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.

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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.

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