Further evidence that the US financial system is just a giant Ponzi scheme with a piece of analysis from The Wall Street Journal showing that Goldman Sachs loaded up AIG with enormous risks that almost destroyed the insurance giant, and which would have left the world’s financial system in smoking ruins. It fueled AIG’s risks.
It seems that Goldman Sachs originated or bought protection from AIG on almost half of the $80 billion of dodgy US mortgage assets that AIG insured during the housing boom.
According to the WSJ, Goldman Sachs was acting as an insurer for the banks worried that the mortgage securities would tank. It provided that insurance at a massive profit, and then to cover itself, it bought protection from AIG, in the form of credit-default swaps that in the end nearly destroyed AIG.
The revelations are important because they suggest Goldman Sachs made enormous profits from the markets moving into the tanking phase.
And then it made money at the other end when it received a bailout from the the US government which spent billions in taxpayer dollars closing out the bad trades that AIG had made with various financial firms but was unable to pay off.
The Goldman Sachs strategy is there for all to see: make massive profits by playing both sides of the street.
no comment untill now