[lbo-talk] Can we afford to pay off all the swaps?

[Charles Peterson]

I've gleaned that all the money we've pumped into AIG
(first the $85 billion, and then the ~$35 billion?)
has gone straight out to settle AIG's Credit Default
Swaps (i.e., the gambling debts for which they never
bothered to have reserves), just at the moment they
become due.  Of course, as part of the swap, we've now
got the toilet paper, isn't that nice.

But exactly how long can the Fed and Treasury keep
this up?  How many trillions in CDS's did AIG write on
one side?

And aren't we on the hook for all the future losses at
Fannie and Freddie?  Isn't that potentially in the
trillions also?

The way this looks, when the bubble finishes
deflating, the US public will have taken on nearly the
entire loss.

How big was the bubble above projected housing price
baseline?  $5 Trillion?  Is anyone figuring the total
cost we're on the hook for, not just the trillion
peanuts we've shelled so far?  And what if the
collapse doesn't stop there?

Is that correct?  Am I missing something?

And it seems even this is just a small part of the Fed
and Treasury are doing.  Going further, how many of
the outstanding $65 Trillion in CDS are one-sided? 
And are we going to have to pay off other derivative
losses also?

Charles Peterson

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