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Source:
Goldman Primed to Benefit from AIG’s Woes — Again, William Cohan Says
Yahoo Tech Ticker, Jul 02, 2009 10:28am EDT
Aaron Task
http://finance.yahoo.com/tech-ticker/article/273168/Goldman-Primed-to-Benefit-from-AIG%27s-Woes—-Again-William-Cohan-Says
"If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability." -Henry Ford
The record $16b 30 year bond auction was light as the yield was a few bps above where the when issued was trading and the bid to cover at 2.26 was the weakest since May and below the '09 average of 2.43. Indirect bidders totaled 44% which is about in line with the '09 average. Going out 30 years to collect a nominal yield of 4.47% with no inflation protection is taking huge faith that the return will compare favorably to other asset classes with the backdrop of the current impact of a weaker US$, higher gold, rising inflation expectations...
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July 3rd, 2009 at 8:35 pm
Don’t waste your time with this one.
July 4th, 2009 at 10:32 am
Although Cohen wrote an interesting book, you have to question his understanding of the market after reading the article. Credit default swaps aren’t flood insurance. There’s no secondary market for flood insurance after you buy it. Once you spend the premium, its gone. With credit default swaps, there’s daily two way liquidity in the over the counter market. If Goldman Sachs didn’t need the AIG credit protection anymore, it probably sold the credit default swaps back to the market to recoup some of the original costs. This appears to be an populist piece with a populist title that’s poorly researched if not ignorant. Shame on you for posting it. You should know better.