Job 2: If you can’t do Job 1, punt.
American International Group said last week that bad calculations on some arcane debt swaps had translated to $3.6 billion more in losses than the company had previously estimated. And that’s just the tip of the iceberg as the subprime meltown spreads. “Credit default swaps form a large but obscure market that will be put to its first big test as a looming economic downturn strains companies’ finances,” writes Pulitzer prize-winning Gretchen Morgenson in today’s N.Y. Times. “The market for these securities is enormous. Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — roughly twice the size of the entire United States stock market.”
How long before we start hearing “Where were the accountants?”
