How AIG Became Goldman's Toilet

By Jeff Nielson of Bullion Bulls Canada

There have been many accounts of the shady dealings that Goldman Sachs(GS) had with AIG(AIG).

But one key point has been soft-pedaled, and another has been ignored altogether.

The first is that Goldman used AIG as a financial toilet. The second is that Goldman began openly and deliberately misrepresenting assets/investments to investors starting in 2006 or 2007 -- at a time when all the other banker-oligarchs were continuing to assert their "mark-to-model" valuations both publicly and privately.

I'm basing my analysis on two accounts of the Goldman/AIG relationship: one by New York Times columnist Gretchen Morgenson, and a blog entry by Yves Smith and Tom Adams, an attorney and former monoline executive.

Others have alluded to my first point, but never in blunt terms. Essentially, as the bankster-created U.S. housing-bubble progressed, Goldman Sachs discovered that AIG was so eager and aggressive to cash in on what it perceived to be a bankster gold mine that it would write up insurance on anything -- irrespective of whether its own personnel had any genuine understanding of what they were writing up.

Thus, Goldman Sachs began to take the worst of its financial waste to AIG, in order to get AIG to write up credit default swaps on the assets in question. For those still not familiar with some of the bankster jargon, a credit default swap is a form of insurance used specifically to insure against the risk of default on debt instruments.