Tuesday, August 09, 2011

Monday Market Mania

Well that was fun in the stock market on Monday, wasn't it?

Let me start by just personally extending kudos to S&P for finally -- for the first time in several years at least for sure -- actually doing their fucking job and telling the truth, and for showing why they have always been considered and always will be considered far and away the most credible ratings agency in the world today. And especially for refusing to kowtow to pressure from no one less than the President himself not to downgrade U.S. debt as is obviously warranted at this time. In a way, I think we should probably be happy to be retaining even an a AA+ rating from S&P, and I am not the least bit surprised to see our debt only only downgraded but put on negative watch for further downgrades even from here.

I mean, it's highlarious to sit and listen to the President on national tv (for some strange reason today) as well as Treasury Secretary Geithner rage against S&P about how unwarranted the rating cut was and how mistaken S&P's judgment is, etc. When in reality you, me and everyone else in the country all know that, literally less than one week ago, this country was straight-up one or two days away from a debt default. Period, end of story, we were one or two days away from some form of debt default, a fact that was made extremely public by both sides of the debate on a repeated and consistent basis and in a very deliberate manner. Longtime readers will note that I have always been all about owning the consequences of your decisions here on the blog, and when the President and the GOP leadership both repeatedly make the decision to broadcast to the world how we are going to default on August 2, we won't be able to make a $60 million interest payment due on August 3, etc., then shut your holes and don't complain when a ratings agency whose sole job is to determine how likely your country is to suffer some form of a default on its debt, decides that maybe you are no longer worthy of the highest possible credit rating indicating the highest possible confidence that no default is ever forthcoming.

Because, you know, last week everyone and their mother associated with the U.S. government told the world loudly, clearly, and very deliberately that we were going to, you know, default on our debt on August 2 or 3. There was a stalemate on both sides heading right up to the weekend immediately prior to the scheduled default, and in fact the two sides eventually settled the debate generally by kicking the can down the road (sound familiar? It's unbelievable, isn't it?) until December to determine which programs will suffer cuts, and how much, to help stabilize the deficit in this country.

Anyways, somebody tell me again how President Obama goes nuts all week a couple of weeks back about how we're going to default on our debt on Tuesday, we're going to miss interest payments on Wednesday, etc., and then is back on tv a week and a half later questioning how S&P could possibly decide that U.S. government debt is not worth of what is essentially known as "risk-free" status among the major ratings agencies. That is just about the most thoughtless thing I've heard in the entire Obama term thus far. We're obviously not a triple-A rated country anymore in terms of our sovereign debt, and those of you Americans out there who actually have some scrotum should probably be focusing a lot more on what the fuck Moody's and Fitch could mother fucking possibly be looking at in recently re-affirming the U.S.'s triple-A "risk-free" status for its sovereign debt. As one more reminder, this is the debt that was very publicly a day or two away from literal default less than a week ago. The entire issue is really just unbelievable if you have your head screwed on straight.

Oh, and here's one other topic while I'm discussing the markets. This story makes my mother fucking blood boil -- that AIG is apparently going to sue Bank of America for some $10 billion for fraud related to subprime mortgages leading up to and during the financial crisis. And don't get me wrong -- Bank of America are a bunch of shitbags, and that bank -- the country's largest I believe -- could very well be leading the market and the sector lower as people are sure to start really considering that the bank might require another bailout or at the least a solid round of capital-raising in order to right the ship.

But this is AIG -- the company that essentially invented the notion of writing insurance contracts on other companies' debt defaulting over the past decade, accepting hundreds and hundreds and hundreds of millions of dollars in insurance premiums to insure the debts of companies like Fannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns, Wachovia, etc. on the blind, thoughtless assumption that none of these banks would ever actually fail, and that AIG was thus merely being paid "free money" at zero risk to the firm of ever having to pay out those insurance obligations in case of the disaster. This is the same company that, when all of those entities I mentioned above did experience defaults or even bankruptcies or near-bankruptcies, AIG of course couldn't even come close to actually paying out what it owed under these insurance policies, and who thus required a $180 billion bailout package from the U.S. government back in 2008/2009, much of which was paid directly by the way to Wall Street banks straight out of the government's coffers.

And now this same true piece of garbage company wants to recover $10 billion from shitbag Bank of America, for "misleading" AIG as to the nature of the mortgages bundled into securities that AIG accepted millions in fees to write insurance polices on. So AIG employees recklessly chased millions in fees and agreed to write countless insurance policies that the firm could not possibly ever pay off in the event of an obviously realistic set of circumstances (since they actually happened), and now they want to recoup from their clients AIG's losses on those insurance policies? Are you fucking kidding me? AIG, are you out of your fucking mind? The whole mother fucking point of offering up insurance on mortgage securities is the process of doing the due diligence to determine whether or not you are willing to provide the requested insurance, and at what price your actuaries have determined you are willing to offer it. That's the whole fucking point.

I mean, I could understand the claim that Bank of America probably made about a billion statements that turned out to be completely and utterly wrong about its expectations with respect to the value of the mortgages packaged into securities insured by AIG. Every company in America, on both sides of these transactions in fact I am sure, was more or less totally wrong about their expectations for the underlying mortgages in just about any debt portfolio five or six years ago. But how a company with the sophistication level of AIG -- the preeminent insurance company on earth as of before the financial crisis, bar none -- can willingly choose to participate for premiums that it agreed to, as an insurer of last resort in an entire securitization system that was truly hopelessly flawed, ultimately do its due diligence and decide to accepte hundreds of millions of dollars in fees to insure these mortgage securities against default at the prices agreed to by AIG in each and every case, accepting those premiums in exchange for promises to insure those securities and then now try to claim that they were somehow "tricked" by Bank of America with respect to what was in the securities that AIG had investigated before quoting its price to begin with, is beyond me.

And the thing that pisses me the shit off the most, by a mile, is that the U.S. government right now owns 77% of AIG. No, strike that -- Americans own 77% of this company right now, even after a large sale share earlier in the summer to reduce the holding from originally 92% after the company's ridiculous bailouts in 2008 and again in 2009. We own this fucking company!! And we're going to stand by and allow them to try to file downright frivolous claims that by definition would eliminate responsibility for AIG's own due diligence as the leading and most sophisticated insurance company in the history of the world? Literally! Why the shit would we ever allow that? We own this fucking company, big time. You and me brotha, we own this shit.

President Obama: if you're interested in getting someone with a head on their shoulders to at least consider voting for you in the next election, I want to see you on the fucking television, wagging a finger right at the camera, and telling AIG that they either withdraw this refluckulous claim today -- like, right fucking now -- or you are shutting them the fuck down once and for all like the filthy fucking crooks that we all already know they are. And then, let's hope they call your bluff and don't withdraw the claim against Bank of America, so you can shut those assholes down and put every one of those 63,000 full-time AIG employees out of business. You know -- our fucking employees. Mine and yours. How dare those sanctimonious shitpieces at AIG, who are only even employed at all right now by the mother fucking grace of having a two consecutive pussies as president who are just too damn afraid to stick it to the people who deserve it most, now demand the return of $10 billion because they didn't even fucking try to do their jobs and actually size the potential liabilities under the default insurance contracts they wrote. But it's not AIG's fault, right? They were "tricked" as part of the financial crisis by the very clients they were agreeing to protect. How unbelievably AIG of them.

What a load of bullshit. I would happily accept a big loss on our $180 billion investment in AIG at this point if it means putting the company's entire 63,000 full time workforce out of business. Tomorrow.

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