I hope so Crazymark! AIG certainly did not.....hence the need...

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    I hope so Crazymark! AIG certainly did not.....hence the need for a bailout. My understanding is that theses guys probably thought they had the cash to back up their CDS bets but their hedging models (normal curve based) placed a too lower probability of debt default and did not really take into account conditional probability either.

    The Black swan is a great read. I reckon the link below is a great read as well.


    http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all

 
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