McClatchy DC’s Greg Gordon has done a bang up job dissecting Goldman Sachs’ huge profits after the bailout. This topic represents the intersection of TARP, the Wall Street investment banks and the offshore reinsurance industry. With subprime mortgages stuffed inside insurance linked securities that were peddled both domestically and overseas, the securitized reinsurance contained a derivative based financial guarantee which was likely made good by TARP (my posts on Allstate’s Willow Re, which was not bailed out can be found here in general with my “bell cow post” here. With a tip of the hat to our good friend Mr CLS I can short cut the exhaustive written series of articles by Greg Gordon that focuses on bailed out Goldman Sachs with a recent Youtube interview he gave.
As an aside I continue to believe the collapse of this glorified pyramid scheme explains more on the recent volatility of the costs of RE than anything you’ll hear from the paid shills at their tradegroups (Ol’ Eli is so proud of his work there his Bio is access restricted). I think after a fair read of the information open-minded folks would tend to agree. Or put another way the tail risk associated with Hurricanes does change over time but not overnight. And those that could game the system made out like bandits. The Youtube embed is below the fold.