You Decide

Excerpted from The Market Ticker

".........You haven't seen the half of what happened though - not yet.  It appears that AIG - the company we have bailed out (thus far) to the tune of some $100 billion plus, in fact isn't done.  It appears they may have written credit protection on Greece.  If this allegation by the German equivalent to The New York Times is true Americans are going to be asked to pay billions of dollars - or more likely, hundreds of billions (since Greece is almost certainly not the only place - try Spain, Portugal, Ireland, etc) to bail out a bunch of FOREIGN NATIONS.

Do you both think Americans can and will pay that bill?  A bill that has been forced on us, and yet benefits not The United States economy, but foreigners? 

Wars - big wars - start over much less, my friends.

Oh, and let's not forget - some 30% of Greece's workers went out on strike to protest their "austerity measures."  That's right - one in three.

The Fed and our fabulous Treasury Secretary already gave tens of billions of our hard-earned money to foreign banks to prop them up via AIG.  That was just a down payment; now we all get to - quite literally - buy all their houses over in Europe.  They get to keep living in them. ........"

Sunday, February 21, 2010

From FAZ,. Note the text below, translated by EuroSavant, replaces an earlier GoogleTranslate version. You can read an English version of the entire article here.

http://www.eurosavant.com/2010/02/21/cds-just-another-evanescent-bubble/

In the larger scheme of things, this example shows how AIG could have, and probably did, serve to channel funds from the public at large to speculators.

London investment bankers name AIG as a further CDS-seller. That company had to be nationalized during the financial crisis due to its having written insolvency insurance on American mortgages. This debt-load would have led to the collapse of the world’s biggest insurer. Prior to the financial crisis AIG is said to have widely held State credit-risk. If yet-larger insurance positions on Greece exist, then the American government would have a strong interest in preventing that country’s insolvency.

Even if these are mere rumors about the Greek banks and AIG, this example makes clear the weakness of CDS markets. This protection is sold by banks or insurers who themselves have access only to limited capital resources. They have as a rule clearly lesser credit-worthiness than the states for which they are selling insolvency protection. Insurance by CDS could turn out to be just a bubble."