Former Goldman MD on Goldman Profits

I thought this was an interesting read. The arguments rests on the now well-publicized observation that bank profits are being driven by the 'free' money provided by the Fed. Nevertheless, another viewpoint never hurts (care of Zero Hedge).

AIG Fuels Bank Profits

Tyler Durden at Zero Hedge publishes a provocative post regarding bank profitability and AIG CDS payouts. In some ways, this should not be a surprise. As described in my previous Soros post, AIG was long lots of credit risk by selling protection to banks. Given how far credit has deteriorated, banks SHOULD be deeply in-the-money on those contracts. Indeed, these contracts are precisely why AIG has been bailed out multiple times by the government. So as these contracts get unwound, a significant amount of P&L should be flowing to the banks.

Nevertheless, Tyler always offers an interesting opinion, so have a look.