AIG, naked CDS, bonuses

The media and blogosphere are alit with rage at the bonus payout at AIG.

I find this outrage misplaced. Executive compensation is a big herring and is outrageous across the board, you don't have to go to AIG to be outraged. In software I have seen some mediocre talent get some pretty outrageous payouts. Executive compensation is out of control in general.

No what outrages me is a report that came out this morning, that most of the bailout moneys for AIG went/are going to speculators. It is reported that 2 hedge funds (no names) are making north of 400M (also mentions goldmorganstanley). Anyone want to bet that these were not hedges for real debt assets but naked CDS? So out of bad debt comes more bad debt. Minsky financial instability hypothesis, found proof in naked CDSs in spades.

Here is a thought: STOP THE PAYMENTS TO NAKED CDS AND SPECULATORS.

Since AIG is effectively nationalized, instead of getting in the hair of the workers there, stop payments to speculators, give them back their premium (the insurance they bought) and GO HOME. If the asset was hedged then it is kosher.

Here is the catch, I suspect that the bulk of the payments on subprime defaults were done in 2007-2008. That money has LEFT THE BUILDING, the horse has left the barn. Go after that speculation money, bring it back and STOP STEALING FROM TAXPAYERS TO PAY SPECULATORS THAT HAVE AMPLIFIED THIS FUCKING MESS WE ARE IN! This is the stuff revolutions are made of, no pun intended.

Comments

Post a Comment

Popular posts from this blog

Thug vs Thug: Porsche 1, Hedge Funds: 0

The latest drama is fun. VW became the largest company in the world, in terms of market cap, ahead of EXXON on a little financial market coup d'etat orchestrated by Porsche. Apparently VW stocks was on the way down, I don't know the details but many Hedge Funds (HF) were short the position. Fine. The price goes down. Porsche starts buying the anonymous float (and probably some private too?), but the point is they build a 73% market share without many people noticing. In the US you would need disclosure after 10% or so. Point is, that many HF wake up and realize that their short position is about to lose a lot of money. So what do they do? those idiots? they short cover all together, which means they buy the stock to cover the short. The stock zooms up, by a full multiplier and overtakes EXXON. Porsche makes A KILLING in the process and has robbed the city robbers to the tune of "potentially $30B". Not bad for a days worth of work. PS: hey, psst Porsche! With t...
Read more

Madrid Blog--We get sued

Image
...for having children If you are a foreigner and move to Madrid, do not, necessarily expect a warm welcome. Yesterday, we, or rather Don Mark Fleury and Dona Natali Manson ***note to Building Association of Serrrano XX, before you lawyer up, do your research. My husband spells his name "Marc" with a "c." and my first name is spelled "Nathalie;" not to mention that my honest English stone mason forbears would cringe at the misspelling of their last name to confound with that of the notorious 20th century serial killer. received an official communication from the Juzgado de Primera Instancia de Madrid, from one Don Ramiro Blah Blah, President of the Building Association of Serrano XX, a building of exactly 12 units, half of which were owned at one time by his father in law, in which it is alleged 1) "Mark Fleury and Natali Manson" have four children 2) these children own bicycles 3)and roller skates 4) and scooters ( Nathalie comment: nope sorry ...
Read more

Houston, We have a central-bank-run!

Judging by the comments, it seems many of you share my interest in understanding the recent economic news, at least Juha does. So I will continue covering that. Yesterday, my brother Carlos, who works for BNP in Europe sent me this story: Apparently we are seeing a dumping of US related assets by what is speculated to be... the Chinese. . Forget the computer attacks, Asia's sovereign funds dumping US assets would have a real impact on the economy. Credit and liquidity crises are not new and, when they turn bad, they turn bad. In 1929, the liquidity scare sparked a bank run. Banks didn't have enough cash and were defaulting, accelerating the mad dash and "bank-run" to get your money out while there was still liquidity. Then, the real economy wound up with no credit, and we all know the sad story from there. 2007 isn't like 1929. It isn't an "end-consumer" bank run. You and I are not going to the corner bank to take our savings out. Our confidence ...
Read more