NY Times: A.I.G., Where Taxpayers’ Dollars Go to Die

A.I.G., Where Taxpayers’ Dollars Go to Die
By GRETCHEN MORGENSON

Published: March 7, 2009


“DERIVATIVES are dangerous.”

That simple sentence, written by Warren Buffett, begins an enlightening discussion in Berkshire Hathaway’s most recent annual report. Mr. Buffett’s views on derivatives, gleaned from his own unhappy encounters with them, should be required reading for all United States taxpayers.

Why? Because we own almost 80 percent of the American International Group, the giant insurer whose collapse was a direct result of derivatives it sold during the late, great credit boom.

A.I.G. nearly barreled off the cliff last September, when it couldn’t meet its obligations to customers who had bought a version of derivatives called credit default swaps. Such swaps are like insurance policies; bondholders buy them to protect themselves from default on various forms of debt. ...........(more)

The complete piece is at: http://www.nytimes.com/2009/03/08/business/08gret.html?ref=business

Arcane, complicated fraud, but that is what they are.

gives a better return than the tax losses due to derivatives.