Some things that had happened...

I haven't blogged in a while. I don't know why, sometimes the passion to blog just come and go. I suppose!

First, a few things have happened since I blogged. 

United States elected in 2008 the first black president-elect Barack Obama, whose speeches are truly inspirational. Here's the inauguration speeches: 

Before that, the world had sweated over the possibility of having an Alaskan cute but stupid hockey mom - Sarah Palin - as its vice president 

Credit crisis swept over the world. The big financial institutions had been brought down to its knees. Lehman Brothers is now gone. Merrill Lynch bought by Bank of America, who is now in trouble itself. http://www.nytimes.com/2008/11/09/business/09magic.html http://www.nytimes.com/2009/02/08/business/08split.html?_r=1 Citigroup once the biggest bank in the world by market capitalization is now smaller than ANZ - the smallest of the big 4 Australian banks. Amazing isn't it? 

The whole credit crisis started mainly because of greed. I couldnt possibly think of what else. The banks got creative during the US residential property boom period and created a credit derivatives instrument called CDO (Collateralized debt obligation). It basically made up from a pool of mortgages which are then subdivided into tranches based on its credit quality. The worst quality is sub-prime mortgage, which basically means that the mortgagee has a questionable credit rating, but is still able to get the mortgage anyway. Sub-prime carries the highest risk, but in a world of finance, higher risk means higher returns ;-). So all goes well during the US property boom, but when things turn sour, it all falls apart goddamn quick. All institutions that carry CDO, continues to bleed. 

One of the biggest insurance company in the world, AIG created a product that insures the CDO itself. It earns so much money during the property boom, and noone at the time really thought that things would go down south. AIG had been bailed out by the US government, and there is a recent public outcry that it paid millions in bonuses to its employees, by using taxpayer money!!! At first I thought how stupid were these people to do that, but you gotta look at the things from a different perspective as well, and here is one: http://dealbook.blogs.nytimes.com/2009/03/25/dear-aig-i-quit/?scp=2&sq=AIG&st=Search