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February 07, 2010

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Thomas Collins

TM, has any journalist, as far, as you know, had access to the contracts on the deals that Goldman claimed would have protected it if AIG had been left to the bankruptcy courts? I don't claim any inside knowledge as to the Geithner/Paulson/Bernanke maneuvering in 2008 and 2009. All I have is my instincts, which tell me that backstopping the commercial paper market and the money markets (which I think were the two things that were necessary) while leaving the banks to bankruptcy restructuring would have been far more painful in the short term, but would have alleviated what we now have in the medium term (which I think is the world's central banks playing make believe that the credit contraction has begun to work its way out of the world's financial system).

Barry Dauphin

We interpret this Super Bowl pregame to bring you a political message from your Prez! There should be a law against this sort of thing.

Gmax

If Goldman is populated with the smart guys that I think they are full of, I am reasonably convinced that they would have understood counterparty risk and probably had sufficient collateral in their vault or a State Street vault or some other third party holder such that I doubt that Goldman was going to take a hit. More likely, quick action by Goldman to sell these securities to act against their collateral would have driven even larger losses for AIG.

Rob Crawford

We interpret this Super Bowl pregame to bring you a political message from your Prez!

Oh, yes... keep yourself in the public eye, Barry... make people sick of your voice, sick of your face...

P ana so nic Ol ymp ics

AIG was always Congress' toy. It got their pals jobs like the ambassador to Afghanstan/Iraq, etc. Dem pals, Kennedys, etc. Dems AIG showed up around intelligence work and funding and the rest is history. AIG was used to take care of those cuaght up in dem works and garbage traded for the jobs. When they got involved in the intelligence funding overseas in places like Afghansitan and Iraq it became obvious who they worked for and they still expect that money free from Congress dem pals for services performed(hiring) like the aid dem works they were involved in; free money.

Neo
GORDON Brown is reaching for help from President Obama's Democrats as he prepares for the televised debates that could determine whether he remains Prime Minister after the general election.

As talks about the format of the three debates enter a crucial phase, The Times has learnt that Joel Benenson, a polling and strategy adviser who worked in the "prep team" that readied Mr Obama and Joe Biden, the US Vice-President, for their election debates, is already heavily involved in tactical planning.

glasater

Gmax-

A figure of sixty two bil is a figure bandied about for GS's reserves--or 'the vault'--I've heard repeated from talking heads on CNBC.

And I truly feel sorry for Gordon Brown if he is relying on any help from Zero's minions for debate.

daddy

Apologies guys for the following OT, but over at Pajama's Media Roger Simon and Chaco are doing a "follow the money" in the AGW scam investigation, and asking for leads, and what I posted over there didn't seem to go through so since I want Charlie to see it, I'm re-posting it here.

Charlie,

This might be worth a look.

The BBC has been about as big a spouter of this AGW doctrine as any organization on the planet. In a comment on a column last week by the BBC's Climate Proselytizer Richard Black, a commenter questioned the reason for the BBC's AGW bias by linking to the following and asking for Black to reply:

http://www.iigcc.org/">http://www.iigcc.org/">http://www.iigcc.org/

That organizations first paragraph reads:

"About the IIGCC

"The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for European investors. The group’s objective is to catalyse greater investment in a low carbon economy by bringing investors together to use their collective influence with companies, policymakers and investors. The group currently has over 50 members, including some of the largest pension funds and asset managers in Europe, and represents assets of around €4trillion. A full list of members is available on the membership page."

"Did you catch that: FOUR TRILLION EUROS" posted the commenter.

Then he followed with the link to the ">http://www.iigcc.org/membership.aspx"> Membership List, which prominently included among many others:

"BBC Pension Trust"

Knowing that, rereading a sentence from the first link now really stands out:

Under the "Categories: Investment" paragraph we read:

"IIGCC chairman and BBC head of pensions investment Peter Dunscombe..."

Catch that? The BBC is the Chair of this 4 Trillion Euro AGW Carbon Trading investment scheme.

BBC correspondent Black did not respond to the comment.

glasater

If it's any comfort daddy--the Euro has gone down in value the past few weeks...

JM Hanes

Wow, daddy, that's pretty jaw dropping.

Speaking of Charlie, he got a major shout out in the intro to the Climategate Timeline, 1940 to 2010. (You'll have to zoom in on the PDF to be able to read it). Ditto at the Volokh Conspiracy this week, in "The Amazon, Apple, Macmillan Kerfuffle."

Rick Ballard

TC,

The focus on the incestuous relationship between GS and AIG obscures the fact that SocGen would have been pushed into insolvency right after AIG. If SocGen went, then the whole Eurozone house of cards would have trembled and might well have fallen. GS had to have had a very good idea as to the value of that trump, and they played their hand accordingly. They behaved like pigs and when their curly tails finally disappear through the door of that great Armour plant to which they are headed, they won't be missed at all.

I don't believe that Team BOzo running a "Wall Street Swine of the Month" campaign via the NYT is going to work well at all with Turbo Timmy at Treasury. He was just a little too close to the action, all the way through.

Melinda Romanoff

Rick-

That was they point of the Fed swap lines, at least that's always been my belief. SocGen, Calyon, et al were broke when the Spanish property bubble blew. The ECB has been propping the Spanish banking system since '06.

AIG and GS are the political punching bags du jour.

I'm just too beat to follow through tonight.

G'night all.

clarice

daddy, charlie will see it..PJM just has a delay before comments are posted.

Max Regor

Tom, interesting stuff, but you need to look at all of it. According to the article "In just the year before the A.I.G. bailout, Goldman collected more than $7 billion from A.I.G." It is not clear from the article whether this was a settlement or collateral for obligations outstanding at that time. I do not have the answer. I understand your argument, though I am unconvinced.

daddy

Corrrection,

The link to my Follow the Money AGW link above needs a Link correction.

Where it says the BBC guy is the head of IIGCC Fund is not at the 1st link but instead is here: ">http://www.professionalpensions.com/professional-pensions/news/1440290/iigcc-calls-urgent-changes-encourage-institutional-investment"> PROFESSIONAL PENSIONS: IIGCC calls for urgent changes to encourage institutional investment

"The group is calling for strong price signals and caps on carbon emissions that will encourage scarcity and demand.

IIGCC chairman and BBC head of pensions investment Peter Dunscombe said: "The credibility of emissions trading schemes would be greatly improved with a robust price signal as well as clear and frequent communication from the regulator on trading data and improved transparency over direct government participation in schemes."

So same sentence and meaning, just found at a different location, but I want to be 100% correct.

AL

A little quiz: who wrote this?:

“…the unprecedented domination exercised by an insignificant number of very big banks, financial tycoons, financial magnates who have, in fact, transformed even the freest republics into financial monarchies."

"… drags the capitalists, against their will and consciousness, into some sort of a new social order, a transitional one from complete free competition to complete socialisation."

Rob Crawford

Um, you did, AL, at 6:41am.

Rick Ballard

That would be Vladimir Ilyich (via Bing) some 90 years ago. The July 19th speech is worth a read. Vladimir Ilyich certainly pegged the nature of the Versailles Treaty with this apologia for the repudiation of Tsarist debt. It's also a very decent primer on the source of the concept of "inevitability" which guides what passes for the minds of today's 'progressives'.

It would be more interesting (to me, anyway) to see a debate structured around

RESOLVED: The economic interests of the United States would be better served by 40 capitalist piglet banks dispersed geographically than 5 capitalist hogs living in Wall Street brothels.

I suppose I'll have to settle for the NYT promoting Team BOzo's "Capitalist Swine of the Month" contest though. It's another Death Cage match where you wind up hoping that both sides keep their strength up in order to maximize total damage inflicted.

TCO

The bailouts were moronic and you were an idiot to advocate them.

TCO

I'm just skimming your post, because I don't respect you much. The market timing stuff is just silly. You really are over your head. Unless, you have inside information, the value of something is what you can auction it for.

TCO

Gmax: Whether or not GS had money stashed someplace else has no bearing on the losses (or unrealized gains) they would take from counterparty risk if AIG went belly up. If you have 20 dollars and I bail you out for a 2 dollar bet that the booky won't pay out on, it is the same 2 dollar benefit to you (and loss to me) whatever your reserves are elsewhere. And how the heck would GS selling assets (or "taking money out of a vault") have reduced money from AIG? And if they had that ability, why didn't they do it already? Please...THINK.

AL

Yes, Rick.

Aside from being very practical (and ruthless) politician, the guy also was graphomaniac. He changed his mind like windsock, and you can find virtually anything in his 100+ volumes of writings and speeches.

Rick Ballard

ZeroHedge has another GS as Master Thief piece up. Perhaps the WSJ fellow who penned Will We Ever Trust Wall Street Again? should take a look at those Abacus deals for the answer.

Rick Ballard

AL,

I've always considered the utter unreality of the dialectic wrt "inevitability" as being an inherent impetus to constant sophistry.

BTW - thank you for your reference to Keynes. I really needed a reminder that neo-Keynesians have the same attachment to Keynes as neo-conservatives have to Burke.

TCO

Shouldn't have done these bailouts people. Man up and admit it. you had a bunch of tissue paper logic and fancy words (that's what macro weenies specialize in). All of you need to go read Brealey and Myers, especially the sidebar comments and the discussions of new instruments, bankruptcy, covenants, etc. in the last chapter.

a funding consultant

I was just browsing for related blog posts for my project research and I happened to discover yours. Thanks for the excellent information!

AL

The pleasure to share thoughts with open-minded (quite rare treat novadays) fellow blogger is all mine, Rick.

BTW, in Marx-Lenin Political Economy course, which was mandatory in all Soviet universities, Recession in Capitalist Economy was called “crisis of overproduction”. Kind of making sense; but do not ask me what is egg or what is chicken: overproduction or overinvestment.

Thomas Collins

Looks as if GS also has its hands in the Greek finance debacle. See LUN (via Instapundit).

Rick Ballard

TC,

They are also getting the nod in Spain. Obviously, CDS belongs in every con artist, safe cracker and extortionist's tool kit. The Der Spiegel piece is very interesting. I wonder if they are they joining the NYT's 'Capitalist Swine of the Month' campaign?

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