The Daily Bail reprises an article by Richard Teitelbaum (Bloomberg) where the title says it all:
How Goldman Sachs Created 'Shitty' CDOs, Sold Them To AIG, Forced AIG into Bankruptcy, Paid Themselves Billions in Bonuses, And Watched as Tim Geithner Covered It All Up.
And Paulson was CEO at the time and knew all about it. More truth about lack of Fed transparency. This is not entirely new if you've been following the work we've published from Janet Tavakoli, who is quoted extensively in the article below. Still, it underscores some of the more arcane points and delves into new territory with discussion of CDO substitutions. Easy to follow summary piece from Bloomberg's Richard Teitelbaum.Here's what you need to take from this: Goldman put together crappy CDO's, bought Credit Default Swap protection (insurance) from AIG, pushed AIG into bankruptcy by making claims on the insurance, and then got paid -- not by AIG -- but by the TAXPAYER.
Oh, and the guy who tried to cover all this up? Barack Obama picked him to be your Treasury Secretary. Is this a great country, or what?
Read the full story here
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Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled By The Machines
In this podcast, Joe sheds light on why:
* The flash crash happened and why our vulnerability to future crashes is even higher now.
* How the majority of trades that happen on a daily basis are now conducted by machines that have no underlying concern or understanding for the companies who's securities they trade. The market has become volume for the sake of volume - which is not healthy.
* How the complexity and pace of the current technology driving trades has become so complex that it has effectively evolved beyond our ability to fully understand its risks.
* Why the government agencies responsible for understanding and overseeing exchanges are woefully under-resourced and unprepared to be effective in this new era.
* How the average trader is destined to lose in today's market, while the big banks & HFT firms who can afford to win the arms race are making essentially-guaranteed profits.
http://tinyurl.com/63v3sbm
The Great Global Debt Prison
After careful examination, it becomes evident that debt does not fuel economy, it suffocates it. It does not nurture growth, it stunts and poisons it. Extreme debt is not a fundamental organ in a body of commerce; it is an aberration, a spreading cancer which disrupts the circulation of healthy trade. Debt is, in large part, unnecessary.
One figure in ‘Little Dorrit’ which fascinated me was the character of Mr. Merdle, a national banking superstar who dominates the investment world with the help of British treasury officials and various political deviants. Merdle is referred to by merchant circles as “the man of the age”, a financial marvel who seems to make fortunes in every endeavor he touches. Little does anyone realize that Merdle is a fraud, a Ponzi scheme artist who takes money from unwary speculators and sinks it into increasingly more tenuous investments. In order to continue hiding the fact that all his financial ventures are ending in ruin, he lures more and more depositors to pay off previous debts. The problem is that Merdle is creating debt to chase debt. Eventually, his insolvency, and that of all those who trusted him, will catch up and overtake the lie he has carefully projected. All economic instability is invariably revealed, no matter how expertly it is hidden.
Mr. Merdle, in my mind, is an almost perfect literary representation of today’s private Federal Reserve and the global banking syndicates of JP Morgan, Goldman Sachs, Citigroup, etc. The Federal Reserve, with the help of politicians on both sides of the aisle, created a series of illusory incentives (through interest rate cuts) which allowed banks to begin lending almost unlimited fiat at rock bottom prices. America was awash in credit, to the point that it was nearly impossible for the average person to avoid the temptation of borrowing. What we didn’t understand then, but are beginning to grasp now, is that credit derived from fiat is not “capital”, it is NOT wealth. Credit is the creation of an obligation, to be paid at a later date, if it is paid at all, and because there are no rules to tie the debt to any legitimate collateral (at least for banks), there is nothing to back the obligation if it falters. Therefore, fiat induced credit is not the creation of wealth (as Keynesians seem to believe), but the destruction of wealth!
http://www.zerohedge.com/article/guest-post-great-global-debt-prison
Bankers Skirt Efforts to Overhaul Pay
But it turns out that executives have a way to get around those best-laid plans. Using complex investment transactions, they can limit the downside on their holdings, or even profit, as other shareholders are suffering.
More than a quarter of Goldman Sachs’s partners, a highly influential group of around 475 top executives, used these hedging strategies from July 2007 through November 2010, according to a New York Times analysis of regulatory filings. The arrangements were intended to protect their personal portfolios when the firm’s stock was highly volatile, especially at the height of the crisis.
http://dealbook.nytimes.com/2011/02/05/stock-hedging-lets-bankers-skirt-efforts-to-overhaul-pay/
Thank you for the links above. I've posted the information from DealBook.
Mr. Merdle, in my mind, is an almost perfect literary representation
of today’s private Federal Reserve and the global banking syndicates
of JP Morgan, Goldman Sachs, Citigroup, etc. The Federal Reserve, with
the help of politicians on both sides of the aisle, created a series
of illusory incentives (through interest rate cuts) which allowed
banks to begin lending almost unlimited fiat at rock bottom prices.
http://www.zerohedge.com/article/guest-post-great-global-debt-prison
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