Replies to post #141344 on ajtj99's Market Pulse

[hawk]

Were does the Federal Reserve get the authority to buy stakes in companies, specially foreign ones ? This is ludicrous.

[Neutral Man]

AIG has some serious counter-party derivative contracts with GS(Goldman Sachs), and if they go under GS goes under, if GS goes under then Warren Buffet goes down, and so on, and so on, you figure it out!

Hint: Think Paulsen, Treasury Secretary, former GS King-pin, duhh!?

[ajtj99]

They basically wrote massive amounts of naked Credit Default Swaps (protection against default backed by nothing).

The demise of AIG could have created a domino effect that may have toppled the entire global financial system. The government really had no choice in that matter but to rescue them.

This is why credit default swaps should be regulated and backed by collatoral like insurance policies.