2009 March 17 « Life in Peru

AIG bailout politics

The political posturing around the AIG bailout back home in the US almost makes Peruvian politicians look sincere…

Remember when former NY Attorney General Elliot Spitzer – not exactly the poster boy for ethics himself – keelhauled then-CEO Maurice “Hank” Greenberg in 2005? Here’s what Greenberg recently said about credit default swaps at AIG:

“However, he said AIG’s sales of credit default swaps “exploded” after he left the company in March 2005. He said AIGFP reportedly wrote as many credit default swaps in the nine months after he left than it did during the previous seven years combined and, he maintained, too much of its new business was tied to the subprime market.”

Instead of all the posturing, let AIG fail. It was just a house of cards. AIG’s business model of insuring investments only created a false illusion of security. Letting AIG fail would be a good first step to cleaning up both the financial system and ethics in business.

Bailouts and political posturing don’t change the fact that money is just a funny printed paper. Real productivity, what we contribute to society in tangible terms, and the tangible things you expect to get in return, is what matters. Just printing up more money so old guys in suits can continue to get ridiculously rich doesn’t seem like the solution to me.

March 17, 2009 Posted by wwelvaert | Business & Economy | AIG, bailout, business, Elliot Spitzer, ethics, Maurice Greenberg, politics, recession | 2 Comments

Walk through Cusco

We took a walk through some residential areas of Cusco on Sunday. Wanchaq, our neighborhood, is a fairly nice, middle-class part of Cusco. Some of the nicest residential areas of Cusco are Larapa, Magisterio and Huancaro Residencial. There are also poorer neighborhoods both near downtown as well as on the outskirts of the city. The residential areas of Cusco are growing fast, new buildings are going up everywhere. True to Peruvian form, some unfinished buildings linger around for years.

Cusco is an expensive city by Peruvian standards, thanks to the tourist industry. The cost of real estate is entirely out of line with personal incomes. Asking prices for nice apartments easily exceed $50,000. Consequently, as in all of Peru, it’s not uncommon for 2 or 3 generations of a family to share a home, which is also why you find lots of young couples making out in public places.

These are pictures of middle-class residential areas in Cusco. I’ll try to get some pictures of the other districts later.