I have seen the “braying” all day on both sides of this, and was interested to see KD’s take. Hear! Hear!
hh
Many in the community, myself included, object strenuously to a poker player who has an extra set of aces up his or her sleeve. We also object to a casino capitalist model where the winnings are kept but the losses are forced onto someone else.
And that, dear reader, is what Goldman (GS) and the rest of the big banks have been doing for the last two years.
Over the last several years Goldman Sachs entered into a metric ton worth of credit default swaps with AIG, even though AIG was incapable of paying off on those swaps. They did so as the "brightest people in the room", that is, either knowing that AIG was incapable of covering the bet or simply not caring that AIG could not cover the bet.
These transactions allowed Goldman (and the other banks who engaged in them) to hold "assets" on their books at intentionally-inflated values - that is, at demonstrably more than those "assets" were actually worth in the market, under the rubric that should their value fall Goldman would be able to "recover" under their insurance policies (the CDS.)
But in point of fact these transactions were never any good, because AIG didn't have the money to pay.
The truth be told, this whole set if is nothing more than Karl Marx crony capitalism and the people doing it need to be in jail.
“No, the real objection of Taibbi and others (myself included) is that Goldman managed to steal $13 billion dollars of American Taxpayer money, without which they would not exist today. Having stolen that money through claims of imminent financial collapse made by their former head, Henry Paulson, at their urging, they now have speculated with that taxpayer money and kept the proceeds.
Nobody would object were Goldman to return not only their “TARP” money but also the entirety of the “passthrough” benefits they have received, specifically but not exclusively the $13 billion dollars that was funneled through AIG to them.
But if Goldman had done that, they would have posted a huge loss, and in addition would not have had the money to repay TARP.”
WE HAVE BEEN CHEATED AND the obamanation machine knew it would happen..... it was taxpayer money that was used, no given away free to these criminals....
The unmitigated arrogance by all of the above is a capital offense.
Denninger is right on this one.
There is a fine line between taxing the citizenry and theft as well.
Obama and Congress are officially thieves and robbers.
When this became evident Goldman (and others) managed to connive the government into "saving" AIG by throwing more than $100 billion dollars of taxpayer money into the firm. About $13 billion of that went directly to Goldman Sachs to "pay off" those contracts.
And that $13 billion amounted to full value of the contracts, that is, 100% of their value. The Goldman traders didn't have to take even a small loss on their ill-advised bets.
It's good to run the government.
But it's ridiculous to pin this on Obama specifically. The most recent chapter of the fleecing began under GW Bush's watch, under the direction of his Secretary of Treasury and his appointed Federal Reserve Chairman, and with the approval of the Republican establishment. McCain was so interested in securing Goldman et. al. that he was willing to interrupt his campaign.
The vast majority of conservative Freepers ridiculed the only Republican candidate that warned of this mess before it occurred and resisted the bailout. Conservatives were so pychologically invested in Iraqi and Afghani nation-building that they failed to see the economic and political ruination of America under the Republican President and Congress. Obama is just more of the same, only worse.
Except that Goldman at least claims their CDSs were fully collateralized, meaning all of AIG's other counterparties would have suffered had they failed, but Goldman would have still gotten their money. Here's one of the articles that discusses it - basically it sounds like Goldman was just smarter than most of AIG's other creditors, and was the first to recognize AIG was in trouble and demand collateral: