AIG - What A Blow UP!!!!!

Credit Default Swap is another kind of derived credit entity in the pecuniary market. With the securitisation an imposing method for revenue generation and assigning funds to where there is a complete paucity of them, the swapping market emerged as another astonishing one.

The securitised bonds in form of Collateral Debt Obligations were betted upon whether the source of fund on these bonds would default or not. The investment banks selling the investment packets used to go on an agreement with insurance companies on the bonds they were selling to the public.

How stupid it all sounds that even the company selling investments is not sure if the investment would turn sour or not and surmounting over that it is insuring its own financial position in the process. Well this was the trick that brought down one of the biggest insurers in the world, the American International Group and its story still lies stuck on the blood of tax payers whose hard earned financial savings, that was presented to bail out the AIG group and in turn as many call it the back door bailout program of the Investment giants on the either side of the Atlantic.

Even if we do not go in to the detail of how the Credit Default Swap or the contract how the investment companies insured their Credit Debt Obliations with the AIG occurred but the fact that lies hidden well beneath all this that the companies were actually betting on the house buyers to default and the insurance companies betting that they won’t and the common man who lied between them stood at the stance wherein his decision were out of his dreams and he could only see his saving plummeting and disappearing without any trace.

Well these credit write downs might not seem as the most intelligent written documents however they might lead up to the biggest public awakening movement ever. Recently with the inside out declarations of the AIG bailout program the real picture behind all this is coming out. Neil Barofsky, the special inspector general for the Treasury Department’s Troubled Asset Relief Program is presented the recent report with all the mal functionalities that were carried out during the AIG bailout that started at around 60 billion USD but went up to 200 billion USD, the highest any company can expect to furnish from tax payers accounts for its own actions that were of a product of malcontent distrust and betting practices.

Now the bailout program that was finally undertaken and device by the Bush treasury Secretary Henry Paulson was a complete trash and a beaming lit to the whole American system. Recently with the upcoming reports the truth behind everything is coming out.

Starting with the companies that had junk(in form of Credit Debt Obligations) insured with AIG even if the credit ratings of their assets have depreciated to the BBB or maybe BBB- still, interestingly, all their assets got every penny they were supposed to get back. Moreover the government created a special entity of the AIG called Maiden Lane only to buy all the troubled assets from the investment banks. The story of the day was that when the credit system blew up due to misappropriations and miss-interpretations of the banks they were only to be saved by getting every penny they had ensured with every penny and no looses recorded.

Someone please tell Warren Buffet it was not just the TARP that saved his lovely Goldman Sachs it was the only reason that saved it through what people now call the back door bailout.

Back door bailout turned out to be the method in which the companies that had been insured by the AIG got their full stakes without any form of negotiations. The money they were to get as insurance was paid them in full. The reason that Paulson gave and which Tim Geithner is still defending turns out to be that the French companies who had been in a contract with the insurance giant that they were not ready for any form of negotiations against full payment of the bonds.

Societe Generale confirms this case however with the recent role reversals a number of new issues are building up. Some companies are speaking out that no negotiations were ever tried in the bailout of the Credit Default Swap with AIG. It was done on one dollar to 100 cents basis.

Societe Generale received the most, $16.5 billion, including collateral posted by New York-based AIG and payments from Maiden Lane III, the vehicle backed by the New York Fed. Goldman Sachs got $14 billion, and Deutsche Bank AG, based in Frankfurt, got $8.5 billion.

In his remarks, Geithner said, “everyone should realize that because of the actions of the Treasury and the Federal Reserve, the American financial system is now in a position where it can provide the credit necessary for economic growth.”

Henry Paulson approved payments of $62.1 billion, or full value, to 16 AIG counterparties, including Goldman Sachs Group Inc., in November 2008 to retire contracts in which the insurer promised to reimburse the banks for declines in mortgage-linked holdings, according to a Nov. 17, 2009, Barofsky report. The French banking regulator “forcefully asserted” that firms in the country couldn’t make concessions outside of an AIG bankruptcy, Barofsky said in that report.

Well even if we justify the bailout then how the great leaders going to justify the cash throw they exercised only to build up back the strength of the banks that have been responsible for blowing off the system.

Standing on top of all this another controversy of Henry Paulson being related to none other than Goldman Sachs and his imposing architecture in helping the investment giant to regain what it had lost in the turmoil. Paulson is an alumnus of the same and has been accused of deliberately letting the banks get their full share through the back door bailout even though they were not worthy of it.

Mergers and acquisitions are always written in with fraudulent activities and high staking manhandling of funds be it the Bear Sterns takeover of JPMC or the merger of Bank of America Merrill Lynch but every entity established its fortune on the fall and fall of the largest insurance group.

Read more

Is Australia still Invincible?????

The demolition of pakistan in current test series once again makes us think 'Is australian era really gone?'. Before this series started it was anticipated that pakistan (for the first time in 15 years ) will confront australia. Even ponting said that they will not make a mistake of taking a dangerous side like pakistan lightly but series ended in 3-0 clean sweep of pakistanis.... making a perfect record of 13-0 for aussies in last 13 test matches played between them...

The retirement of major players like Shane warne, Mcgrath, Gilchrist, Hayden, Martyn, Langer in a quick succesion raised a doubt over austrlia's ability to rule the world of cricket. Just after these players departed australia stumbled a bit with series loss to india,england and south africa in 08-09 and overall loosing 6 tests in past 3 years... the speculation were raised that Australia is no longer invincible and either india or south africa would replace it as a top team.

However these spuculation proved to be right with india grabbing the top spot in ICC test champiuonship for the first time and south africa retaining 2nd spot. It was happened first time in more than 8 years that any country was able to remove Australia from rank no. 1. Such was their tyranny in the world of cricket.

The team was then considered beatable as they lacked quality spinner in the absence of Warne... lacked solid opening pair in the absence of Hayden and Langer... but the performance of Nathan hauritz as a spinner and of Shane watson as an opener has given a great boost to australia chances of regaining the rank no.1 title. With current series win against West indies and Pakistan, Australia has proved that they cannot be taken for granted. Their domestic structure is so strong that their playing eleven never lacks in any of the depatrment.


Most of the credit also goes to Ricky ponting for Australia's success in past 7-8 years. His continuous elegant batting has fetched him 'Player of the decade' award both in tests and one day. His captaincy has also been phenomenal. He holds the record for most wins by any captain. In the 2nd test with pakistan, at the end of forth day his team was 89 runs ahead With only 2 wickets remaining, he was the only person optimistic about winning the match.

Even the astute cricket expert would have not agreed with him. But in the end australia won comprehensively by 37 runs. These gives paradigm of his leadership qualities. Many times ponting has been critisized severely for his 'win at all cost' theory and involvement in racial abuse......... but these had not much effect on him becoming one of the greatest leaders ever in cricket.
Read more

Intentionally WRONG!!!!!!

If Massachusetts was not bad enough, the whole truth has not come about the diminishing Democrats against the power hungry republicans in public. With the turn of the Massachusetts seat from Kennedy to Scott Brown it seems the Democrats have become quiet vulnerable to any kind of further political revisions that may occur. Even in light of the new tax that Obama has promised to impose on the investment activities of the banks to curb use any form of public fund in the race for fund generation, the people still are not in favour of Obama. Scott Brown is a living example of that.

Besides the Massachusetts seat next state to go under elections is none other than Illinois of which Obama was a Senator. However environment in Illinois is in no form better than what was in Massachusetts. Herein the outcry of the public is so much that the Republicans freely sing alike that this state does not belong to Obama; it belongs to the people of Illinois. Well Martha Coakley was definitely a mistake but for now on Obama will have to rein a deadly battle in Illinois to reinstate what the democrats are losing- public trust and establish the Democratic hegemony.

With the huge failure of the Health Bill and the government officials picturing the reconciliation options it has become evident that Obama is bound to pass any form of health bill even if it is of any sub standard quality. Millions of dollars have already been invested by lobbyists and vested fund raisers for a health bill and most of them stand at a blank juncture with this recent development. However even with a reconciliation option Obama would not be able to put forth the same health bill.

Obama’s popularity more or less stands at a dicey juncture. People are speculating whether he would be able to last the January 27 declaration wherein he is going to device his understandings and put forth the new budget options that he had thought about.

Health bill was a palpable blunder however his propensity towards attracting obvious attention and charm sometimes overwrites much stuff including his votes. However there is still lot of speculations of what he might announce.

One thing that most Americans have in mind is the raising of the taxation on the public in the form of some form of federal tax. Well with so much liquidity in the market and growing inflation it is peremptory for any government to raise the interest rates however the economic situation in the United States is slightly different. It has just now recently risen from the ashes of the Great recession and the unemployment still hovers around the 10 digit number. Thus taking back the money from the people is going to wipe out lots of small time workers.

It has been argued by lots of financial analysts like Krugman that raising interest rates would not be a sound option right now however there may be an option to do it sometime after another round of bailout out money launched to stabilise the employment setup. But till then taking out money would kill more jobs. The whole American economy is walking on a thin line and slight divergence in the people’s attitude might lead to bear racing over bulls.

Another thing that Obama is going to discuss is his plan of action to curb the government appending to deal with his federal deficit of trillions of dollars. The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.

Obama plans to exempt military spending while leaving many popular domestic programs vulnerable, his move is certain to further anger liberals in his party and senior Democrats in Congress, who are already upset by the possible collapse of health care legislation and the troop build up in Afghanistan, among other things.

With the announcement of the new tax on institutions above 50 billion USD businesses the common man have had the news of the day, however this piece is causing Wall Streeters the hard time of the life. The new tax that would most probably pass through curbs most of the trading and betting activities with public money and those allowed legally under strict jurisdiction.

Investment Banks in light of these events face closure of many of their huge firms. Warren Buffest hedge fund manager and a so called philanthropic investor have also claimed that such regulations would definitely derail the system. The policy would eat up the investment market. In part he is true but too much injustice had been done to taxpayers over betting technicalities.

This has provoked many banks especially Goldman Sachs to plan out an exit strategy which would most probably be going private.

"Goldman is already in the process of figuring out how to go private," said Tom Sowanick, chief investment officer of the Omnivest Group in Princeton, New Jersey. "Goldman did not need -- or want the TARP money to start with -- and there is no reason for them to keep their bank charter and remain a public company." Hedge fund manager Doug Kass, president of Seabreeze Partners, has made Goldman going private among his "20 Surprises for 2010."

Kass predicted: "Sick of the unrelenting compensation outcry, government jawboning and associated Populist pressures, Warren Buffett teams up with Goldman Sachs to take the investment firm private."

It was this company that had helped itself on the 10 billion USD of the TARP money and also participated in the bailout program of AIG where in it got 100 cents against each dollar it had invested in the credit default swaps as the write down were dismantled. It was this company that turned to a public holding company for the TARP backup and now with so much regulation in hand Goldman Sachs is planning to pursue an exit strategy.

So all in all there is lot of explanations for Obama to do while his regime goes under the hammer on 27 January. His political conflicts and the war promises in Afghanistan has degraded his stand however with this path breaking financial strategy in conjugation with the comeback of Paul Volcker the conditions may not be so bleak. There is still hope that he might revert back on the Republicans with full form.

Read more

Ohh This Country called INDIA is weird….

We are celebrating the 50th 60th Republic Day today. And on this holy auspicious day which is no less than an excuse for over 1.3 Billion 1,300,000,000 People to sleep longer….

A Republic is as the Dictionary suggest is “a state in which the supreme power rests in the body of citizens entitled to vote and is exercised by representatives chosen directly or indirectly by them.” Huuh i wonder how much of that definition is applicable to India….

Anyway to commemorate the historic occasion we the fools have listed the things that make India the great country it is…India…

Apparently the biggest news in on this day that chote nawab Mr Saif Ali Khan has got a Padma Shri….

The free encyclopaedia namely wikipedia says that “Padma Shri (also spelled Padma Shree, Padmashree, Padma Sree and Padma Sri) is an award given by the Government of India generally to Indian citizens to recognize their distinguished contribution in various spheres of activity including the Arts, Education,Industry, Literature, Science, Sports, Medicine, Social Service and public life.

The key word being DISTINGUISHED, its an endless debate to whether he deserved it or not but Miss Item Number Rakhi Sawant deserves JUSTICE… India is a REPUBLIC and all Indian need to be treated equally… She says on her twitter page (which we hope is of her) “Is desh mein Censor Board ka Kaam hai kya?? They can allow 'Kamniey' the whole movie but have problem with the word 'Kaminee' in my song..”

Further more she vows to keep fighting “But main fight karungi... Rules sab ke liye same hone chahiye.. What do you guys say?”

And in one of her replies she says “To kya main acting chor du?? Kal ko kisi ko mera dance acha nahi lagega to kya main dance karna chor du? This is not fair yaar!”

As told by her bio on her twitter page …She is - A simple girl with big dreams..

rakhi1 rakhi2
We just wish Miss Sawant All the very best for her fight againt the gross injustice the India Censor Board has done to her…

Over to some other stuff…. Just read a Headline on the most selling English newspaper of India “No national Language in India: Guj HC.” The Article continues on to say that “Does India have a national language? No, says the Gujarat High Court.”

“…. the court asked whether there was any notification saying Hindi is India's national language, for it's an ``official language'' of this country. No notification ever issued by the government could be produced before the court in this regard. This is because the Constitution has given Hindi the status of the official language and not the national language.”

So we Indians do not have a national language just an official language called Hindi….A very nice observation to be made on the 60th Republic day of the country…
Another issue embroiling the country right now is the topic of Burqa clad women on voter Id card… Which is like the stupidest thing ever… how can anyone on this planet distinguish between Shabana, Zeenat and Zoya… burqa (1)
Come on people grow up…. The Supreme court is correct for a change and these women should pose without their veils unlike these gentlemen..
This country is weird, nonsensical, foolish, stupid and what not but its also the greatest, the loveliest, the sweetest and the most amazing country on Earth..

It has its problems but that's what makes it special.. and we can change the country just like people have since hundreds and hundreds of years.

Never thought i would say the name of a SOHAIL KHAN starrer to end my first post as a fool but

Read more

What is it??- Obama Buffet showdown!!!!

Well as a matter of fact Llyond Blankfein calls himself as the man who is doing God’s work. He may not be wrong. With so much power vested in the hands of a few Wall Street bankers and few to challenge this capitalistic setup how can this quote go unjustified.

The god itself has brought to man the power to think and make in turn brought out this perfidious system of financial hierarchy wherein common human tendency is manipulated used and betted upon for fund generation. I would say Llyond has got real guts if he tells just what people have been not speaking ever since. The hold and the wrath of the financial institutions have become such that their con has surpassed any measure possible.

It has become peremptory for them to run and make money, then crash the system and when the time is ripe and tables turn, escape into the shadows of tax payers’ money as part of some government funded relief program and silently come back with another boom only to plan another plunge some time later.

Goldman Sachs paid its executives twenty billion worth of USD in the single year of 2008 when financial crisis had broken the entire global economy and not to forget the single handed payout to the CEO Blankfein to himself a whopping 70 million USD for his so called “God’s work”. What was this? How can they expect the taxpayers to accept something like this to happen?

Assholes like Alan Greenspan and Robert Rubin brought in the Financial Services Modernisation Act 1999merging the depository and investment activities of bank and Institutions like Goldman Sachs, Lehman Brothers, Fannie Mae and Freddie Mac securitising the housing loans to investment packets, naming them with imposing designations such as collateral debt obligations and using it to make investments that were dependant on home owners mortgage payments.
Home owners generally are reliable but when assets are being considered as liabilities it is obvious you are going wrong.

When the road side hawker was being given the loan to buy a house the financial system was apparent to be blown up and many of the Wall Street illustrious names were going to come down. It was not difficult to find Greenspan’s tongue worrying over his early remark as he said later in this decade that the CDOs were actually risky.

Next is what you crash the system you blow up people money into this air. House prices plummet like anything, the consumptions slumps terribly and the effect if felt on the common man. Where did they come into the picture?? And if all this not enough the fiasco is intensified with the government announcement of the Troubled Assets Relief Fund, a way the bankers would use the tax payers money again to regain stability to restart it all over again. And remarkably Bush and Obama accepted this glorious proposal and notified the world that this money and fund is however not for the people, it is not going to build any jobs rather it is for the Wall Street Banks only whom from now on we would specify as “too big to fall”.

What a smart act of perfidy! Well the banks got their separate money tuning to billions of dollars no matter how it destabilised the world as such with already slumping and liquid markets. The dollar devalued and gold went up high up. How was this money used and misused is again history. This money after all was God’s promise to holy Wall Streeters.

The money pretty much bailed out the banks brought them out of slump and reinstated their financial and investment activities. Bank picked up a new note, if people no longer have interest in buying a CDO then why not sell them another CDO by the name Carbon Dependant Obligation. The game is same the players the same only the currency different and I can bet on the outcome- it would just be the same!!

What I have in mind in telling all this is how relevant is the Wall Street control over the market.

Very!!! However Obama’s latest show with Paul Volker and his new method of taxation has brought in lot of speculations of what might happen. Till now the Obama regime have been too much under control of speculative trade and the favour of Wall Street banks, however this recent developments pose lot of bleak circumstances that have grown out of nowhere. I cannot call Obama to be clear saint for his popularity among public have plummet like anything due to the TARP procedures, the Afghan War and the two digit unemployment data so he might have brought out this recent development. However it is to see how long Obama can sustain this and keep up with the goodwill of the people.

Obama announced a plan last week to impose a fee on as many as 50 financial companies to recover losses from the federal government’s Troubled Asset Relief Program. The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

“If financial firms want to trade for profit, that’s something they’re free to do,” Obama said.
“Indeed, doing so responsibly is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private-equities funds while running a bank backed by the American people.”

If this is an act to curb most of the investment activities then it should better be imposed. This plan however is going to face the test of time and how much destabilisation the rich entities can bring to the general public and the president himself. Warren Buffet himself stood up against this tax as it is going to kill most of the methods of revenue generations using public money and tax the betting people massively.

Adding to that Buffet is praising Blankfein to be handling the most intriguing bank on Wall Street with utmost care. He is saying TARP was a complete trash and an unnecessary option. “Most of the banks didn’t need to be saved,” Buffett said. “Including Wells Fargo.”
Before the U.S. Congress approved the bailout in 2008, Buffett, 79, said he was making a $5 billion investment in Goldman Sachs because he expected the government to rescue financial companies.

But Mr Buffet even if you helped one of then what about the rest!

As a matter of fact this is actually a better start of Obama by taxing the people who have made over taxation of American people so desperate as an option to the government however let us hope Obama is able to sustain this and this does not turn out to be another Health Bill.

Read more


Related Posts with Thumbnails