The collapse of what was once the largest insurance company in the world, AIG, goes straight to the heart of the hubris that caused today's problems.

Fools always believe what they want to believe.  This truism is as true today as it was yesterday and the day before.

 It was certainly true when AIG began writing insurance policies on financial investments. Investment banking is nothing more or less than a global casino where savings are bet in the hope of greater reward.

The cost of the bet is measured by risk and the greater the risk the greater the possibility of reward. It is also true that the greater the risk, the greater the possibility of loss.

 This is where the hubris of AIG enterered the picture. When the investment banks found a pigeon stupid enough to write risk insurance on their increasinly risky bets, they were home free or so they thought.

 But if AIG was in fact stupid enough to write insurance on increasingly complex and risky financial bets, it didn't mean AIG had the money to back those insurance policies up when the bets went bad--and they didn't.

 Today, AIG is bankrupt but the investment banks are still receiving full dollar on their insurance policies because an even bigger sucker than AIG has been found--the US taxpyer who is now committed to paying off AIG's bad debts. 

The next time you go to the polls, remember what you voted for and what you in fact got.

Good luck,

Darryl Robert Schoon

www.survivethecrisis.com

www.drschoon.com