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That was when the market meltdown was already apparent. Those collateral calls from 2007 to 2008 amounts to a minor 2.5 out of 13 billion. $2.5 billion did not

by codexon 17y ago

That was when the market meltdown was already apparent. Those collateral calls from 2007 to 2008 amounts to a minor 2.5 out of 13 billion. $2.5 billion did not make AIG insolvent. $13 billion did. The source is from Burry, the first person to start buying CDS's in 2005. He even bought some from GS. You can't really expect GS to be honest here when their reputation is on the line. And yes, GS should have written it down as a loss. Because if it was you in their shoes, you would have been forced to eat the losses since you don't have their government connections. Why does GS get a free pass?

vlod 17y ago
Is it GS fault that AIG was doing securities that it couldn't collateralize? No.. why does GS care. Yes the government could have forced them to eat their losses, but the point of the bailout was to stabilize the market. The government didn't want anyone (not just GS) to lose money, as that would have caused a cascade effect. (In their mind) I think your suggesting (as far as I can tell) is that GS forced the government to give out money (through their political connections). I really don't think that's true. I think the government was super concerned (and super scared) that the flow of money would stop and the whole US economy would fall. Not just investment banks but everything.
- deleted 17y ago
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- codexon 17y ago
  I think your suggesting (as far as I can tell) is that GS forced the government to give out money (through their political connections). This is very much the case. To open an account at Goldman Sachs, you must invest at least $10 million. Averages Joes are not investing with Goldman Sachs. If they wanted to stabilize the market, the government could have chosen to invest it in banks that did not overextend themselves, or to directly purchase toxic assets instead of doing it through a middleman: letting GS skim a profit. Instead, they predictably saved the assets of the super rich instead of mainstreet America.

by codexon 17y ago

vlod 17y ago

Is it GS fault that AIG was doing securities that it couldn't collateralize? No.. why does GS care. Yes the government could have forced them to eat their losses, but the point of the bailout was to stabilize the market. The government didn't want anyone (not just GS) to lose money, as that would have caused a cascade effect. (In their mind) I think your suggesting (as far as I can tell) is that GS forced the government to give out money (through their political connections). I really don't think that's true. I think the government was super concerned (and super scared) that the flow of money would stop and the whole US economy would fall. Not just investment banks but everything.

deleted 17y ago
[deleted]
codexon 17y ago
I think your suggesting (as far as I can tell) is that GS forced the government to give out money (through their political connections). This is very much the case. To open an account at Goldman Sachs, you must invest at least $10 million. Averages Joes are not investing with Goldman Sachs. If they wanted to stabilize the market, the government could have chosen to invest it in banks that did not overextend themselves, or to directly purchase toxic assets instead of doing it through a middleman: letting GS skim a profit. Instead, they predictably saved the assets of the super rich instead of mainstreet America.