CDS and side letters

[Supercilious]

Well,... here is the story.... Enjoy!

http://www.ritholtz.com/blog/2009/04...ce/#more-22986

(PS the comments are very interesting too)

[Thailandnotes]

Re: CDS and side letters

"The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams - with no correlation between “fees” paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world."

Might have to quit reading this site for awhile.

[cjppjc]

Re: CDS and side letters

"The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams - with no correlation between “fees” paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world."

Might have to quit reading this site for awhile.

Yes, criminal fraud. I wonder why this is never mentioned. If I tried to insure every home on my block, I would go to jail well before any claim was made.

[ThePythonicCow]

Re: CDS and side letters

Might have to quit reading this site for awhile.

Why's that?

[Sapiens]

Re: CDS and side letters

Well,... here is the story.... Enjoy!

http://www.ritholtz.com/blog/2009/04...ce/#more-22986

(PS the comments are very interesting too)

Oh boy! The cat is out of the bag. Thanks for the link.

[cobben]

Re: CDS and side letters

"the payments made to AIG by the Fed and Treasury, which were then passed-through to dealers such as Goldman Sachs (NYSE:GS), can only be viewed as an illegal taking that must be reversed"

Is that a realistic expectation?

The last thing the elite does in a country when they realize that the system cannot be saved is to loot the treasury.

[World Traveler]

Re: CDS and side letters

Bingo! That's what happens in banana republics. I spent 3 weeks in Ecuador in 1995, studying Spanish and staying with a family. To improve my Spanish, I used to watch Univision Spanish-language news every night when I got back to U.S. And I especially paid attention to the news from Ecuador.

Ecuador's economy was VERY bad in mid and late 1990's and in 1996, they elected Abdala Bucaram, also known as "el loco", who promised reform and help for the little guy. Campaigned as a populist.

Once in office, he was so corrupt, that he was forced to flee the country in 1997. One of his last acts as president was to send a minion to the Ecuador Treasury to withdraw $7 million dollars that was never seen again.

Reason I remember is because it was openly reported in the Spanish-language news media and yet nothing ever happened to hold him accountable for openly stealing from Ecuadorian government.

Truly the last act of a corrupt elite is to loot the Treasury. What we're seeing now in the U.S. The only question is how much they get away with. We'll find out in the next few years...

[ThePythonicCow]

Re: CDS and side letters

The last thing the elite does in a country when they realize that the system cannot be saved is to loot the treasury.

This suggests more optimism than seems warranted. They are looting the Treasury, but we seem far from "the last thing." The crooks don't seem to be anywhere close to leaving, or being run out of town.

If we are close ... I should start subscribing to my local newspaper, as the headlines will be historical.

[cobben]

Re: CDS and side letters

They are doing it openly & brazenly, that suggests to me there is not much time left . . . before . . . what? no clear idea.

[ThePythonicCow]

Re: CDS and side letters

They are doing it openly & brazenly, that suggests to me there is not much time left . . . before . . . what? no clear idea.

Perhaps the "what" is just what iTulip has predicted, the sell off of our foreign held Treasuries.

I see no immediate signs of domestic revolt; almost everyone is carrying on as best they can without visible change. But certainly foreign leaders and wealthy seem ready for "Change", and can now see they have little to fear, other than more corruption and degradation of the dollar, from the new administration in Washington.

No one will want to Ring the Bell when the exodus begins, as all will be striving to sneak out before the crowd. The Fed and the Treasury and the big banks will mask the problem for a while, with more lies and more printing.

When the big guys leave the little country in a hurry, it is all over in a big hurry for the hapless residents remaining, like a childs balloon shot with a .45. But America is relatively big and quite stable outside of some inner cities, and those leaving the dollar are moving from the big mother ship to smaller boats, some being constructed as we speak.

I wonder what and when will be the headline event that causes every common man's jaw to drop, as they realize we aren't in Kansas anymore.