Jim,

This finally made a major US paper.

Monty

Dear Monty,

If you have the knowledge to understand this article, it outlines the money trail from government to derivatives and underscores that the loss side of these instruments are still on balance sheets of the loser and the Federal Reserve.

Regards,
Jim

N.Y. Fed pushed AIG on contracts
After federal bailout, insurance giant lost its leverage with banks
By David Cho
Washington Post Staff Writer 
Wednesday, October 28, 2009

The Federal Reserve Bank of New York said Tuesday that it had no choice but to instruct American International Group last November to reimburse the full amount of what it owed to big banks on derivatives contracts, a move that ended months of effort by the insurance giant to negotiate lower payments.

Fed officials offered the explanation in a rare response to a media report after Bloomberg News said that the New York Fed, led at the time by then-President Timothy F. Geithner, directed AIG to make the payments after it received a massive government bailout. The officials said AIG lost its leverage in demanding a better deal once the company had been saved from bankruptcy.

Lawmakers and financial analysts critical of the payouts say it amounted to a back-door bailout for big banks. AIG, the recipient of a $180 billion federal rescue package, ended up paying $14 billion to Goldman Sachs over months and $8.5 billion to Deutsche Bank, among others. Before the New York Fed intervened, AIG had been trying to persuade the firms to take discounts.

The precise cost to taxpayers of these decisions is difficult to determine. Bloomberg, quoting an industry source, reported Tuesday that AIG was aiming to pay just 40 percent of the $32.5 billion it owed to the banks. Using those figures, the report concluded that the government needlessly overpaid $13 billion.

More…

Dear Jim,

China’s sovereign wealth fund, CIC, announces that they have earmarked $110 billion for overseas investment. Lou Jiwei, CEO of China Investment Corp, said today "Now we are seeing expectations of medium and long term inflation, and the value of major currencies may have to fall to a new equilibrium level.” He further said “Investing in major commodities can be a hedge, so is investing in real estate.”

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Jim,

Gold’s decline will prevent delivery of gold on option expiration. Gotta love the manipulation.

CIGA Eric

Dear Eric,

The Russian rumor of large sales came when gold was trading between $1050 and $1060.

This is why the great profit will be to the insurance gold holder who is not glued to the screen.

Regards,
Jim

Jim,

I’m also not sure if I told you guys the story last year when I was in Middletown, Pennsylvania. There was an abandoned metal forging plant in town that contained a 40-ton drop forge, used for creating industrial machinery and military forgings (artillery tubes and naval propellers, etc.). The drop forge was huge, over three stories tall.  It had been sitting there for over a year after the company went bankrupt. I met the former plant manager and he said that the Chinese were buying the forge and were going to ship it back to China on a rail car.

China also is buying Volvo. That means you are now driving a Chinese car.

All the best,
CIGA Rusty Bayonet

Ford says China’s Geely preferred bidder for Volvo unit
By Tom Krisher and Joe Mcdonald, AP Business Writers
On 10:19 am EDT, Wednesday October 28, 2009

DETROIT (AP) — Ford Motor Co. has picked a consortium led by China’s Geely Group as the preferred bidder to buy its Swedish Volvo Cars unit, the U.S. automaker said Wednesday.

Ford said the selection signals that it is conducting "more detailed and focused negotiations" with Zhejiang Geely Group Holding Co. Ltd. about the sale.

The announcement means that both sides have reached a fundamental agreement to sell the storied brand, but details such as price still must be worked out, according to a person briefed on the negotiations.

The person, who asked not to be identified because the talks are private, said Ford and Geely are "on the same page" about sharing key technology and other items, but no definitive sales agreement has been signed.

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