Business week – The idea certainly seemed all right to throngs of Americans who were outraged by news that American International Group (AIG) paid out millions of dollars in executive bonuses after it was rescued with taxpayer cash.

But would no bailout be even worse? Financial analysts and federal officials have warned that doing nothing to save AIG—or banks or the auto industry—would be a catastrophe, an economic domino effect of bank losses, stock market chaos, and job cuts. No one—at least no one in the government—has the stomach for that.

Read Complete Article

Tags: aig, american-international-group, auto industry, bailout, banks, domino-effect, federal officials, gamco investors, Hedge Fund Heavyweights, job-cuts, leon cooperman omega advisors, losses, market chaos, mdash, stock market, stomach, wisdomtree investments

Guardian Unlimited – Billionaire hedge fund manager John Paulson has made a £100m profit by betting that the Royal Bank of Scotland’s share price would fall dramatically, according to calculations by the Guardian, adding fuel to the debate about the impact of short-selling on bank stocks.

New York-based Paulson, who made more than $3bn by betting against the US housing market, now appears to be profiting from positions placed on the assumption that bank shares would tumble in the aftermath of the market chaos caused by the demise of the sub-prime mortgage industry.

His hedge fund, Paulson & Co, was one of the few to trade through the ban imposed on short-selling by the Financial Services Authority in September to protect the rescue takeover of HBOS by Lloyds TSB.

Read Complete Article

Tags: aftermath, amp, assumption, bank-stocks, billionaire, demise, financial-services-authority, guardian, hbos, hedge-fund-manager, john paulson, lloyds, market chaos, mortgage industry, royal-bank-of-scotland, share price, sub-prime-mortgage, takeover, us housing market