Michael Lewis’ article at Vanity Fair is a fascinating summary of the problems that led to the failure of AIG – a must-read.
The Man Who Crashed the World
Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved—the silent, shell-shocked traders of the A.I.G. Financial Products unit—and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.
Read the rest, it’s a very interesting and plausible explanation of how the unthinkable happened at a company that was supposed to ensure the country’s financial stability and would up maiming it instead. Still, as compelling as Lewis’ case is, I don’t buy it in its entirety.
Is the entire financial disaster of 2009 really the fault of one man? Not a chance. Lewis’ designated scapegoat seems to be a major player, right enough. But every one of the millions of people in America who took out a loan they couldn’t pay back or defaulted on their credit cards is responsible for part of this mess. That fact Lewis completely ignores.