Posted on 03/19/2009 9:03:40 PM PDT by Professional
"Bonus is a real issue. It touches us viscerally," Spitzer said. But he added, "The real money and the real structural issue is the dynamic between AIG and the counterparties."
"Virtually all" of the $80 billion-plus in the initial AIG bailout went to the company's counterparties, including nearly $13 billion to investment bank Goldman Sachs alone, Spitzer said.
http://www.cnn.com/2009/POLITICS/03/19/aig.spitzer/
(Excerpt) Read more at cnn.com ...
Yes. I have to agree. Greenberg knew then and knows now that the strength and future of the company was with its' core business and core competency. There's absolutely no love-loss between Greenberg and the people that took over AIG-FP and ran it into the ground. That is self-evident fromt the interviews Greenberg has given the last two months.
The Obama administration doesn’t have a clue what is broken much less how to fix it. The Fed took over the reins yesterday and doubled down. We’re in for a very rough ride. Please explain if you think differently, I am very much open to a more positive interpretation. Right now I’m pretty freaked out at the Fed’s actions.
Ah yes Chgogal, humpty dumpty right? What a mess...
Think how IMPRESSED and amazed you’ll be when Obama fixes this?! He’ll be your personal savior, best friend...
Sorry, you and everyone else are being duped beyond belief. Granted, I’ll credit these jokers as pulling off the greatest heist in the history of mankind. It makes everything else look miniscule in comparison.
Of course, Obama is just the useful idiot they let be the face of this thing. The they is Soros, the powerful democrat socialist establishment, and some others I suspect but will not name. True evil is at work.
But hey, in a little while, when things are much better, you’ll forget, and feel much better. Hey, we can go back to complaining about petty things instead.
http://www.time.com/time/business/article/0,8599,1886275-2,00.html
It’s a decent overview article, if you’re interested in this you probably know most of it, TIME is writing to the lowest common denominator here.
Two paragrapha are worth attention:
“With its high credit rating, AIG FP wasn’t required to stockpile reserves, or collateral, as traditional insurers must to cover potential losses. As the CDOs that AIG insured began to crater, the counterparties began asking for more collateral to back their policies, which was written into the contracts. Cassano said in August 2007 that he couldn’t imagine a situation in which AIG would “lose one dollar in any of these transactions.” He was right. AIG didn’t lose a dollar; it lost billions of them.
In a rare interview, former CEO Greenberg, who is suing AIG and being sued by the company over financial-management issues, tells TIME that once the company lost its top credit rating, AIG FP should have stopped writing swaps and hedged, or reinsured, its existing ones. But Cassano’s unit doubled down after the spring of 2005, writing more and more subprime-linked swaps as the ratings plunged, which made the possible need for collateral enormous in the event its debt was downgraded. The downgrades occurred in 2008. “Of course they were going to run out of money,” says Greenberg. He adds that as the liquidity crunch hit in 2008, AIG FP should have renegotiated terms with the banks to ease their demands on collateral. “You can renegotiate almost anything, anytime.” “
All the fed did was buy bonds off the street. By taking the bonds off the street, they put cash into the hands of the former owner, and drove rates down to the point where the cash holder should find “something better to do”. And what is so bad about that?
Right now, imagine the left side of your room with 10 trillion dollars, in 100 dollar bills. On the other side of the room, imagine deflated bonds, stocks and real estate.
What you going to do with that 10 trillion paying you zero interest, but making the bank rich?
Great, you just reminded me how much I hate ratings agencies, and just how big a jail they should make for the directors of them.
Years ago, i couldn’t understand why such a terrible company like AIG had a AAA rating. Now, now I know...
I'm not exactly sure what you think I'm wrong about - but I'll leave that aside.
I'll agree with you that hedge funds have made trillions - nothing wrong with people making money. I think you're saying that there's been horrible market manipulation through shorting of key financial stocks - I'll agree with you there. I'd take it a step further and say that the massive consolidation of the financial services sector the last 30 years, and especially the last 15 has been a net detriment rather than a benefit. In addition to the UPTICK rule, the consolidation has made the market manipulation even easier.
Here's where I think we part ways. I don't put Obama in this global cabal. There may be people, like Soros et. al. that wanted Obama in power purely for a profit motive. But, Barry's a true believer. He's not wedded to anyone or really anything but his own ego and own ideology - whatever you want to call it.
Barack Obama sees wealth - no matter whose wealth it is - as the enemy of the poor. He does intend to remake the country into something different, and something completely foreign to what the founding fathers had in mind. If people, any people, think that they're going to manipulate Barry into doing something for them so that they can make some cash, I have a feeling they're going to be disappointed.
>> He certainly isn’t toeing the party line nowdays.
That was Morris, not Spitzer.
I hope you are right. I’ll collect my early retirement and get the hell out of dodge and live on a small tropical island. ; )
Thank you! Seems that everyone has forgotten Spitzer’s heavy handed attack on AIG and Hank Greenberg.
Yes, I have to agree 100%. I don't want to pick a fight with Professional because I think much of what he says is legitimate. But, Obama is not going to turn this around - even if he wants too, and I think that's probably debatable.
We are going to see such inflation because of our "magical" monetary supply, it may be unprecedented for a stable western democracy. Then, what's China going to do when they see their American nest-egg fall off the cliff?
Things are bad and are only going to get worse and it is completely out of Obama hands so long as he continues to spend like a drunken sailor the night before the ship's due to pull out of port.
Listen, we're not even a 100 days in, and he's already spent $1.3 trillion - hasn't touched health care, hasn't touched education, hasn't touched the "poor". And, he's already promised the largest tax increase in AMERICAN HISTORY while the country is staring down the biggest recession of the last 69 years. The country is in a flat spin with a rookie pilot.
Ok, You and I agree on almost everythign. But, I think like anyone going to DC, the power and money there is so tasty, they eventually forgot why they got there. Same thing with Spitz. He may have been driven at some point by justice, but got corrupted along the way. That doesn’t mean they don’t know the difference later, between what they think is right/wrong.
Fortunately, Obama becomes harmless for this, and even if not, there are people more powerful and money hungry than Obama is an idealist. They’d boot him out before he violated their needs. Obviously, that is EXACTLY what happened to spitz and blago.
May I ask you. What is it inflation inflates?
And you’ll find me on that Island. We’ll have a drink together.
I can clearly see the roadmap of the next 5-6 years. They will be exciting, profitable, potentially bankrupting, and all points in between.
Were you here during y2k? Careful what extreme views, fear, and the collective power of folks can do with your mindset.
Inflation inflates the cost of goods and services relative to a previous point in time.
Don’t forget cap and trade that will add hundred’s of billions of taxes on Americans.
Very well said. Remember, if you can confuse people, manipulate them, regarding things you don’t understand, this is how they get their way. Like your mechanic does!
So, what you’re saying is, the cost of goods goes up, but the companies that make the goods don’t make any more money, they in fact lose money?
Inflation inflates not just goods and services, but the providers. Real Estate and Stocks must “inflate” too right?
I find it frustrating that people are to have their opinion both ways. On one hand they say stocks are down, and going lower. Then they say inflation is a problem, they’re printing money.
Hello Money, meet Mr. Asset.....
Trust me, it’s coming. Like a gallon of gas on an ember.
Inflation is going to be the problem, yes indeedy, but not quite yet. It will strike in the middle of night, just when everyone makes a really cute song about how Obama saved the world...
So, I’m basically telling you, that we have a 3 part game ahead over the next 6 yrs. A smart guy could make a buck or two. Especially next time.
But no, I was not on FR during that time. I remember someone telling me that my car wouldn't start because of y2k. Sheesh....it's much like the global warming fear that governments are promoting for tax collection purposes.
Hey, can you give some roadmap markers for the next 5-6 years? ; ) I'm all ears and eyes.
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