Financial Crisis

[thaidrew]

Here is some more food for thought, just to keep the ideas coming and the interest from waning.

''When the US government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.''

The charge isn't merely insulting but ignorant. Less responsible journalists continue to bring up the $US12.9 billion ($15.7 billion) we received from AIG, as if that was some kind of big deal to us. But as our CFO David Viniar explained back in March, we were hedged. Our profits from AIG "rounded to zero.''

People who don't work at Goldman Sachs, of course, find this implausible: How could $US12.9 billion round to zero? Easy, but you just need to understand the mathematics.

Let's assume AIG transferred $US12,880,560,250.34 of taxpayer money to Goldman Sachs. A Goldman outsider, asked to round this number, might call it $US12,880,560,250.00. That's not how we look at it; at Goldman we always round to the nearest $US50 billion, so anything less than $US50 billion rounds to zero.

Think of it that way and you can see that $US12,880,560,250.34 isn't even close to not rounding to zero.

Have a great day. TD

[Abrak]

Here is some more food for thought, just to keep the ideas coming and the interest from waning.

''When the US government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.''

Actually the big gambler is Goldman's whose whole profit model is based on gambling taxpayers money. If you look at a good year for GS they make 30% ROE and pay each of their staff US$700,000 bonuses on US$2,000,000 of average equity. That means, a good year, GS makes in excess of 60% return on equity before tax.

Now such a return is pretty difficult to achieve in a 'good year' even if your employees are pretty good. Many conspiracy exist, GS controls the financial system, they are all geniuses. The reality is more simple - they gear their balance sheet 25x. They can do that as they are not regulated, but they are not going to be allowed to go bust. If you think about it getting a return of 60% on US$2 when you play with US$50 doesnt require that much skill.

I in no way aim this at GS - I believe they gave TARP the best annualised return of any bank - but it was still a crap deal (one bank bought back its warrants at a 3% annualised return). To make US$1.4bn on US$10bn of loans, US$12.9bn of repayment of AIG obligations and US$28bn of debt guarantees over 8 months is lousy. Look at what Warren Buffett got stepping in way too early.

http://blogs.wsj.com/marketbeat/2009/07/23...llion-on-paper/

(In point of fact why not have him do the bailout.)

But the really crap deal is this - the only reason that anyone will lend anyone 25x their capital is because their lending is essentially guaranteed by someone. It is not GS's fault, it is simply stupid to allow them to punt the market with your guarantee for no return. If leverage was sensible then bonuses would be more like US$150,000 - GS explains why the government must bail them out....

http://www2.goldmansachs.com/our-firm/pres...22-release.html

[teletiger]

I think they left a few thing out. very wise.

Regards.

[teletiger]

More than one way to skin a cat.

Want your bailout money back? Default, before the Government does.

David Streitfeld describes them as "ruthless defaulters". As opposed to benign, compassionate lenders, I suppose.

http://www.zerohedge.com/article/debt-repudiation-–-table

Regards.

[flying]

Bernanke 100%

Edited July 29, 2009 by flying

[flying]

Jul 29, 2009, 2:58 a.m. EST

HONG KONG (MarketWatch) -- Chinese stocks in Shanghai fell sharply Wednesday afternoon as investors rushed to take profits, also sending Hong Kong-traded shares of mainland Chinese companies lower. In extremely volatile moves, the Shanghai Composite plunged as much as 7.7% in afternoon trading, before recovering to trade down 5.1% at 3,264.36 in late action, giving up most of the gains made over the last five sessions. In Hong Kong, the Hang Seng Index fell 3.2%, while the Hang Seng China Enterprises Index sank 4.3%. "The China markets crashed because the markets are at an unattainable level because of hot money and there are fears the central government will act to cool the markets," said Francis Lun, general manager at Fulbright Securities.

http://www.marketwatch.com/story//chinese-...rush-2009-07-29

That must have been one heck of a meeting they had in Washington DC yesterday?

Edited July 29, 2009 by flying

[midas]

Bernanke 100%

Flying

this makes me feel angry again-it scandalous isn't it?

In Alex Lah's great Post #3195 the four videos from the Khan academy

explain very effectively about the dangers that were building up i the system.

Your average Joe didn't have access then to the statistics provided in the

Khan academy videos but I'm sure if they had very many people probably would not

have been so eager to keep buying homes the way they did. But Bernanke knew full well about

what was really happening.....................

So why wasn't this cretin with his army of assistants at least warning the public about the realities

of the housing bubble instead of papering over the cracks? A senior public servant

who everyone ( quite clearly wrongly ) relied on for advice.

This guy clearly actively prolonged the housing bubble with his so called " guidance "

and brilliant or not-he shouldn'tbe trusted regarding anything he says

[BEENTHEREDONETHAT]

Like 99.9% of politicians they do what is best for them or their backers and not the country as a whole.

Edited July 29, 2009 by BEENTHEREDONETHAT

[AlexLah]

And if I may add that in the Der Spiegel article it was clearly explained that all central bankers that meet at the BIS prior to this disaster had been warned about this multiple times and years before. None of them (Bernanke included) took action to try to avoid this misery that so many people are now in. They should be nailed to a wall with rusty nails so their flesh will start to rot and they die from gangrene.

Watch this rather unpleasant experience for the big O........

Thanks for appreciating the Khan video's Midas. There are a lot very informative ones and the guy does a great job in explaining things in easy to understand way's.

[flying]

Flying

this makes me feel angry again-it scandalous isn't it?

But Bernanke knew full well about

what was really happening.....................

True but like Beentherdonethat said.... They all are just errand boys in the bigger scheme. Same for Paulson et al

They all need to be marched out to a gallows. But more importantly their bosses need to be dealt with.

Watch this rather unpleasant experience for the big O........

Alex as much as I agree Obama is creme of nothing....That video is a misnomer...He is actually introducing his guys in the line. What you see as a hand extended is him saying & this is so & so.

But at the rate he is going with Afghanistan etc............I am sure the day will come when he has shoes tossed his way. But this time it will probably be Americans tossing them.

Edited July 29, 2009 by flying

[Naam]

And if I may add that in the Der Spiegel article it was clearly explained that all central bankers that meet at the BIS prior to this disaster had been warned about this multiple times and years before. None of them (Bernanke included) took action to try to avoid this misery that so many people are now in. They should be nailed to a wall with rusty nails so their flesh will start to rot and they die from gangrene.

Watch this rather unpleasant experience for the big O........

Thanks for appreciating the Khan video's Midas. There are a lot very informative ones and the guy does a great job in explaining things in easy to understand way's.

i also appreciated the video but my eyes are good enough to realise that the hand came out a fraction of a second too late and was shaken by the man walking behind Obama.

anyhow, the video is a masterpiece of explanation why we have a financial crisis, people losing their jobs / homes, a weak US-Dollar and a rather strong Thai Baht.

rational conclusion: if Obama's hand is less often snubbed the financial crisis will fade away.

[flying]

UPDATE 1-Weak U.S. 5-year debt auction raises worries

"It was just a horrendous result," William O'Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich Connecticut, said about the auction.

"It was the weakest bid-to-cover since September 2008, and by my numbers it was the biggest tail since February 1993. It was just a very, very weak result."

http://www.reuters.com/article/marketsNews...949944020090729

Will be interesting to watch all the auctions soon to come.

With the government set to issue $2 trillion in new bonds this year to finance economic and financial rescues, investors have been watching for any signs of waning demand for U.S. debt, particularly among foreigners.

Edited July 30, 2009 by flying

[flying]

Lots of Info

The End of the End of the Recession

http://www.zerohedge.com/sites/default/fil...20Recession.pdf

[midas]

True but like Beentherdonethat said.... They all are just errand boys in the bigger scheme. Same for Paulson et al

They all need to be marched out to a gallows. But more importantly their bosses need to be dealt with.

Like the big kahuna who said this in 2004:..................

BARACK OBAMA: When you rush these budgets that are a foot-high and nobody has any idea what's in them and nobody has read them…

RANDI RHODES, FORMER AIR AMERICA RADIO HOST: Fourteen pounds it was.

OBAMA: Yes, and it gets rushed through without any clear deliberations or debate. Then, these kinds of things happen, and I think this is in some ways what happened to the Patriot Act. I mean, you remember there was no real debate about that. It was so quick after 9/11 that it was introduced that people felt very intimidated by the administration.

[trogers]

Will people still buy stock when they know the financial statements don't mean squat?

I am thinking this every day but the markets dont seem to worry

There is always a long queue outside the Lottery Office...

[Naam]

UPDATE 1-Weak U.S. 5-year debt auction raises worries

"It was just a horrendous result," William O'Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich Connecticut, said about the auction.

i tried to discuss the debt auctions of various government securities with my dogs. unfortunately both were not really interested and indicated that they would rather discuss what's up for dinner or whether the neighbours' cats are allowed to stroll outside their home and be fair hunting game again.

with the majority vote of two to one against me i finally succumbed and agreed with them that the debt auctions have no impact on their nor on my lifestyle. the gardener, who passed by and listened to what we discussed, agreed with the dogs too. when i asked the nurse who took my blood today what she thinks about treasuries she answered "tle-sha-lee? mai loo long loy!" .....whatever that means

[flying]

Like the big kahuna who said this in 2004:..................

Yes he said much but was also one of the guys pushing TARP down our throats

But I see head way being made....slightly

Here are a couple that spell trouble for the FED & TARP

The gentleman from Ohio Kucinich is well known already but this

Barofsky is the TARP Special Inspector General

He has been digging & is one of the few that actually has the power to do something.

We will see if he does.

http://www.lewrockwell.com/sardi/sardi113.html

Edited July 30, 2009 by flying

[midas]

This seems a worrying trend ?

Building societies suffer record £2.3bn withdrawal of savings

the biggest monthly outflow of savings for 54 years in June — and warnings of continued withdrawals as unemployment forces savers to dip into their nest eggs.

http://www.newstin.co.uk/rel/uk/en-010-016750512

[midas]

Barofsky is the TARP Special Inspector General

He has been digging & is one of the few that actually has the power to do something.

We will see if he does.

http://www.lewrockwell.com/sardi/sardi113.html

Way to go Barofsky

I am just happy he is a relatively young man so he doesn't go

the same way as Gerald Walpin.

if you didn't see this story- take my word-I saw him present his case

and he was no more senile than many of the members of Congress.

http://blogs.abcnews.com/politicalpunch/20...einstated-.html

[flying]

Way to go Barofsky

I am just happy he is a relatively young man so he doesn't go

the same way as Gerald Walpin.

if you didn't see this story- take my word-I saw him present his case

and he was no more senile than many of the members of Congress.

http://blogs.abcnews.com/politicalpunch/20...einstated-.html

Yeah at least Barofsky seems to have some teeth...We will see

I had not read that story about Walpin thanks

[trogers]

when i asked the nurse who took my blood today what she thinks about treasuries she answered "tle-sha-lee? mai loo long loy!" .....whatever that means

mai roo = don't know

long loy = clue

She must have scratched and shaken her head when answering you - "I don't have a clue what you are saying..."

[BlackJack]

UPDATE 1-Weak U.S. 5-year debt auction raises worries

"It was just a horrendous result," William O'Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich Connecticut, said about the auction.

i tried to discuss the debt auctions of various government securities with my dogs. unfortunately both were not really interested and indicated that they would rather discuss what's up for dinner or whether the neighbours' cats are allowed to stroll outside their home and be fair hunting game again.

with the majority vote of two to one against me i finally succumbed and agreed with them that the debt auctions have no impact on their nor on my lifestyle. the gardener, who passed by and listened to what we discussed, agreed with the dogs too. when i asked the nurse who took my blood today what she thinks about treasuries she answered "tle-sha-lee? mai loo long loy!" .....whatever that means

for every action there is an equal and opposite reaction

maybe its just a delayed reaction

so wait a bit

[Naam]

when i asked the nurse who took my blood today what she thinks about treasuries she answered "tle-sha-lee? mai loo long loy!" .....whatever that means

mai roo = don't know

long loy = clue

She must have scratched and shaken her head when answering you - "I don't have a clue what you are saying..."

i made it up as i did not discuss UST with the nurse but concentrated on her (rather big) boobs. my understanding is that "mai roo rong roy" -if literally translated- means "i don't know a hundred times" or means "i have no fookin' idea".

[Naam]

going back to the financial crisis. i would like to know what the three resident apocalyptic riders gain when they congratulate each other and pat each other on the shoulders after having discovered another "scandal" and present it by posting a link to youtube. this question is not a rhetoric one!

[trogers]

when i asked the nurse who took my blood today what she thinks about treasuries she answered "tle-sha-lee? mai loo long loy!" .....whatever that means

mai roo = don't know

long loy = clue

She must have scratched and shaken her head when answering you - "I don't have a clue what you are saying..."

i made it up as i did not discuss UST with the nurse but concentrated on her (rather big) boobs. my understanding is that "mai roo rong roy" -if literally translated- means "i don't know a hundred times" or means "i have no fookin' idea".

If you are strong enough to concentrate on her boobs, you should be discharged...

[LaoPo]

i made it up as i did not discuss UST with the nurse but concentrated on her (rather big) boobs. my understanding is that "mai roo rong roy" -if literally translated- means "i don't know a hundred times" or means "i have no fookin' idea".

...you should be careful with your heart Naam.......I wanted to surprise you with a picture of a Thai lady with big boobs so I googled "thai big boobs"...well..... :D I really couldn't find anything proper to post here since it would be against forum rules....

LaoPo

[midas]

going back to the financial crisis. i would like to know what the three resident apocalyptic riders gain when they congratulate each other and pat each other on the shoulders after having discovered another "scandal" and present it by posting a link to youtube. this question is not a rhetoric one!

I am very sure a lot more than you do from your posts

[BlackJack]

I think the idea of talking about the frauds, conspiracies etc. is really to keep the fires burning under the perpetrators. By not letting the issue die the authorities may have to act.

Many questions need answers and hopefully the system will become fairer for all to make a buck or 2.

The Gold sacks of the World will pay one day if the talk is kept up.

Ground swell - class action - fall guys.

I am looking forward to it

[Naam]

I think the idea of talking about the frauds, conspiracies etc. is really to keep the fires burning under the perpetrators. By not letting the issue die the authorities may have to act.

the proceeds of your avatar elephant is what the "perpetrators" care about

p.s. existing naïveté seems to be limitless!

[Naam]

i recognise Mee-duss, Uhleksx the Lala and Goldie Frying. but who might be the forth one?