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Presenting The BlackRock-AIG Presentation In Which It Becomes Clear That Soc Gen Had Pledged Sub-50 Cent Securities To The Fed's Discount Window
Many of you asked for the BlackRock presentation that disclosed Goldman's desire to tear up AIG CDS contracts at a concession (i.e., discount), so here it is.
Some of the notable highlights first - as BlackRock points out on page 8 of the presentation:
- Negotiating Position: Goldman Sachs is the least risk averse counterparty, i.e., the only counterparty willing to tear up CDS with at agreed upon prices and retain CDO exposure
- Goldman approached AIG in August to discuss tearing up the CDS contracts
- BlackRock has advised AIG on tearing up 9 CDS in the Goldman portfolio with a $3 billion notional
- These transaction were selected because they were distressed portfion likely to experience credit events and convert to cash positions in the next few years (converting to cash position reduces any basis between the CDO and CDS values)
- The bid-offer spread between AIG and Goldman on these CDS tears-ups is $300 million
- Goldman has expressed a willingness to negotiate tear-ups on additional trades (including 7 synthetic Abacus transactions)
- Concession: Goldman would likely accept a small concession but may look to its funders to absorb the loss (or a portion of the loss)
- Goldman's exposure to AIG is limited to the difference between collateral requested (what they are likely posting to swap counterparties) and collateral received at any given time from AIG. While hedging this AIG counterparty risk is expensive, the cost would translate into no more than 2 points on the whole portfolio
- Goldman's swap counterparties are exposed to Goldman Sachs rather than AIG counterparty risk, and are therefore less likely to be receptive to deep concession
- Access to the Assets: Goldman has said that it does not hold the cash CDOs, but has back-to-back swaps on most of the positions
- Other factors
- Because Goldman prices have been consistently lower than third-party prices, Goldman and AIG have negotiated a collateral posting protocol in which Goldman's prices are given a 12% positive haircut for collateral posting
- Goldman's requested collateral margin, therefore, is generally 12% higher than the agreed collateral posting at any given time
This is why Goldman may have been willing to tear down contracts - in essence it would have had a loss buffer of up to12% more than prevailing market prices on the CDOs, so even a protection tear down would have resulted in the ability to take incremental losses on the underlying (assuming it was still held at AIG). Not only that, but Goldman's aggressive margin requirements were in a league of its own:
- $1.3 billion in additional collateral has been requested, but not posted as of 10/24
- Goldman's collateral request does not reflect any haircut to Goldman prices per the protocol established with AIG, so at least a 12% gap attributable to the haircut will remain as long as the haircut protocol is effective
- BlackRock's projected values are higher than collateral requested, i.e., BlackRock expects the portfolio to perform better than values implied by requested collateral
And here is why Goldman was particularly worried about the actual underlying securities in its portfolio:
The portfolio is projected to experience higher tranche principal losses than the overall portfolio in all cases (e.g., 15% higher than the total portfolio in the base case)
- Despite a significant concentration in prime/agency RMBS, the overall quality of the portfolio is impaired by a large exposure to Alt-A RMBS
- 29% of the Goldman portfolio is prime/agency securities concentrated in a few high-quality CDOs, compared to only 17% for the total portfolio
- However, another 26% of the portfolio is comprised of Alt-A RMBS (vs. 17% of the total)
- Additionally, 55% of Goldman's portfolio is concentrated in 2005 vintage assets (compared to 38% of total)
- By rating, Goldman's portfolio is barbelled
- 33% of assets rated AAA (compared to 36%), but 25% are below investment grade (compared 18%)
In layman's terms, what all this means, is that Goldman would have indeed been willing to accept tear downs due to the excess buffer (positive haircut) arrangement the firm had in place with AIG. Indeed, the firm had downside protection all the way down to at least 12% below fair value as determined by all other AIG counterparties (granted, in such an extremely illiquid market as CDOs nobody knew what price these securities would print at, especially if trades were done in the size discussed). Furthermore, according to BlackRock, Goldman was wise enough to offload the actual CDOs to clients, and was exposed merely through "back-to-back swaps on most of the positions." This means that Goldman only was exposed purely to counterparty risk on AIG's behalf - should AIG default, Goldman would become the client-facing entity guaranteeing "pass through" sold CDS.
Yet one wonders just how many billions of dollars Goldman had in margin variation between collateral posted to it via AIG, and how the amount of money it had paid to buyers of CDS sold by Goldman. We are certain that since no Goldman client had the same negotiating power as Goldman did with AIG, Goldman likely had a positive balance in the hundreds of millions if not billions simply on the collateral variance.
As page 10 indicates, whereas all counteparties had requested collateral at a price for the underlying CDOs of 49, Goldman was extremely aggressive, demanding collateral for a price-equivalent of 37. The latter compares to a BlackRock model price for Goldman of 44, meaning that even the Fed's advisor in good faith could not recommend such a generous treatment of Goldman in the context of all its other counterparties. Were Goldman to receive the same collateral as everyone else, it would be due 8.1 billion: $1 billion less than the 10/24 collateral request.
Now keep in mind, that of the top 5 counterparties, SocGen, GS, Deutsche Bank, Merrill and Calyon, only Goldman had subsequently sold off its entire CDO book: once again implying that unlike the other 4 firms, who at least held the exposure on their own balance sheet, and thus one can say deserved to receive some insurance, Goldman had bought then sold its entire portfolio, in essence making Goldman nothing than an AIG conduit, which was fully hedged and, as noted above, only had counterparty risk, yet which had the benefit of up to $1 billion in excess cash on its books due to day-to-day marking of its CDS exposure and its advantage collateral arrangement.
Futhermore, as Goldman owned CDS on AIG itself (as a counterparty hedge), Goldman had absolutely no risk in its relationship with AIG whatsoever!!! Of course, It is critical to remember that Goldman not only received par between the collateral previously posted to it, and actual cash from Maiden Lane III, it also made billions by selling actual AIG CDS (which as we claimed previously was done while in possession of material non-public information). Amusingly, while Goldman bought all of its CDO protection from AIG exclusively, it definitely used a very broad seller base when it loaded up on the actual AIG protection. Therefore, Goldman's only, ONLY risk, was that of a complete systemic collapse and the repudiation of all contracts, CDS and otherwise. Which is why Goldman's various agents did everything they could to prevent that from happening, up to and including loading the Federal Reserve with trillions of toxic debt in the upcoming 12 months.
And speaking of the Federal Reserve, while reading the SocGen section, we came across this little stuner on page 3:
We have heard second-hand from a trader that Soc Gen has pledged much of the portfolio to the Fed discount window for future liquidity
Aside from the fact that in October 2008 France-based Soc Gen was not a Primary Dealer (it only just applied for this position a few weeks ago), one needs to turn to page 5 of the presentation to realize that Soc Gen's portfolio had a value of 49 cents on the dollar. What this implies is that in October of last year (and ostensibly prior) Soc Gen, a foreign, non Primary Dealer, had access to the Federal Reserve's Discount Window, where it had pledged securities that had a value of 49 cents on the dollar, and for which the Fed would have taken arguably no haircut, thereby funding the French firm at par for securities that were worth less than half, and which the taxpayer was on the hook for. Indeed, these securities may well have been completely worthless: lower on page 3 we read:
Soc Gen and AIG are currently in dispute over existing events of default and credit events under transaction [ineligible] for 2 deals, totaling $650 million of notional exposure.
We would not be at all surprised if the defaulted securities were part of the crap that had been given to Tim Geithner, at the time head of the New York Federal Reserve.
And what Soc Gen was doing by pledging reference assets to the Fed, we are certain that all the other counterparties (those which unlike Goldman still held on to the securities) were doing as well.
The fact that the Fed was willing to risk taxpayer capital with such reckless abandon, first in the form of accepting literally worthless reference securities from Soc Gen (as documented by BlackRock), and subsequently by bailing out Goldman at well over par (remember the money the firm made on its actual AIG counterparty-risk) protection, would have been sufficient to terminate Geithner's career in any self-respecting banana republic. Too bad America is no longer even that.
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The French?
Anything but the French.
This calls for drastic action!
Google "French military victories"
Look what I found:
http://en.wikipedia.org/wiki/Louis_XIV_of_France
http://en.wikipedia.org/wiki/Napoleon_I_of_France
http://en.wikipedia.org/wiki/Battle_of_Verdun
If you hit the "I'm Feeling Lucky" button instead, you get a nice LOL
Hilarious! I laughed so hard I choked on my coffee.
ugly reading
usa vs vietnam
usa vs korea
usa vs goldman sachs
and "french state bankrupted by default on loans to usa to fight the english in their civil war"
how poor is american education?
i know thats funny but i cant remember where its from????
Fu$k the fed
www.RevokeTheFed.com March 2008WHEREAS, Article I, Section 8 of the Constitution of the United States of America authorizes Congress "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures";
WHEREAS, on December 23rd, 1913 the US Congress enacted the Federal Reserve System;
WHEREAS, the Federal Reserve System is considered an independent agency within the federal government, with oversight of Congress and containing appointed public officials on its board of directors;
WHEREAS, the Federal Reserve System Controls the Federal Reserve Note, the official currency of the great nation of the United States of America;
WHEREAS, there may be controversies regarding the legality and constitutionality of the Federal Reserve System, it is recognized that the said system has operated continuously as the central banking system of the United States since the inception of the Federal Reserve Act of 1913;
WHEREAS, the Constitution of the United States of America granted Congress the authority to create the current Federal Reserve System, it also does grant Congress the authority to modify or revoke the Federal Reserve System;
WHEREAS, the actions of the Fedreral Reserve System represent the credit and currency of the United Stated of America to the citizens of this great nation and to the world;
WHEREAS, the Federal Reserve System, acting independently within the federal government allowed, supported, and even promoted parasitical and non-productive uses of the money and credit of the United States of America;
WHEREAS, the United States and likely the entire world's financial system is undergoing massive de-leveraging of the said parasitical and non-productive uses of the credit and money of the United States of America (as well as other nations' currencies);
WHEREAS, the US dollar, the "Federal Reserve Note" is declining in value due to these parasitical activites, as well as potentially other causes;
WHEREAS, it is recognized that the citizens of the United States and other nations did willingly participate at some level in the creation and propogation of said parasitical activities;
WHEREAS, it is also recognized that the United States of America, a sovereign nation, has the legal, moral, and God given authority to take actions to benefit its citizens and to protect its good name, credit and money in times of difficulty;
WHEREAS, it is recognized that the current time is such a time of great difficulty;
WHEREAS, it is recognized the parasitical financial institutions and their activities are at odds with citizens of the United States of America and the good credit and money thereof;
WHEREAS, the current indications are that the Federal Reserve System is acting to preserve the financial system currently flooded with the parasitical activities;
WHEREAS, the current indications are that the neither the Federal Reserve System, nor the Congress of the United States, nor the people of the United States have access to the books of the institutions being preserved by the Federal Reserve, and therefor the degree of inter-connectivity and risk associated with the institutions and other entities cannot be determined;
WHEREAS, the Federal Reserve System is accepting non-performing assets as collateral for credit with ultimate taxpayer responibility to entities not under its legislative mandate;
IT MUST BE CONCLUDED, that the Federal Reserve System is not acting to the benefit of the people of the United States of America, its credit, money, and good name;
WHEREAS, it is recognized that the political will and capability of the government of the United States of America may not be up to the task of prosecuting this proclamation ; It is also recognized that this may be the only hope for the continued survival of the United States of America as the great nation as it has historically existed.
NOW THEREFORE, it is PROCLAIMED by those supporting this Proclamation that the Congress of the United States of America FULLY NATIONALIZE the Federal Reserve System, and take full control of the credit and money of our great nation; The Congress must take whatever action necessary to seperate out, sequester, disown, or otherwise neutralize the effect of the parasitical financial activities which led to the current crisis; The Congress of the United States of America must reorganize, replace, or terminate the Federal Reserve System as appropriate; or otherwise devise a system for creation of the national currency.
IT IS FURTHER PROCLAIMED, that the Congress of the United States of America in cooperation with the Executive of the United States of America contact allied nations and any other nation willing to participate in the overhaul of the failing and parastical financial sytem currently in operation and create new treaties and alliances as necessary to create a sane and productive system of finance with the express goal of supporting a productive national, and by extension and through voluntary cooperation, world economy;
FURTHERMORE, it is PROCLAIMED that it should be the goal of such an international effort to maintain fair international trading practices allowing for protection in national interest of labor, resources, and productive capabilities;
WHEREAS, it is recognized that such a move on the part of the United States of America may result in the necessity of an isolationist policy IF the other developed nations do not follow our lead; If such occurs, so be it.
SO HELP US GOD!
Amen.
Time to copy this information and send it to Barofsky. Google his name and go to the gov. site. You can send information or evidence of wrongdoing…copy and paste the appropriate story(ies) into the box, add name, email and phone number and off you go. I sent the Huffington Post article with a small forward explaining why I sent it.
We have to keep up the pressure.
I was reading this World Bank blog post about Zero Rupee Notes and suddenly it came to me:
The zero coupon bond, zero-cost-of-funds discount window, 'flat is the new up' - and (of course) the confidence level we feel at all pronouncements and 'enforcement' efforts by our designated public guardians - these things have one thing in common:
Zero.
That's right, the zero.
And in that spirit I request, nay, I Demand!, that henceforth, all of my personal debts be settled using Zero Denomination Greenbacks.
What better way to fight hyperinflation?
And what better place to launch this movement than the pages of ZH?
I have to admit, there's a certain amount of appeal to a fiat currency that would be totally honest about its own worthlessness.
Zero-denominated fiat currency would indeed be one of the most absolutely stable investments, and it would strongly outperform (in relative terms) in conditions of high inflation.
"would have been sufficient to terminate Geithner's career in any self-respecting banana republic. Too bad America is no longer even that." So after Timmay's and Hanky's testimony tomorrow, the O goes on TeeVee and soothes the jobless masses with more hocus pocus change. If he would man up, he would fire Timmy on prime-time, withdraw the Bernake nomination, nominate someone else and demand that the Fed be audited so that we can sort all this crap out. Otherwise it is a slow death, lots of grand standing, posturing and all the while he loses even more credibility. Can a president be impeached for gross negligence?
Nope. If you could, Dubya would've been gone in '04.
+1
You are assuming that he has any executive authority.
I hope I am wrong but the guy is a empty suit.
The only authority he has left is over that Portuguese water dog thingy.
I almost feel sorry for the pathetic dupe; a true scion of affirmative-action. All that time rising up through the ranks without nary an ounce of expended effort. Always protected by a group of enablers and fixers to ensure the next step up. (See both state senate and Senator campaigns.)
Imagine being admitted to Harvard law without achieving any undergraduate distinctions and/or honors? Imagine being commonly known as Barry Dunham in high school, yet no one seems to care nor notice that he adopted some weird ass radical name later on in life?
The best part of being the ultimate dunce is that he seems to actually believe his shit. Boy, I can only imagine the dossier from the scouts who were checking out the next-gen talent for the PTB: a narcissist who will never see it coming.
B9K9---you are spot on---I have called him Milli Vanilli for 3 months now---and boy does this name fit
Lol...I was calling him Obamavanilli since like Jan last year.
Also the Bankermanchurian Candidate.
I wish I could come up with a good combination that sums him up...lemme throw this one out there.
He's Teddy Ruxpin. But, O'Ruxpin just wasn't cutting it. I put out Teddy Ruxpin on this guy 6 or 7 months ago and I think that's who he is.
"a true scion of affirmative-action. All that time rising up through the ranks without nary an ounce of expended effort. Always protected by a group of enablers and fixers to ensure the next step up."
Notice that W and O both fit these descriptions.
The handlers of our elections probably could not pin down the timing of the reset more narrowly than about a decade or so.
And if O somehow survives, the next one will be a like non-entity.
President Pelosi? </hurl>
deleted
"Timmay's and Hanky's testimony tomorrow" More Kabuki theater. If those two are hustled away in irons at the end of the "testimony" I will consider the Republic as on its way to restoration. Absent that I see no future other than revolt.
Since most feel that Hank got a get out of jail free card in Oct '08, I am not optimistic.
+1000 .Dude
I never understood why what has to be the most massive fraud in the history of the world could be held back from prosecution for so long.
Now that smoking guns here and there are shadowed by blazing artillery fire, we can know this is war. It will be interesting watching these people destroy each other.
If only this were true. I'm afraid that the innocent bystanders will once again take the brunt of war.
There is no case. Your standards for evidence are almost nonexistent.
How many times do I have to ask dude, do you mind posting your CIA badge number?
True that. National security, bitch!
Where are Chewy & Gordon?
Whoa. Geithner surrendered to the French?
Nice tie in. Still waiting to see how pass the dipshit on the left hand side (Douche Bank) fits into it.
Is this proof of perjury for lloyd "I llove money" blankfien? I would think so.
I understand the anti-wall street sentiment but, to limit it to just this story for a second, this seems a bit inflamatory, right? It looks pretty simple to me - Goldman was owed some money by AIG. They thought they were owed $14.5 Bln, AIG thought they owed less. Goldman bought CDS for the difference. If AIG went bankrupt, Goldman would have been protected - no profit, no loss. Once AIG was taken over by the government, the money Goldman spent on CDS was worthless but counterparty risk was gone also - they could reasonably expect to be paid in full. AIG goes under - fine. AIG survives - fine. Sounds like prudent risk management for a legal contract agreed by 2 entities in this country, right? If not, what should Goldman have done? As noted in this post, they wouldn't trade with other counterparties (monolines) that wouldn't post collateral. They were willing and able to post collateral, just required the same thing in return. But I am open to the discussion!
A few things. Market + .12 ... probably not par at the time ML3 went down. Can we agree on that?
SG communicating a willingness to take .49 of par is a serious matter if true. Absent a take-it-or-leave-it posture, that means the final price would only have gone down from there. So a $60 bil bailout becomes more like $25-$30 bil and the Fed quite possibly breaks even or makes money off the RMBS collateral and some of that GS genius for risk management flows down to taxpayers.
This story is not saying that Soc Gen would have walked-away at .49. If it was saying that, it would mean that mean GS would have taken .37, less than everyone else (which it is not saying). It would also contradict that GS was the only one willing to walk-away. .49 was merely the value of the CDOs on which Soc Gen based its demand for collateral. If AIG had posted that collateral, it still would have been be on the hook up to 1 for the protection it sold.
I think the "expose" part of this story is that Soc Gen had access to the discount window and that the Fed may have been loaning par on collateral everyone else had below .5 (the story provides no support for that claim, but it wouldn't surprise me).
This is why Goldman may have been willing to tear down contracts - in essence it would have had a loss buffer of up to 12% more than prevailing market prices on the CDOs
I read this to mean that "positive haircut" protection worked in the other direction. My understanding of the ML3 transaction is that the Fed "took on the sins" of AIG by accepting AIG's (often distressed) collateral at par rather than at market -- which was definitely closer to .49 than 1.00 FMV -- on the other side of a "loan" to AIG (that will never be paid back) cash to be paid over to counterparties to make them whole at 1.00. Lender of last resort since AIG couldn't roll over otherwise and haircuts would go to 100%.
I read the 12% "positive haircut" as part of GS's hedge strategy because GS's pricing undercut the competitor counterparty banks.
I'm open to being corrected if I'm missing the boat here.
I'm not a financial guy, but if everything was so hunky-dory, why did Goldman receive a bailout. You state that whether AIG goes under or survives, Goldman is covered. So why the need for the bailout?
214 you are 100% correct, this article, while maybe
fun to read, is way off base. Factual errors and
misstatements always weaken any conclusion.
Article states that GS was taking a 12 point POSITIVE
haircut in its collateral dispute with AIG. Assuming at least that point is true, if GS
marked the reference assets at 50 cents, they only
were receiving collateral from AIG based on a reference
asset mark of 62. So they were uncollateralized on
those 12 points. But the article says this "extra"
collateral (when in fact just the opposite) was the reason they were willing to take concessions on the CDS
tear ups, so the whole article falls apart. Might
make a good work of fiction though!
The positive haircut is what threw me, too, because the article only makes sense if GS was protected in the other direction.
The point isn't that GS did anything wrong, per say. The point is they were willing to settle for less and the NY Fed decided to pay them in full, and they pretty much lied about it. Saying they were forced to honor the contract. (It's widespread knowlege that AIG almost never paid in full on their insurance side. Fighting beneficiaries tooth and nail for ever dime of settlement, novation, is what made AIG great).
Let's not miss the forest for the trees. TD tends to get a bit overheated. He is a polemicist.
GS is just guilty of having good friends. The NY Fed and the Fed is guilty of apparant bad faith at a minimum.
Has the US treasury any silver left?
This is daydreaming I know but can the President do a Kennedy here or is all the silver in JPM grubby hands and if so can they seize the physical using a emergency order
The fed is on the hook for tons and tons of leased gold by contract from the LAST confiscation. All congress has to do is give them a bill and tell them to pay up. It's on the treasuries books AND the FEDs which is screw up as well. Likely they have some sort of weasel clause where they think they can settle up for 35 dollars of printed nothing per ounce instead of ounces.
Where are the indictments for this criminal activity?
In all likeliness it will be swept under the rug and life goes on as if nothing has happened.
This is a travesty to the nth degree!
There was a good interview with an author on KeiserReport that wrote a book called "It Takes A Pillage", ex-Goldman Manager, recommended viewing!
Thanks again ZH for your testicular fortitude exposing this corrupt organization called the USFED!
"Goldman had absolutely no risk in its relationship with AIG whatsoever!!!" I actually do remember that in testimony or reading that, they said they were fully hedged! And we are finding out more and more and more. Protecting Timmy's ass, doing favors all over the place, cover up after cover up. GET THESE GUYS IN JAIL! STOP CORRUPTION! KILL THE FED! ELECT NEW OFFICIALS AND GET NEW REGULATORS OR GET RID OF THEM....OUTSIDE SOURCES COULD DO A BETTER JOB, THERE'S ALOT OF GREAT PEOPLE WITHOUT JOBS RIGHT NOW!! GREAT JOB ZEROHEDGE AND EVERY CONTRIBUTING REPORTER FOR DOING THE RIGHT THING!
Let's do that...outsource the Fed, the Treasury, the IRS, the SEC to Afganistan or Pakistan...any stan will do.
Ruth I don't disagree with your point - if there is fraud at the expense of the american people we should ask congress to take action. That said, do you have any thoughts on what I wrote? Like zerohedge, I want to bring to an open discussion anything that merits that discussion! It's faster than the popular press, that's for sure...
A period after the word "career" and deletion of the remainder of the final fuming paragraph would have been a good edit, Tyler. After all is said and done, who would want to live anywhere else?
Honestly, TD, I can hardly keep up with you.
Do you sleep? Probably not.
I don't - too much to read!
Kickin ass TD.
Pressure building. Someone is going to fall on their sword. Maybe Davos is just the beginning.
Even if Soc Gen's overall portfolio is worth 49¢ on the dollar, isn't it at least possible that what they pledged to the Fed came out of the better parts of the portfolio, and so was worth significantly more than the 49¢ on average? And that's aside from the possiblity (which TD mentioned) that the Fed didn't accept the assets at par. I'm not brimming with confidence that either of these things happened, but can they be ruled out?
Even if Soc Gen's overall portfolio is worth 49¢ on the dollar, isn't it at least possible that what they pledged to the Fed came out of the better parts of the portfolio, and so was worth significantly more than the 49¢ on average?
Context here: if I remember correctly, the finance minister of France was on the blower to the US Treasury/President etc. saying in effect 'if we have to mark all this total sub prime crap down to market then Soc Gen, Calyon (Credit Agricole), maybe others, are all toast and we will have a full blown European banking collapse. So HELP'. All talk of sub bits being good etc. etc. is rubbish. The US bailed out loads of foreign banks (central and otherwise) by whatever methods could be cobbled together toute de suite. All to 'save' the system. Does not seem to be working, does it? Not in realland, that is.
if I remember correctly, the finance minister of France was on the blower to the US Treasury/President etc. saying in effect 'if we have to mark all this total sub prime crap down to market then Soc Gen, Calyon (Credit Agricole), maybe others, are all toast and we will have a full blown European banking collapse.
I don't remember any of that. I can't for the life of me find anything on what's going on with the banks in France, and I live in Brittany and have an account with SocGen. But I'm sure that your paraphrase is right on the mark.
Mr. Durden, are we ever going to know who is the John Dean?
A masterful scheme unraveling here, Tyler.
Stunning in its complexity.
Guys on the inside, guys on the outside....all playing their respective instruments . Like a symphony.
In the doctored world of the MSM they give Pulitzers for this type of investigative journalism < no sarcasm >.
Kudos for an excellent review.
I live on the west coast, who wants to come out here and start a protest, get some of this shit into the MSM (not that they would understand)?
Yea, this needs to get passed to Barofsky and Issa and any member on the investigating committee by tomorrow for sure. They need to dismantle Goldman Sachs for good, shut that thieving group down today!!!
What's the problem here with Goldman? It seems they managed risk quite effectively and, as they've stated on many occasions, were fully hedged against AIG. The SocGen stuff is interesting though.
the problem with goldman is not how they did business (that was just un-ethical) rather, the problem is that Blankfen has now been caught perjureing himself under oath at the FCIC hearings when he spoke of never discussing CDS haircuts.
Most of those CDO's are now worth less than 10c on the dollar.
LOL. WSJ just had an article with the headline
"Fed Emails Show Glee on AIG"
and they promptly changed it to:
"Fed Emails Show Angst on AIG"
What a spin job this is:
http://online.wsj.com/article/SB1000142405274870390620457502722204465657...
This is....
FEDGATE
FEDGATE
FEDGATE
The fed is a dirty wiener.
Where do Paulson and Neel Kashkari fit into all of this as I don't see their names mentioned in much of anything any longer.
Surely they are in the mix too no?
What was that weird story about KariKash chopping wood in Humbolt County, BumFlick, California? Then the next day Pimco hires him? Doo Doo Doo Doo Doo Doo Doo Doo (Twilight Zone Music)
Zero - if Ben's re-nomination is thwarted you should be nominated for a Pulitzer, for that matter even if he is reappointed, a nomination is in order.
I LOVE ZH AND PLS DONATE TO THIS SITE SINCE THIS STUFF IS SO UNBELIEVABLY FANTASTIC
I work in collateral and I know AIG had a ratings based threshold on the confirm, not CSA level and didn't pay a dime in collateral for most of it's bespoke deals.
Also, how could the FED and Maiden Lane settled the GS swaps by buying the underlying collateralized debt obligations if GS had sold off their positions and were back to back? the fed 100% payout equated to a credit event and GS paid out 100 to the parties who bought protection from Goldman..?
Ok so maybe I am prone to paranoia, but I think you guys are overlooking one critical factor.
All of this went down at a critical point in the 2008 election:
1) Goldman is a heavy contributer to the Democratic party.
2) Goldman fully insures up on AIG, then pulls the rug out from under AIG via collateral calls.
3) Mysteriously at around the same time there is a huge draw-down on money markets.
4) Economic pandemonium ensues. Nothing damages the party in power more than a bad economy, which, in the eyes of the public at least, had been going ok up to that point.
5) Democrats sweep into power in senate, house. Super majority. Presidency in the bag - no veto, no filibuster. And this powerful new cabal owes Goldman a favor or two.
6) Goldmanites get appointed to high posts, and Goldman is rewarded with no haircuts and now no competition (their competition was 'allowed to fail' or otherwise disposed of).
7) Economically, however, things got a little more out of hand than intended (or by design to provide a crisis to be 'taken advantage of').
8) Bail outs all around - bankers prop the market up so the politicians look good, politicians hold a few mock hearings and slap a few wrists - overall, a brilliant plan. Win. x10E12. $. Politicians get their agenda. Goldmanites get (more) rich.
9) Massachusetts election comes along and throws a wrench in.
Ok, I realize there are probably 1,000 holes in the logic. And by no means do I think Republicans would do any different given the chance and the same alignment of the wheels. Just an econovice here - can someone set me straight on this?
hey, you forgot Goldie Hank was in Treasury before the election? The Dems do not have monopoly over squiddie's affection non?
+1000 This was coming for a year....expertly timed...even with Palin they had a lead until this staged coup was triggered. They even got the Clintons a Son-In-Law. Way too much influence? Of Course. Way Too Much Control? Looks like it. But we bounced Corzine out, and they know the end game is near. Now they want to go private again.
The Money Market withdrawals "Caught them by suprise", even though they are not FDIC insured. STOP LYING TO US. This was staged.
Always enjoy the discussions, may I contribute some recollections
The two GSEs that supported what is believed to be 40% of the country’s mortgage market were bankrupt.
The largest insurance company in the world failed.
The largest thrift institution in the nation failed. The nation’s fourth and, tenth largest banks failed.
Three of the nation’s five largest investment banking firms failed including the largest retail brokerage company in the country.
The nation’s money market funds in many cases were unable to meet their promises to pay back 100% on the dollar and many were on the verge of being closed without investors being repaid.
The commercial paper market was closed to asset backed securities issuers who had at one time funded these financial instruments there.
The yields on junk bonds soared to 25% as investors refused to make money available to this market.
Banking companies were refusing to make money available to their peers because they no longer trusted that they would be paid back.
The LIBOR-OIS spread spiked to an all-time high of 364 basis points in October 2008, indicating a severe credit dislocation.
Counterparties were giving evidence of failing.
Failures of financial institutions outside the United States were accelerating.
+++++++++++++++++++++++++++++++++++++++++++++++
I, along with the bright and sophisticated members of this forum, do not necessarily endorse the precise intervention(s) orchestrated in the midst of this self-reinforcing “black swan”, however I am curious as to the recommendations, this audience might now suggest as to both; what should have been done-and wasn’t ( or vice versa)… and moreover what should now be done to heal these events.
Close all markets for one week;
Guarantee all personal bank deposits and personal pension plan cash holdings;
Let shareholders and bondholders in the failed institutions take their required hits in capital reorganisations (cram-downs);
Organise quick house forclosure process to enable house market to clear;
Pass usury laws to ensure fair bank interest rates etc etc and prevent predatory lending;
Recreate economic conditions to encourage indigenous manufacturing industry by reducing imported crap from third world economies;
Stop all foreign wars;
This just for starters...
the american hatred of the french shows a total, but not unsurprising, ignorance of your own history
The Ticker
Job Cuts Get Brutal: Sprint, Pfizer, Home Depot, Caterpillar
By Kirk Shinkle
Posted: January 26, 2009
The job loss tally so far today: 54,500. Cuts are coming across industries as further weakness in the economy keeps major employers slashing away.
On the same day it agreed to buy rival drugmaker Wyeth, Pfizer said it would cut 15 percent from its combined workforce (that's a bit less than 19,500 jobs). Meanwhile, Caterpillar is faring poorly in the global recession. It's cutting its workforce by 20,000 including 11 percent of its workforce, or 12,000 jobs, and 8,000 contractors. Home Depot, a lingering victim of the downturn in both consumer spending and housing, said it would slash another 7,000 jobs as it shutters its high-end EXPO business. And finally, Sprint Nextel is eliminating 14 percent of its workforce, or 8,000 jobs.
Update: Add another 6,000 to the tally above. Philips Electronics is cutting too.
http://www.usnews.com/money/blogs/the-ticker/2009/01/26/job-cuts-get-bru...
Corruption does not cast out corruption.
Fact is: Americans are as pathetic as any people in history. They are easily manipulated, their collective brainwashed mind imagines that it is ''the greatest'' in the world, and at the same time, they now stand exposed to their own lack of care.
The American government is corrupt with delusions of a new world order global market call from crypto fascists that don't give a damn about the population in general but for their own sake, which is the expense of the public trust. America had the tools to keep corruption at bay, so long as it had people that could use the tools. The fact is, America and the global population in general has been overcome by leaders that the skill to sustain proper returns because they lack the moral foundation for just cause. The rule of contempt is at hand and people are buying selling and trading it. There is no promise in AIG, there is the assurance of ''failure to deliver''.
I have been accusing the Fed of taking less than real par on window transactions for a year and a half. Good to finally have some proof.
Just reasoned that there was NO EFFING WAY that the banks had enough good collateral.
I mean how fkin much is a mezzanine tranche of a CDO built off of a synthetic debt pool worth? How about 0? Anybody who knows anything about CDSs and CDOs knows that the instruments are in many cases built specifically to go to 0 in the event of sufficiently significant impairments; I mean it's all there in the Davis prospectus just as an FYI.
If you loaded a synthetic CDO with CDS payment streams off of LEH CDSs - and you could do this, just sell tons of protection on LEH or else acquire from existing counterparties - then when LEH went BK, all tranches of that CDO go to 0 immediately. Supersenior, mezz, everything.
These bastards even took the D, X and E tranches of existing CDOs and then securitized THEM, creating A1 tranches composed ENTIRELY of mezz and equity tranches of other CDOs. And they got AAA ratings for these supersenior tranches built out of a pool of freaking equity tranches.
In the event of any widespread impairment, these instruments very rapidly go to ZERO. Yet they were rated AAA and swapped to Fed and USTaxpayer for par