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AIG: Now that you own it, learn about it!

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First of all—what is AIG?

AIG is American International Group, the largest insurance company in the world. It's not just an insurance company, however; its business is divided into four divisions: general insurance, life insurance and retirement services, financial services, and asset management. It was started in 1919 in Shanghai.

How did it (almost) collapse?

Like many other banks, AIG lost a lot on its mortgages, including $18.5 billion in the past three quarters—all part of the subprime collapse. Its share price has dropped 79% this year. But bad became worse this Monday when AIG received a downgrading of its credit rating. What's a credit rating? All securities are given a rating that tells you how much risk is associated with your investment into that security. Depending on the rating, the company must have a certain percentage of money on hand. The ratings, given by agencies like S&P and Moody's, are a lot like school grades "“ A's are good (need less money on hand), B's are okay/bad (need more money on hand), and C's are junk (need even more money on hand). So S&P & Moody's downgraded AIG, which meant it needed to post $14.5 billion in collateral to support its trading contracts. AIG couldn't sell its assets off quickly enough to get that money. Seeing its impending doom, AIG tried to rally the rest of the banks (JPMorgan & Goldman) to lend them the money.

That didn't work, so the Fed had to step in order to keep it from total collapse. The Fed has promised to lend up to $85 billion to AIG.

But I thought the Fed wasn't going to bail anyone out anymore.

Well, yes, that's what they said. And they definitely stuck to their word when they let Lehman slide to its demise this weekend. However, AIG is more than just an investment firm. It's such a huge insurer (the largest in the world in terms of assets), and was such a huge player in the Credit Default Swaps (CDS) market, selling off risk to other financial players around the globe. If it collapsed, it would have shaken the global financial world.

What are Credit Default Swaps?

Okay, say I invest $10M into a bond for General Motors, but I'm now afraid that GM may see financial trouble. Instead of just selling my bond off, I can enter into a sort of insurance policy with a big bank, say AIG. I pay AIG a small premium every quarter. If GM remains fine, then AIG does nothing. If GM does see financial trouble and I lose money on my bond, AIG will pay me what I lost on my bond. Likely, this will be a lot of money, relative to the small premiums I pay. Once this happens, the contract of the "swap" terminates. This is all fine and great, except for the fact that the CDS market isn't regulated—thus I could enter into a contract with a bank that doesn't have the resources to cover the loss of my GM bond. The CDS market totals $62 trillion, in which AIG plays a central role. Since just about every bank, insurer, and institutional money manager has some sort of exposure to CDS, they all have some sort of exposure to AIG. Hence, the necessary bailout.

How does the bailout work?

Well the Fed doesn't just hand over the money when they do these bailouts. It has promised a two-year loan for up to $85B. In return, it gets a 79.9% equity stake in the company in the form of warrants (a warrant is basically a call option issued by the corporation—allowing the Fed the option of buying common stock in AIG at a specific price) called equity participant notes. Interest on their loan is at Libor (the London Interbank Offered Rate—it's basically the London equivalent of the US Federal funds interest rate, and is often used as a benchmark for short-term lending) + 8.5 percentage points. That's about 12% (now), which is very high interest.

So AIG has to make good on the loan in the two-years either through general operations (not likely) or through sale of its various assets or branches of business. AIG has about $1.1 trillion worth of assets, and the Fed plans to sell them off in an orderly manner.

Why so much money?

Though AIG only needed $14.5 billion after the credit downgrade this week, the $85B loan was designed so AIG would be left with little debt and it could take on whatever the next few quarters has in store.

Does this matter to me?

Yes—now you own part of AIG! Well, kind of. That $85 billion is comprised of your tax dollars. Yep, your tax money is now going to protect bad investments. Investments that packaged up your debt into various securities, and sold it off to another party, who sold it off to another party, who sold it off all over the world.

However, since the Fed is LENDING the $85B to the corporation (unlike the Fannie & Freddie deal) the government could make some serious money off the high interest rate. That is if, by some sort of divine intervention, the market, and thus AIG, rebounds. The Fed is making it clear that the taxpayer will only see positive effects of the bailout.

But will the taxpayer be affected?

Who knows. It may be true "“ the Fed and the Treasury may make some money off AIG due to the high interest rate, but will I ever see that money? . It's certainly a good way to assuage the public's fears.

Will the bailout work?

It should. See, certain branches of AIG are doing just fine. Its aircraft leasing business, for example, is the second largest in the world and is estimated to bring in between $7 and $10 billion.

And who's to blame?

That's for next time.

Be sure to read more of what Diana learned today here.

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Giovanni Rufino - © 2012 The CW Network, LLC. All Rights Reserved
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XOXO: 20 Things You Might Not Know About Gossip Girl
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Giovanni Rufino - © 2012 The CW Network, LLC. All Rights Reserved

Ten years ago, Gossip Girl became appointment television for America’s teenagers—and a guilty pleasure for millions more (whether they wanted to admit it or not). Like a new millennium version of Beverly Hills, 90210, the series—which was adapted from Cecily von Ziegesar’s book series of the same name—saw The O.C.’s Josh Schwartz and Stephanie Savage trade in their west coast cool for New York City style as the show followed the lives of a group of friends (and sometimes enemies) navigating the elite world of prep schools and being fabulous on Manhattan's Upper East Side. In honor of the series’ tenth anniversary, here are 20 things you might not have known about Gossip Girl.

1. IT WAS SUPPOSED TO BE A LINDSAY LOHAN MOVIE.

Originally, the plan for adapting Gossip Girl wasn’t for a series at all. It was supposed to be a feature film, with Gilmore Girls creator Amy Sherman-Palladino writing the script and Lindsay Lohan set to star as Blair Waldorf. When those plans fell through, the producers approached Josh Schwartz—who was just wrapping up work on The O.C.—about taking his talent for creating enviable high school worlds to New York City’s Upper East Side.

"The books are a soap opera, and TV makes a lot of sense," executive producer Leslie Morgenstein told Backstage of the decision to go the small-screen route. "When we made the list of writers who would be the best to adapt Gossip Girl for television, Josh was at the top of the list."

2. PENN BADGLEY INITIALLY TURNED DOWN THE ROLE OF DAN HUMPHREY.

Barbara Nitke - © 2012 THE CW Network, LLC. All Rights Reserved.

Though he was hardly a household name when Gossip Girl premiered, Penn Badgley had been acting for nearly a decade—and had a lot of experience working on first season TV shows that never took off—when he was offered the role of Brooklyn outsider Dan Humphrey, and his initial response was: thanks, but no thanks.

“The reason I turned it down initially was because I was just frustrated,” Badgley told Vulture in 2012. “I was frustrated and I was broke and I was depressed and I was like, ‘I cannot do that again. I can't.’ … Stephanie Savage, the creator [of Gossip Girl], she said to me, ‘I know you might not want to do this again, but just take a look at it.’ And I actually was like, ‘I appreciate so much that you thought of me. I just don't want to do this. Thank you for understanding that I wouldn't want to do this.’ And then they couldn't find anybody for it—which is weird, because a million people could play Dan Humphrey—and she came back around, I was about to get a job as a waiter, and I was like, ‘Okay.’”

3. ULTIMATELY, BADGLEY PROBABLY WISHES HE HAD FOLLOWED HIS INITIAL INSTINCT.

Badgley told Vulture that, “I wouldn't be here without Gossip Girl, so I will always be in debt and grateful. And I've said some sh*t that ... I don't regret it, but I'm just maybe too honest about it sometimes.”

But executive producer Joshua Safran had a different view on the situation. “Penn didn’t like being on Gossip Girl, but …. he was Dan,” Safran told Vanity Fair. “He may not have liked it, but [his character] was the closest to who he was.”

4. THE CREATORS GOT THE IDEA TO CAST BLAKE LIVELY FROM THE INTERNET.

According to Vanity Fair, when it came time to casting the show’s main roles, they cruised some of the online message boards related to the Gossip Girl book series to see which actors fans of the books were suggesting. One name they kept seeing for the role of Serena van der Woodsen: Blake Lively, who had starred in The Sisterhood of the Traveling Pants. “We didn’t see a lot of other girls for Serena,” Schwartz said. “She has to be somebody that you believe would be sitting in the front row at Fashion Week eventually.”

5. LIKE BADGLEY, LIVELY WAS ON THE VERGE OF QUITTING ACTING.

© 2008 Warner Bros. Television

Like her onscreen (and eventually off-screen) love interest Penn Badgley, Blake Lively was also considering leaving Hollywood when Gossip Girl came calling, so she turned the producers down.

“I said, ‘No, I want to go to college. Thank you, though,’” Lively told Vanity Fair. “Then they said, ‘OK, you can go to Columbia [University] one day a week. After the first year [of the show], it’ll quiet down. Your life will go back to normal and you can start going to school. We can’t put it in writing, but we promise you can go.’ So that’s why I said, ‘OK. You know what? I’ll do this.’”

As for that going back to school and life going back to normal? “When they say, ‘We promise, but we can’t put it in writing,’ there’s a reason they can’t put it in writing,” she said.

6. LEIGHTON MEESTER DYED HER HAIR TO GET THE PART OF BLAIR.

Because Blair Waldorf and Serena van der Woodsen were both best friends and occasional enemies, it was important to the show’s creators that the characters did not look like the same person. That fact almost cost Leighton Meester the role of Blair.

“She came in and she was really funny, and really smart and played vulnerable,” Schwartz recalled of Meester’s audition. “But there was one problem: she was blonde. And Blake was blonde, obviously; Serena had to be blonde. So, [Leighton] went to the sink and dyed her hair. She wanted it.’” (Sounds like something Blair would do.)

7. THE NETWORK WORRIED THAT ED WESTWICK LOOKED LIKE A “SERIAL KILLER.”

Giovanni Rufino - © 2012 THE CW Network, LLC. All Rights Reserved

Ed Westwick, who originally auditioned for the role of Nate Archibald but ended up playing bad boy Chuck Bass, almost didn’t land a role on the show at all. Though the show’s co-creators, Schwartz and Savage, loved the darker edge that Westwick brought to the group of friends, The CW worried “that he looked more like a serial killer than a romantic lead.”

“He's menacing and scary, but there's a twinkle in his eye,” casting director David Rapaport told BuzzFeed. “You want to hate him, but you would also probably sleep with him. He's one of those guys you hate for always getting away with things, but you also want to hang out with him and see what he's up to next. He's the guy that's going to give you a joint for the first time or get you drunk for the first time, so you know he's wrong for you, but he's fun.” Fans clearly agreed.

8. WESTWICK CHANNELED HIS INNER CARLTON BANKS TO PLAY CHUCK BASS.

In order to perfect his posh American accent, Westwick—who was born in London—looked to another iconic American television character for help: The Fresh Prince of Bel-Air’s Carlton Banks (Alfonso Ribeiro). “There’s a slight thing in Carlton Banks,” Westwick told Details Magazine in 2008, “that kind of über-preppy, that I did pick up on.”

9. GRETA GERWIG AUDITIONED FOR THE SHOW … IN OVERALLS.

In 2015, Golden Globe-nominated actress Greta Gerwig—who just wrote and directed Lady Bird, starring Saoirse Ronan—talked to HuffPost Live about the mistakes she made early on in her career as an actress. “I have had moments when I was starting out when I was auditioning for things like Gossip Girl," she said. “And they would look at me like, 'Why are you wearing overalls to this audition?' And I'd be like, 'They said she was from a farm!' and they would be like, 'Well, this is Gossip Girl.’” (The role she was auditioning for, Eva Coupeau—a love interest for Chuck—eventually went to Clémence Poésy, who played Fleur Delacour in the Harry Potter movies.

10. BLAIR WALDORF HAD TWO MOMS.

© 2008 Warner Bros. Television

In Gossip Girl’s pilot episode, Blair’s mom—popular women’s clothing designer Eleanor Waldorf—was played by Florencia Lozano. In episode two, and throughout the rest of the series, Eleanor was portrayed by Margaret Colin.

11. IT WAS ONE OF TELEVISION’S FIRST STREAMING SUCCESS STORIES.

Years before House of Cards changed the way we watch, and even define, “television,” Gossip Girl served as a sort of precursor to the streaming generation. While the show’s Nielsen ratings were mediocre, New York Magazine reported that, “New episodes routinely arrived at the No. 1 most-downloaded spot on iTunes, and then there were the hundreds of thousands who were downloading free week-old episodes on the CW's site. Even executives at Nielsen threw up their hands and admitted that Gossip Girl appeared to be speaking to an audience so young and tech-savvy they hadn't really figured it out just yet.” (Lost and The Office had followed similar tracks.)

12. THE SHOW WAS BANNED BY SOME NEW YORK CITY SCHOOLS.

Giovanni Rufino - © 2012 THE CW Network, LLC. All Rights Reserved.

According to Vanity Fair, some of the elite New York City private schools that might have shared some similarities with the show’s fictional Constance Billard and St. Jude's banned their students from watching it. (Which, the outlet noted, “only served, in all likelihood, to make the students want to watch it more.”)

13. THE SERIES TURNED ITS CRITICISMS INTO A MARKETING CAMPAIGN.

Even by 2007’s standards, Gossip Girl—for a show about high schoolers on what was mainly known as a teen-friendly television network—seemed to relish in pushing the boundaries of what might be acceptable. It didn’t take long for parental advocacy groups like the Parent Television Council to take very public, and vocal, issue with the show's in-your-face sexuality. When it was criticized as being “mind-blowingly inappropriate” and “every parent’s nightmare,” the show turned those critiques into a marketing campaign to help promote viewership.

14. A WRITERS STRIKE HELPED THE SERIES GROW ITS VIEWERSHIP.

While the show struck a chord with certain audiences immediately upon its release, the 2007-2008 Writers Guild of America Strike proved to be a boon to the series. “The CW, because they couldn’t just run repeats or game shows, [Gossip Girl is] all they had,” Schwartz told Vanity Fair. “They kept re-running the show during the strike so more and more people were watching.” Which led to even higher ratings when the show returned for a second season.

15. DESIGNERS WERE BEGGING TO SEE THEIR FASHIONS WORN ON THE SHOW.

Giovanni Rufino - © 2012 THE CW Network, LLC. All Rights Reserved.

Just like New York City itself, the fashions in Gossip Girl essentially served as another character. According to a 2008 article in The New York Times, “Merchants, designers, and trend consultants say that Gossip Girl … is one of the biggest influences on how young women spend."

“When we came back with Season 2, so many designers were lining up and wanting to be a part of it,” the show’s costume designer Eric Daman told Vanity Fair. “They wanted their stuff on either Blake or Leighton.”

16. IT SPAWNED ITS OWN CLOTHING LINE.

To capitalize on the show’s influence in the fashion world, Daman and designer Christine Cybelle (a.k.a. Charlotte Russe) created a Gossip Girl-inspired clothing line.

17. KRISTEN BELL PLAYED AN ESSENTIAL PART OF THE SERIES, BUT WAS NEVER CREDITED.

Though viewers had to watch all 121 episodes of Gossip Girl to learn the identity of the titular tattler, Kristen Bell provided the voice for “Gossip Girl” for all six seasons, without credit. And while she sort of hoped that the finale would have revealed that she was indeed “Gossip Girl” all along, that ending was not meant to be. “I’m sure that it would’ve been really cool had I got to play some vicious part and actually come out as Gossip Girl, but I think it was appropriate for one of the main cast members to have surfaced as Gossip Girl,” she told Perez Hilton.

Though she was a key part of the series, she didn’t learn GG’s true identity until the very end of the show—and she was surprised. “I don’t know that I ever forethought it being Dan,” she admitted. “That was a bit of a shocker!" (If it makes her feel any better, Badgley reportedly didn’t learn Gossip Girl’s identity until that scene was actually shot.)

18. JANUARY 26 IS "GOSSIP GIRL DAY" IN NEW YORK CITY.

© 2008 Warner Bros. Television

At least it was in 2012, when then-Mayor Michael Bloomberg proclaimed January 26 “Gossip Girl Day” in celebration of the show’s 100th episode. “I don’t have a whole lot of time to follow what New York magazine has called ‘The Greatest Teen Drama of our time,’” Bloomberg said. “But I am interested in finding out who the real Gossip Girl is—Serena’s cousin, maybe? And I don’t see how Blair could marry Prince Lewis while she is clearly in love with Chuck, although she and Dan became pretty close when they interned at that fashion magazine. And I just wish that Nate and Vanessa had been able to work things out, I guess Nate was preoccupied with everything that was going on with his father and Jenny and, I mean, it was a tangled web, I guess Dan would have ended up making their relationship impossible anyway, but I’m just a casual fan.” 

Super-fans of the show can still take a Gossip Girl tour of New York City.

19. IVANKA TRUMP AND JARED KUSHNER MADE A CAMEO.

Over the full course of the series, plenty of familiar faces popped up, but two in particular seem kind of funny in retrospect: Ivanka Trump and Jared Kushner played themselves in a club scene. (Ivanka was apparently a huge fan of the series.) “They did it for the money,” a chuckling Schwartz told Vanity Fair.

20. IN AN ALTERNATIVE UNIVERSE, SERENA IS A SERIAL KILLER.

In 2002, von Ziegesar published a bloody take on her famed book series with Gossip Girl: Psycho Killer, which she said she’d love to see adapted. "I took the original text of the first book and whenever I saw an opportunity, I layered in this story of Serena coming back from boarding school as this coldblooded psychopath, which, to me makes total sense,” von Ziegesar told Entertainment Weekly. “She’s sort of like the Ryan Gosling of Gossip Girl world. She has that deadpan style, doesn’t seem to have much personality, and she’s really gorgeous, but then underneath she has this kind of scary ability to kill people. So she’s murdered people up at boarding school. She’s always had this dark side and everyone is a little bit scared of her.”

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Natasha Zinko
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This Just In
This Jeans-Inside-Your-Jeans Look Will Cost You $695
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Natasha Zinko

Besides a few updates here and there, the classic style of denim blue jeans hasn’t changed much since the late 19th century. Now, a London-based fashion designer wants to disrupt the wardrobe staple. Their revolutionary new idea? A second waistband sewed on top of the first one.

According to Mashable, these high-waisted double jeans from Natasha Zinko are retailing for $695. Wearing the pants makes it look like you forgot you already had jeans on and put on a second pair on top of them. But buying two pairs of designer jeans to wear at once would probably be less expensive than owning this item. The double jeans are actually one garment, with the high-waisted inner pair stopping at the hips. Boasting seven pockets, they’re not entirely impractical, but having to undo two sets of buttons and zippers sounds like more trouble than it’s worth.

Model wearing double jeans.
Natasha Zinko
There is a market for high-end blue jeans disguised as fashion crimes, as Nordstrom proved earlier this year with their $425 pants covered in fake dirt. The Natasha Zinko double jeans have already sold out on shopbop.com.

[h/t Mashable]

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