more) on the underlying company. Compare that to a vanilla stock transaction where you max out around 3-1.

]]> By: bmaz http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850810 bmaz Sun, 08 Mar 2009 19:01:42 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850810 <p>Wait. Who is this poster known as “masaccio”???</p> <p>Is he new here? I think he might be!</p> <p>Welcome.</p> Wait. Who is this poster known as “masaccio”???

Is he new here? I think he might be!

Welcome.

]]> By: Elliott http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850808 Elliott Sun, 08 Mar 2009 18:55:18 +0000 http://firedoglake.com/2009/03/08/aig-and-arbitrage/#comment-1850808 <p>The re-air of the Bernanke hearing is on CSPAN right now, it’s unbelievable what we aren’t allowed to know about what they are doing — <em>and </em>what Bernanke and friends don’t know anyway.</p> The re-air of the Bernanke hearing is on CSPAN right now, it’s unbelievable what we aren’t allowed to know about what they are doing — and what Bernanke and friends don’t know anyway.

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