Monday, July 6, 2009

Goldman's new insurance scheme

Your capital requirements now magically go away, with the latest off balance securitization that Goldman Sachs is pushing:

Under Goldman’s idea, it would sell an insurance product to a bank with a toxic portfolio, effectively shifting the risk of the underlying assets off the balance sheet. The insurance would require far less capital to be carried against it than the original assets.

Deutsche Bank engineered a comparable structure to facilitate the dismantling of risk at failed insurer AIG, although bankers close to that transaction said without government involvement the cost of such a structure would be commercially unfeasible.

Why do you think Goldman calls this scheme "insurance?"

It changes the capital required.


Anonymous said...

dear Palmoni, your site becomes more and more like market-ticker or 0hedge (except some nipplegate like articles sprinkled here and there...). How about if you make fun of bears and offer some "explosive" trades like buying X at 36 or buying UYM July options? No seriously, if i want to read GS trushing there are more than enough sites devoted specifically to that. Please stay true to yourself and give us some trades, and not the junky news...

Palmoni said...

Boy that was a tough to read between those lines.

Wall St got ahead of Main St, and I got ahead of Wall St.

Unfortunately, regarding Goldman, we all wear those tinfoil hats...

But on the UYM--On the Junes I had a triple, though I advertised 7x-I took a double in the July's but you probably didn't watch them that closely because you didn't own them.

Want ideas? How about shorting AMZN on the APPL new apps? Shorting BIDU on Chinese censorship?

The rolling over of TWM? Pair the short with a long SPY.

You want cheap? Look at AHC-at .94. PE is already looking at some of their business.

Score a couple for the bears--but I appreciate the Polonious viewpoint!

Anonymous said...

now we are talking :-)