AIG: Angina-Inducing Greed

For those of you who may have just read the headlines and listened to the featured story blurbs on the news regarding insurance giants IAG with passing interest, I will try to give you a simplistic version.

Let's start with the basics. Who or what exactly is the American International Group?

Well, AIG is by their own information "a world leader in insurance and financial services" and "the leading international insurance organization with operations in more than 130 countries and jurisdictions."

Heady stuff, right? I mean, we are talking about the worldwide leader in insurance services and one of the largest financial services organizations on earth as well. We are talking here about the real money. Not just big money, but 'real' money. The kind of money that moves governments and shakes nations.

The folks at AIG are just one of many financial services companies that have undertaken huge losses and faced dire straights as the American economy has gone into reverse over the past year. They blame their particular problems largely on what are called 'credit default swaps" (CDS) in the industry.

Greed is Not Good

"...Greed -- for lack of a better word -- is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind. And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA." - Michael Douglas as Gordon Gekko in "Wall Street"

The Catholic Church divided sin into two classes - venial sins, which were relatively minor, and the more serious cardinal sins, which became known classically as the 'seven deadly sins'. These were said to "destroy the life of grace" and brought the threat of eternal damnation on those who practiced them, unless absolved through a formal confession or forgiven through an act of perfect contrition by the offender.

One of these was the sin of 'Greed', which is seen as a sin of excess, and is applied in particular to the acquisition of wealth. It is closely aligned to avarice, which can manifest itself in bribery, robbery or theft by means of violence, trickery, betrayal, and even treason. It also covers the scavenging and hoarding of materials, as well as manipulation or abuse of authority.

In the film 'Wall Street', Michael Douglas' character Gordon Gekko delivered the above now-famous speech at a shareholder's meeting. Gekko was trying to woo shareholders to accept a bid that his company was making to takeover the Teldar Paper company.

Gekko's sales pitch highlighted that the current Teldar management was bloated, wasteful, and borderline incompetent. Either that, or they were intentionally abusing their positions to ensure their own personal gain, and those shareholders be damned.