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Sully Rulz

Sully Rulz

Anyone remember the heroes on US Airways 1549 that crashed into the Hudson? Well, AIG has managed to screw up their involvement in that, too. They’re denying liability.

When a homeowner has a burglary or a driver has a crash, all it normally takes is a call to the insurance company and a description of the loss to activate the policy. But aviation liability insurance is different. It is activated by a finding of negligence on the part of an airline. If there is no negligence, then arguably there is no liability, and no obligation to pay claims.

For those of us who take immense pleasure in AIG’s cascade of fail, this is a delight. I’m picturing the following sequence of events:

1. Some Senator calls up Liddy and widens his poop shoot yet further (“these people are heroes!”)

2. Liddy calls up his claims department and says: “pay the fucking claims and call back the NYT, you FUCKING moron”

3. Liddy calls up the same claims exec the next day: “oh, and you’re fired”

4. Liddy gets summoned to the Hill again so the polititians can fall all over each other to play the righteous outrage card a bit, which will be a welcome break from the befuddled economic architect hand they’ve been making  a hack job of lately.

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Towel. Throw

I am an Idiot

I feel lik an Idiot

 

Liddy’s falling on his sword.

Quote of the day from analyst Robert Haines:

“It really is a terrible job. I’m not sure who would want it” 

Ha ha.

More Ons

Back to the wheel-spinning department, here is AIG’s crack team of researchers to tell us that clients want service. Boring, sure, but why the picture of the monkey? Well, this is a study of very rich people:

Brokers servicing high-net-worth (HNW) customers have demanded better service from insurers as well as a wider range of cover, according to research by AIG UK.

Well, I guess the market’s shrinking mighty rapidly for the HNW department, so maybe competition is going to increase, not that that point is really a part of the article, because that would require analysis. This one’s good, too:

Ann Owen, vice president for AIG UK’s private client group, said “For some time we had had anecdotal evidence that broker and client demands were shifting in this market…”

Shifting to wanting more service? And AIG has a department of people whose job it is to unearth these stunning insights?

Destination: Nowhere

CBR001002

Ever felt like spinning your wheels for a while? If you love wasting time and energy for a cheap headline and no action whatsoever, then, please, step right up and conduct (another) climate change study on the insurance business. Don’t want to write one, but feel left out? Well, just report about it like it’s news! You get flashy headlines like this:

Climate change will dramatically alter global business and trade

and newsbites like this:

“Climate change will change the way we live and work, and will lead to greater competition for scarce resources, such as food and water. This is likely to result in increased economic nationalism and greater global insecurity, which will in turn add to the complexity and cost of doing business.

“Every organisation needs to have a clear understanding of its particular vulnerabilities and have in place a range of mitigation strategies. Their ability to understand what the impacts of climate change are going to be could not only protect them from threats but could also open up new business opportunities.”

What on earth does that all mean for you? No idea. Climate change is a nice re-euphamisation of Global Warming, and is maybe considered a little less accusatory. Or maybe the science isn’t qutie strong enough to say much of anything. Not that I particularly care either way.

I just think it’s ridiculous for people to spend resources examining these questions when they have absolutely no power over as individuals. But it doesn’t work unless we all unite!

HA! Since when has any large group of people consciously united for anything other than war!? You’re not up on your Hayek.

Helen Kellers Unite

usakeller2

I pay a lot more attention to the blogosphere than I ever have (or will) to the “pundits”  in the MSM. The reason is simply that I think bloggers operate in a more intellectually competitive environment. That, and that I can get a massive dose of commentary and links about the relatively narrow range of my interests every day.

That doesn’t save them from availability bias, though. Take Steve Randy Waldman, possibly the most compelling combination of originality and coherence in financial commentary. His post today is finally tipping my opinion away from his views, though. I’m hardly in a position to line myself up against Steve, Felix, Krugman (etc etc etc) and declare that nationalization is a bad idea, but I’m starting to wonder who really knows what they’re talking about.

The case for nationalization has been made and, I think, hasn’t been refuted in any strong way. This was clear in January. Obama has said his problem isn’t that the idea of nationalization sucks, it’s that he views the execution risk of that strategy to outweigh the downside risk of not doing it.

What was the commentators’ response? Mostly they came up with ideas for why it isn’t such a big deal to execute this strategy. It makes me think these people have never executed a damn thing in their lives. You don’t sit around and think about it, you put together a detailed plan, screw it up and hope that your screw-ups aren’t enough to sink the ship. It’s messy, extremely complex and often very boring.

Most of all, it isn’t suited for blogging commentary because bloggers aren’t willing to spend more than, at most, an hour on a single post. The kind of feasibility study this scale of bank nationalization requires would take hundreds of (man-)hours. And it would be wrong.

Be honest. You're a geek, too.

Be honest. You're a geek, too.

I’ve been trying to get a chance to read through this paper by Philipe Swagel on the insider view of the financial crisis and I’m happy to say I’m half done.

In typical blogging fashion, I’m going to post something now and, hopefully, finish it and post further thoughts later.

Two things have jumped out at me: first, when staring down massive financial risks, the proposed solutions are often commonplace in (re)insurance; and, second, how inevitably technocrats fail.

I didn’t fully realize this last year, but the US Treasury originally proposed to create a runoff company (aka, Bad Bank) to suck in all the mortgage assets and give constituent banks ownership, presumably along with some kind of gbmnt particiaption.

Amazingly, they would take it one step further and actually increase the information available by creating a centralized database with policy level data on all of the mortgages. It appears that one of the issues behind this whole mess is that the holders of the risk don’t actually know too much about it; indeed, the implication is that they know far less than those who sold it on to them and will be stocking the database.

What a win/win. As any intermediary worth a damn quickly finds out, you can restructure deals all day long but they don’t get done without real data. The only hope you have of making a “toxic” deal better is to introduce information.

Wasn’t implemented, though, which brings me to pointe deux. Technocrats fail because their second-rate pay yields second-rate talent and stale or non-existent private-sector expertise means they have less information. The experts in the private sector, though, are always happy to give ‘advice’, which comes packaged with some serious bias.

The above solution was killed because the same banks that, only nine months later, would get outed as irony_ruleszombies and quasi-nationalized allegedly got all twitchy with the UST telling them what to do. 

That would be called irony.

Any chance that the banks were really worried about those assets being marked down?

Generally, voters get frustrated because like to think (hope) that those working on their behalf know what they are doing but really have no way of seeing the difference between the 85th percentile of knowledge (gbmnt avg?) and the 99th (avg Wall Street jobber). Most voters, after all, are even lower down the (nonlinear) ladder.

WTF is the point?

Why, again?

Why, again?

As if the insurance press wasn’t bad enough.

Now we can go over to Insurnace Age and watch some northern dude (bored out of his mind) literally READING inane news stories out loud. Is this some kind of joke? Let me get this straight:

1. Your news stories are horribly uninteresting

2. Your news stories are available for free online

3. Reading to yourself takes less time than listening to someone read out loud.

So you get the same crap and waste more time. Gotcha.