Isn't that nice? So AIG insists that we trust them, and in addition, that everyone else trust them, as to the precise composition of these "assets", their performance, and who is on the other side of the transaction.
Oh, it gets better. The weighted average maturity of these transactions is 1.35 years, they've lost about 1/3rd of their value, we can't tell what's left in there, and we also can't know who's on the other side of the transaction, but what we are told is that the essential financial purpose of these transactions was to evade regulatory capital requirements.
From this we can surmise that some time in the next two years either AIG will have to cough up some $100 billion in additional money in some form or fashion, these "assets" will have to be bought out (at a $50 billion loss, as of today), or if that can't happen because, for example, AIG fails to be able to continue to suck on the taxpayer's tit then the counterparties could have "a wee problem."
Why do I smell sulfur?
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