If 10,000 investors, companies or investment groups / hedge funds bought credit default swaps – (credit insurance) on those portfolios of worthless junk made up of hundreds of defaulting loans – they would have each and every one been paid out 100 cents on the dollar for the full value of the portfolio, whether that was $300 million dollars, or billions of dollars or whatever total value of the portfolio that was insured.
Like a company, bank, pension fund, investment pool, insurance company, corporation, association, state budget or group of individuals in an investment investing group portfolio being paid $7 million dollars for the credit default insurance – and then in a matter of weeks having to pay out $840 million dollars to cover that total payout to each of the investors and companies who participated in taking out the credit default swap (on a package of loans worth only 1/1000 of the stated value in the first place and that weren’t expected to be mostly paid off as healthy loans and mortgages in the first place – almost guaranteed to default) – and how many other places paid out the total amount of the portfolio value to satisfy credit default insurance on the same package? How many times over throughout the hedge funds and others that Goldman Sachs told or sold and each other firm on Wall Street was selling for and against at the same time, as well?
Hmmmm. . . .
Now I see how they were doing it and why the investors’ appetites for more and more of these likely to default loan packages was insatiable –
Every package / portfolio of these loans which were “shorted” – literally paid out for the full value to every investor or company like Goldman Sachs that was holding credit default swaps / credit insurance on it. So, for a $300 million dollar package or a $1 Billion dollar portfolio of mortgage backed securities that went into default – they were assured that 100% of the value would be paid out to them with absolutely no risk and no skin in the game (and in a very short order of time.) That’s how they did it and how they managed to rob every school budget, state budget, county budget, pension fund, educational endowment, retirement fund, and investment portfolio, bank and insurance company throughout the US and across the world.
It probably includes robbing revenues from our treasuries and every sovereign wealth fund in the world in the same way.
Every credit default swap paid out 100% many times over. If there were 10,000 investors and hedge funds playing “short” by buying the credit default swaps on the portfolios, these same pension funds and state revenue funds, etc. would’ve had to pay out 100% of the value to each and every one of them.
I think that’s it and why the institutional investment professionals had an insatiable appetite for these fraudulently valued and likely to fail instruments and portfolios based on loans very apt to default.
– cricketdiane, 04-27-10
How did these get paid out this way legally? Isn”t that illegal?
Talk about free money.
They also had intimate knowledge of the fact that the loans were intended to be in that package of mortgages because they were the most likely to fail and go into default before making their plays against them using credit default swaps that would pay out 100 cents on the dollar for the full package of the portfolio value when it failed.
So each every time they did this – the money which went into their profits, covered their lifestyles, covered their expenses to operate, covered their helicopters and corporate jets, covered their $20,000 per hour salaries and bonuses and perks and corporate taxes and corporate benefits and corporate continuing plays in the marketplace along with offering further leverage opportunities – that money came from the pockets of every hard working, hard earned dollar that was put into savings, investments, and pension funds by Americans and individual citizens throughout the world.
They (Goldman Sachs and other Wall Street investment firms) accessed and used the state budget revenues in our state budgets, our school budgets in our school funds, our tax dollars in our federal Treasury, our school endowments and trusts, our charitable donations that were put into huge pools and used in the same games, our pension and retirement funds, our banks’ assets and pools of funds which belonged to us and every other pool of moneys that people had worked for and placed in a position to be used as an investment tool in order to acquire interest and gain on the money.
Unbelievable. There ought to be a clawback of those funds to put them back where they belong because that game was not only rigged – it was criminal.