The fall of 2008 was a hectic time, when in the aftermath of the Lehman failure, the entire financial system was on the verge of collapse and only the biggest Fed/taxpayer-backed bailout in history avoided an all out depression. Today, as a result of the latest, 12th Podesta leak, we find that then president-elect Barack Obama was also being intimately briefed with unfolding events.
In a previously never before seen confidential memo, sent on November 9, 2008 from current Fed governor Dan Tarullo addressed to Barack Obama, Tarullo send John Podesta an email in which Tarullo, who at the time was not employed by the Fed and was Professor of Law at Georgetown University Law Center, reveals what Hank Paulson and Ben Bernanke in which Tarullo was told on a “confidential basis that, before the markets open tomorrow morning, they will be announcing a significant restructuring of the AIG bailout package. They are taking this step in order to avoid what they asserted would be a systemic crisis.“
From the article:
Just three questions here about Sarah Dahlgren’s “resignation”:
1. Why is she resigning now: is there a crackdown on just how corrupt the Goldman Sachs branch office at Liberty 33 truly is? Acutally, just kidding. Ignore this for obvious reasons.
2. What will her salary at Goldman Sachs be once she joins the 200 West firm?
3. Which Goldman partner will replace her?
– NY Fed Head Of Banking Supervision, And Person Who Handed Over Billions In AIG Profits To Goldman, Resigns (ZeroHedge, April 30, 2015):
The name Sarah Dalgren is well-known to long-term Zero Hedge readers: back in January 2010 we revealed that, just before the Great US banking system backdoor bailout by way of getting a par return on AIG CDS, back in August 2008 Goldman was willing to tear up AIG Derivative Contracts, and had in fact offered to take a haircut. It was the Fed who turned Goldman’s offer down! And the person who made the decision would become the Fed’s head of Special Investments [AIG] Management Group: Sarah Dahlgren.
We said that Dahlgren “not only did not save US taxpayers’ money, but in fact ended up costing money, when they funded the marginal difference between par (the make whole price given to all AIG counterparties after AIG was told to back off in its negotiations) and whatever discount would have been applicable to the contract tear down that had been proposed by Goldman a mere month earlier. This, more so than anything presented up to now, is the true scandal behind the New York Fed’s involvement.“
Added: Apr 21, 2013
9/11 Conspiracy Solved: Watch this documentary and look for the evidence and then make up your own mind whether or not 9/11 was an inside job.
Special thanks to Michael C. Ruppert, Mark H. Gaffney, and Kevin Ryan for their amazing research, as they tried to solve the crimes of 9/11. This video is a compilation of evidence they have uncovered.
YouTube Added: 21.03.2013
– Kyle Bass Warns “The ‘AIG’ Of The World Is Back” (ZeroHedge, March 12, 2013):
Kyle Bass, addressing Chicago Booth’s Initiative on Global Markets last week, clarified his thesis on Japan in great detail, but it was the Q&A that has roused great concern. “The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time… and it is happening in size.” As he explains, the regulatory capital hit for the bank is zero (hence as great a return on capital as one can imagine) and “if the bell tolls at the end of the year, the 27-year-old kid gets a bonus… and if he blows the bank to smithereens, ugh, he got a paycheck all year.” Critically, the bank that he bought the ‘cheap options’ from recently called to ask if he would close the position – “that happened to me before,” he warns, “in 2007 right before mortgages cracked.” His single best investment idea for the next ten years is, “Sell JPY, Buy Gold, and go to sleep,” as he warns of the current situation in markets, “we are right back there! The brevity of financial memory is about two years.”
Click the image below for the full presentation (unembeddable):
The main thrust of the discussion is Bass’ thesis on Japan’s pending collapse – which we wrote in detail on here, here, and here – and while the details of this thesis should prepare most for the worst, it is the Q&A that provides some very clear insights into just what is going on in the world.
Starting at around 50:00…
Bass On Immigration Reform in Japan – hailed as a solution to the demographic problem – Bass says “Ain’t gonna happen. They need wage inflation and this will not encourage that. It’s an untenable situation.” Summing up his whole view on Japan – “I just don’t think it can be fixed.”
Question: When you look today in the capital markets at the tactical asymmetry that exists among the various financial instruments to take advantage of cheap optionality – what is that instrument?
I’ll give you guys a bit of an idea… we don’t talk about exactly what
we do – we tell you how much we love coke but we’re not gonna give you
The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time.
You know why? Because it’s outside of a 95% VaR, its less than one-year to maturity, so guess what the regulatory capital hit is for the bank… I’ll give you a clue – it rhymes with HERO…
– Secrets and Lies of the Bailout (Rolling Stone, Jan 4, 2013):
It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
– Facing backlash, AIG won’t join suit against U.S. (USA Today/AP, Jan 9, 2013):
NEW YORK — Facing a certain backlash from Washington and beyond, American International Group won’t be joining a shareholder lawsuit against the U.S. government.
AIG was legally obligated to consider joining the lawsuit being brought against the government by former AIG Chief Executive Maurice Greenberg, who claims that the terms of the $182 billion bailout weren’t fair to AIG shareholders.
The prospect of AIG joining the lawsuit had already triggered outrage. A congressman from Vermont issued a statement telling AIG: “Don’t even think about it.”
– AIG Considers Suing US Over US Bailout Of AIG (ZeroHedge, Jan 8, 2013):
Sometimes you just have to laugh – or you will cry. In what could well have been Tuesday Humor if it wasn’t so real, the AIG board (fulfilling its shareholder fiduciary duty) is considering joining Hank Greenberg’s suit against the government over the cruel-and-unusual bailout that saved the company. The $25bn lawsuit, as NY Times reports, based not on the basis that help was needed but that the onerous nature “taking what became a 92% stake in the company with high interest rates and funneling billions to the insurer’s Wall Street clients” deprived shareholders of tens of billions of dollars and violated the Fifth Amendment (prohibiting the taking of private property for “public use, without just compensation”). The ‘audacious display of ingratitude’ comes weeks after the firm has repaid the $182 billion bailout funneled to it and its clients by an overly generous Treasury. The firm has asked for 16 million pages of government documentation, this “slap in the face of the government” portends a question of whether the government will sue The Fed for enabling the recovery that strengthened Greenberg’s case that the bailout was so harsh. Happy retirement Tim Geithner.
– Lawmakers outraged after AIG announces potential suit against US over bailout (FOX News, Jan 9, 2013):
As American International Group Inc. weighs whether to join a lawsuit against the government that spent $182 billion to save it from collapse, U.S. lawmakers have a message for the insurance behemoth: “Don’t even think about it.”
In a letter to AIG Chairman Robert Miller, U.S. Reps. Peter Welch, D-Vt., and Michael Capuano, D-Mass., characterized the insurer as the “poster child” for Wall Street greed, fiscal mismanagement and executive bonuses.
“Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah,” the letter read. “Taxpayers are still furious that they rescued a company whose own conduct brought it down. Don’t rub salt in the wounds with yet another reckless decision that is on par with the reckless decision that led to the bailout in the first place.”
– Marc Faber: “Paul Krugman Should Go And Live In North Korea” (ZeroHedge, Dec 13, 2012):
If there is one thing better than Marc Faber providing a free, must-watch (and listen) 50 minute lecture on virtually everything that has transpired in the end days of modern capitalism, starting with who caused it, adjustable rate mortgages, leverage, why did the Fed let Lehman fail, why was AIG bailed out, quantitative easing, Operation Twist, where the interest on the debt is going, which bubbles he is most concerned about, a discussion of gold and silver, and culminating with his views on a world reserve currency, is him saying the following: “The views of the Keynesians like Mr. Krugman is that the fiscal deficits are far too small. One of the problems of the crisis is that it was caused by government intervention with fiscal and monetary measures. Now they tells us we didn’t intervene enough. If they really believe that they should go and live in North Korea where you have a communist system. There the government intervenes into every aspect of the economy. And look at the economic performance of North Korea.” Priceless.
50 minutes of Faberian bliss:
– A.I.G. Is Now Worried About Bad P.R. — for Policyholders (New York Times, Oct. 11, 2011):
Insurance providers are constantly coming up with new products to sell to policyholders. But the American International Group has hit upon one of the more unusual new services we’ve heard of in some time: reputation insurance.
Chartis, A.I.G.’s property and casualty insurance arm, said Tuesday that it would begin selling something called ReputationGuard. Created by Chartis’s executive liability team, it would give policyholders access to “a select panel” of experts at the public relations firms Burson-Marsteller and Porter Novelli to protect against negative publicity.