AlexS

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

Although gambling and insurance both have an element of chance, there is a key difference. Insurance has a purpose of mitigating damage. You buy insurance on your house and your house burns down, the insurance will help pay for rebuilding. You buy auto insurance and you get into an accident the proceeds will help fix your car. On the other hand, if Goldman Sachs and Bear Stears bet on whether GM will go bankrupt (CDS) there is no repair of GM if one of them wins. There activity is pure gambling, no insurance about it, regardless of what they may call it.


On Apr 01 04:51 AM User 369125 wrote:

> The entire insurance 'game' is based on gambling. They gamble that
> you will never make a claim and make sure the odds are in their
> favor . If this is not an April fools joke and is in fact true,then
> AIG is just doing what is normal for any insurance company practice
> as they have done for 200 years .

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

Why do they need to "unwind" these positions? They're just bets. Gambling. Gambling debts are not enforceable by law, or so I understand. Let them bring their CDSs together and they can all get their money back, and no more. Why should taxpayers cover AIG's gambling losses? Why should they provide the banks' gains? BTW, if you want to explain it to the public, this explanation they will understand.

Schumer Is Way Off

I was reading in another column that Libor is a theoretical rate, a rate that would be if banks were lending to each other. It's obtained by gathering a theoretical rate from a number of U.K. banks, throwing out the highest and lowest sets of rates, and averaging out the rest. These banks don't actually lend to each other at the Libor rate. It's more like an opinion poll. However, there are a lot of financial arrangements that are tied to the Libor rate, for better or worse.

Bank of America: Bailing Itself Out?

The private sector will bail out the borderline cases. The public sector (i.e. the politicians) will attempt to bail out the hopeless cases and will, of course, fail.

To Avoid Failure, Get Really Big; Everybody Else, Watch Out

Because the banking industry exists to carry out the Fed's wishes, as expressed through their money rates. Your local hamburger stand can't do that.