Goldman Sachs, Warren Buffet, the IMF & EU and Greece
Greece to reduce their borrowing costs sells derivatives on their sovereign debt, which is common tthroughout the world.
Goldman Sachs, at this point is an investment bank and handles the sale of the derivatives, interest rate swaps and credit default swaps.
Mr. Buffett's Berkshire Hathaway Inc., has a portfolio of $63 bln in derivatives according to the article above.
So far, everything is legal and running smoothly, then the sub-prime mess hits, credit freezes and US banks take a heavy hit, including Goldman Sachs.
Now we need to look back and see what happened next? During the height of the bailouts GS share prices dropped below $50/ share, TARP is introduced of which GS received $10 bln. When AIG was bailed out via the NY Fed, Goldman Sach’s received another $10.9 bln, using AIG as the proxy, a government company.
When it looked as though GS was experiencing a severe bank run, who came to the rescue? Warren Buffet, of course, and his investment of $5 bln. Who is provided with preferred shares and a warrant to purchase another $5 bln in common shares.
During the week of March 24-31, 2010, the Federal Reserve made a loan to parties unknown, as seen here. Normally most people would say, so what, right? This loan is for $421.8 bln! Marked for the bail out of Goldman Sachs for their asinine derivatives bets in Europe, not only Greece, but the rest of Europe, via the IMF & EU.
One thing that should be noted is that all US banks are in on it as well as many European banks, credit default swaps and interest rate swaps are taking down the European Union and the Fed is bailing out the banks, this time with the help of the IMF.
Until Next Time,
DG