If Bernanke is running for cover over this AIG disgrace, can GS' prop desk be far behind? Recall that GS prop trading, already by 3rd qtr of 07, had taken billions from the likes of AIG. Easy to envision GS, as an early and very big casher of these lottery tickets (aka AIG credit default policies), called before a congressional committee to splain. I would guess it is visiting and maybe re-engineering the transactions trail as we speak (or more likely, has been for many months). Could turn out to be the worst 40 or more billion it ever made. (Nice problem to have, still.)
AIG lost to JPMorgan.....etc, but most monolines posted no collateral in doing so. So any profits JPM has marked are bs if AIG can't cover them and then the chain of profits marked is evaporated, leaving losses on books. The only ones who have profited are those that have had collateral posted daily, however, they are the smaller counterparties in this whole equation.
aig is a harvard case study. http://online.wsj.com/article/SB122538449722784635.html?mod=todays_us_page_one
The counter party of AIG really should take a hit too. Gov shouldn't shoulder 100% of the loss. Afterall, they should be happy that they got anything at all.
You don't get it. AIG has covered it's losses. Courtesy of the US taxpayer. So any losses accruing to AIG benefiting JP Morgan, should show up on JP Morgans quarterlies as profit. Where are they? Remember, thats what the Government bailout of AIG was for: to cover its losses. AIG is one small example. The entire financial bailout is over 10 TRILLION dollars. Most of that went to cover derivative losses. So where did the Trillions in profits go that were "losses" counterpartied by the US taxpayer? That money has apparently vanished. And any thinking person with half-a-nut rolling around, knows thats impossible. For every seller (writer), there was a buyer. So, I ask again. Whose got TRILLIONS in US Taxpayer CASH???
The counterparty gets it from the broker. And the broker gets it from you (the trader). If an account gets liquidated in the red after a margin call, the broker takes the hit then recoups it from the trader. The loss simply doesn't "vanish". Or else how does a counter-party profit from a trade no one paid for???
Have you looked at the stock mkt recently? Are you familiar with how the whole system-wide margin setup operates? Have you seen how much hedge funds lost last year and how much the banks have been writing down? As a 'thinking person with a half-a-nut rolling around', I am certain you can figure it out.
Please, enlighten me. Or are you one who thinks X Trillions in S&P market cap "evaporated"? "Vanished overnight", as they like to say.... You believe that?