Friday, March 20, 2009

Guardian Reporter Would Like To Know If Goldman Sachs Is Racked With Guilt Over AIG (Nah)

From DealBreaker:

...Andrew Clark, the Guardian: Do you accept that it was your collateral calls last year that put AIG over the edge, and do you feel guilty about that?

David Viniar: Ummm..uhh..we didn't do anything wrong. All we did was call for the collateral that was due to us under the contracts. There's no guilt whatsoever....

From Zerohedge:
...Purchasing $10 billion in CDS (roughly in line with what Viniar claims happened) at a hypothetical average price of 25 bps (and realistically much less than that) and rolling that would imply that at today's AIG 5 yr CDS price of 1,942 bps, the company made roughly $4.7 billion in profit from shorting AIG alone! ...MORE including a rather important caveat.
The maximum payout to Goldman occurs when the financial system doesn't disintegrate and the Ponzi is bailed out. See also: "The optimal design of Ponzi schemes in finite economies"
(I've referenced that paper twice today. Like our hat-tippee Bookworm Room I believe the author should be considered for a Nobel)