by Gayle Plato, M. Ed
I don’t usually post others stuff more than a quote, but this information is too valuable to miss. There is a fake profitability question of how is it that AIG, huge insurance company, ‘losing’ money, and financial giants Citibank and Bank of America made profits? Those two banks may have been hyped for those pseudo-two month profit that rallied the Dow for a few weeks. Is it real? Is it just Area 51 of the Groom Lake trader shell game? What IS going in? Power up my black helicopter, cuz Soccer Mom is coming in for a landing.
Well some traders and brokerages make really big commissions off of these games people play.
There is talk amongst trader and Wall Street pop-talk blogs of AIG selling complicated portfolios-a strategy of options, bond, and stocks all packages that only have relationships to each other. So when they want to get out of this–when they hedge- they sell the packages cheaper than should be, letting the banks stick it to AIG. Then the banks turned around doing similar transactions. With that, there are LARGE commissions coming and going and it makes no sense. Profits tick up on the formal balance sheets for the banks, AIG pays bonuses to shift attention over here, and nobody knows nothing as the laundry comes in and goes out. Throw a TARP over it all? Hmm.
Now I might just be some lil ol’ goof out here in blogosphere, but I can read. These tea leaves are making me green with ill, and some shifty money lifters green with the looting of the big business. Our Congressmen don’t have time to read the stuff they sign.
This PLAN by the Treasury is NOT being cobbled together late at night, and Timmy Geithner is NOT just some poor guy workn’ hard. He knows exactly what he is doing and when I saw him on Meet the Press, I started really worrying.
So what happened today? The president of GM left and the board of directors is going to resign. Looks like this biggie is going into bankruptcy; so let the head guys out and let it go under. Now we are merging Chrysler with Fiat. Good God. Did you read THIS one: the government is honoring warranties for GM? Is this insane? Or is this a template of government regulation like we’ll have with universal health care?
Simply put if you pay someone else’s bills, they have no incentive to keep the costs down. Get ready for regulated auto industry. If you cannot see this process of power grab, you are not looking. Go sing Kumbaya and look at Mrs. Obama’s guns. The government is not on autopilot though, and neither the leaders nor any of us are victims.
From the blog- Zero Hedge (http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html)
“For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman’s terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.
In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).
What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner’s (and thus the administration’s) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.”