Comments on: How Goldman offloaded its toxic assets http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: randymiller http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14260 Fri, 30 Apr 2010 15:32:00 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14260 Danny Black,

You are evading the central question. Do you trust Goldman when it comes to investing in a product they are selling? Would you tell some 50 year old relative who is planning retirement that Goldman is trustworthy?

The issue is not how did the investments turn out. The issue is trust.

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By: longandshort http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14221 Fri, 30 Apr 2010 01:23:48 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14221 Danny_Black

No need for a time machine or a camera that shows you what is going to happen (a la Twilight Zone) if the Sec Tsy is going to save your butt if you get in trouble.

Pray tell, how many institutions get an national banking charter in 48 hours? I know, I know, it is because they have really good lawyers.

GS could take enormous risk in 2007/2008 with the knowledge that Hank Paulson/George Bush/Chris Cox were there to cover their losses with taxpayer funds.

How much risk do you think GS would take back then if a an ex LEH MD was at the Treausary and someone with an IQ above the freeezing point of water was at the SEC?

Where do you think GS stock would be if the bald Christian Scientist from Barrington let AIG fail?

Who needs a time machine when you have Hank and Chris to carry your water?

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14210 Thu, 29 Apr 2010 17:37:07 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14210 longandshort, yeap same chances as them and the other people who made money shorting subprime like the one eyed aspergers ex-MD sitting in his room.

All I want for Xmas is your time-machine were I can go forward in time and predict when a bubble is going to finally burst and exactly which products will go to zero. Apparently you believe GS and Paulson had one of these.

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By: Ungaro http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14201 Thu, 29 Apr 2010 10:33:38 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14201 Avoiding losses does not earn a fat bonus. Here is how to make the bonus check really fat:

Knowing that the half-life of the toxic junk is measured in months if not weeks, I buy “meltdown insurance”, essentially a put warrant, or credit default swap, from some deep-pocket issuer like AIG for something like $100K against the $1 bn notional. Then sell the tranches to “investors”. Once the thing implodes, I collect the face value of $1 bn for a tidy $999m+ profit. If my bonus is just a mere 10%, I have done well!

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By: longandshort http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14197 Thu, 29 Apr 2010 08:48:42 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14197 Danny_Black,

Alas, few of us were able to structure CDOs and pay the ratings agencies to obtain a AAA ratings on said structures to short the housing market (like Paulson, Goldman, et al).

Few of us also didn’t have a former partner sitting in Washington ready and willing to do whatever it took to protect the interests of his former colleagues — allowing two competitors to fail (BS and LEH) while making sure the wealth of taxpayers was there to save his beloved GS.

For example, I believe it took two days for GS to become a national bank when the application process for us mere mortals is 18 months.

Other than that, we all had the same opportunity as Paulson and Goldman.

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14191 Thu, 29 Apr 2010 06:05:27 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14191 Randy, you are completely missing the point. The point is that NOW we know those deals went to zero. Just like NOW we know that Netscape isn’t going to take over the world. At the time different people had different views. ACA and IKB had one view. Paulson had another. Paulson turned out to be right, having been wrong for a couple of years. ACA and IKB turned out to be wrong having been right for more than a couple of years.

There are very few things in the market you KNOW are going to go to zero and I guess I am not as bright as you are to know BEFOREHAND that they are going to zero. I can only assume that all of you how KNEW these products would go to zero are currently multi-billionaires slagging off Goldmans as a retirement hobby.

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14190 Thu, 29 Apr 2010 06:00:10 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14190 boogienights, if they thought it was so “shitty” – which is another deal not the Abacus one – then how come then ended up owning part of it? Surely if they “knew” it was going to zero they would have got short on that deal not long.

Weird these emails never got released by the government or the SEC:

http://finance.yahoo.com/news/Testimony- Could-Undercut-SEC-cnbc-3160283437.html? x=0&sec=topStories&pos=main&asset=69e8ac 8d9997b758b24e337dd5d56fbd&ccode=1

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By: HBC http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14188 Thu, 29 Apr 2010 05:40:54 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14188 It’s not as though Goldman was looking over its standing inventory and just happened to come across a cool billion bucks’ not-worth of suspiciously toxic assets it really ought to unload. Not least because if it were, the guy who hypothetically bought them with Goldman’s money wouldn’t have been paid in dollars but in bullets. That’s not what happened.

No, the process of actively searching for precarious assets, optioning them with a view to blending, repackaging and 18kt gilding them like so many Damien Hirst turds which they then gaily hawked to public pension funds… that wasn’t a one-time thing and it wasn’t a mistake. It’s doing Karl Rove, Tom Delay and satan’s work, destroying public infrastructure everywhere – Because They Can.

And it’s been Goldman’s business model since they became a so-called investment bank.

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By: boogienights http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14185 Thu, 29 Apr 2010 04:02:59 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14185 Danny,

Did they tell them that they thought the investments were “shitty” and going to zero? Did they tell them that they thought the investments were mislabeled because people were paying ratings agencies for ratings? I don’t feel sorry for ACA or IKB and could give a damn if they lose all there money. Goldman needs to deal with their own counterparty risk and not rely on taxpayer help. Sorry if I don’t believe Fabulous Fab or Paulson. Show me an email, memo, letter, etc. that states that Paulson was taking a short position. Surely they did this to cover their ass, right? Investment banking, commercial banking, and market making need to be completely separate. Sell stupid someplace else.

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By: randymiller http://blogs.reuters.com/felix-salmon/2010/04/28/how-goldman-offloaded-its-toxic-assets/comment-page-1/#comment-14184 Thu, 29 Apr 2010 03:59:22 +0000 http://blogs.reuters.com/felix-salmon/?p=3607#comment-14184 Since this has temporarily turned into a website about prostitution, maybe Goldman is like the hooker who gives a client an STD, and then says somehow the client should have been aware that she might have an STD. Ok, that might work in court to get her off, but only a fool uses her services after that gets around.

Goldman’s legal defense team is building their case around the idea that people should know if they deal with Goldman, they have a reasonable chance of getting screwed, and suffering the STD afterword.

OK, market makers, can I buy a synthetic CDO where I am betting that Goldman is being less than truthful?

Amarillo Slim made a bet one time that he could hit a golf ball a mile, or some long distance like that. He found a counterparty to take the other side, because nobody could hit a golf ball that far. So Slim took the the other guys out on a big frozen lake, hit the ball, and watched it roll, and roll, and roll. Of course he won the bet. Another time he challenged a very good ping pong player to a game, and when the other guy showed up, Slim told him the game would be played with Coke bottles as paddles. Of course, Slim had been practicing with the Coke bottles, and won.

The point is, if you are betting against Slim, or making a deal with Goldman, you can think you have accounted for every little twist they might have put on the deal, but there will still be some little trick they take advantage of.

“Let the buyer beware?” Nope. Better off to not be a buyer when it comes to Goldman.

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