Comments on: Goldman anger is misplaced http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: HuckleberryFinn http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31183 Tue, 27 Jul 2010 02:24:09 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31183 Well done Dana Radcliffe. It’s not a sarcasm. Contrary to the hotheads you have analysed the Abacus deal set in a (despicable) gambling environment where a zero sum transaction was executed.

A looser and a winner would emerge from transacting synthetic securities. No ‘serious’ cards were hidden under the table, i.e. as the long parties to the transaction would need to see or analyse before closing.

Talking about gangster-like methods indicate little, if any knowledge of previous gambling attitudes in the market. GS had no fiduciary duty to ACA and IKW Bank (the long parties) – two opportunistic and badly managed players, eventually loosing their shirts…. one of which led to mayhem for German tax payers and investors, but not for US tax payers.

This is not to say that GS are saints and without any negative impact on the former bubbling housing market and US pension funds’ wealth, but in other transactions. All up, GS had a very limited negative impact on the MBS market, while the big players such as Countrywide, Fannie, Freddie, Citi, Bear, Lehman and Washington Mutual, were the front runners in this bizarre circus fully supported by Alan Greenspan, Ben Bernanke, Democrats (for promoting home ownership for more people), some Republicans and indeed, by the SEC through this regulator’s lack of competence, (maybe integrity) and interest in the what they should regulate.

The Abacus case was merely a political stunt as the White House was in dire need for a case on which its current masters could build their case for new financial regulation initiatives. President Obama was scheduled to open the financial show case in New York only four days after the SEC announced the fraud case against GS.

Have a look at how out-of-money GS option puts traded the day before disclosure. Not even mad investor parties such as the ACA representatives would have bought such puts one day before expiry without some info of what was coming up the next day. Who was in possession of such info? Reportedly not the GS camp, but only people from the SEC environment. The profits made were in the thousands of per cent, while the put sellers were left with equivalent losses.

I encourage everyone to analyse the trades themselves. So, why didn’t the SEC and the NYSE launch an investigation? The answer appears to be obvious.

SEC’s fraud case was not a zero sum ‘transaction’, possessing the characteristics of a scenario where none of the parties could afford to loose the case. As such, an out of court settlement was required, all of which was evident from the outset.

The SEC would have had significant problems winning this Mickey Mouse initiative, so getting some money to the treasury without loosing face became a must.

Same for GS, as it’s loss of reputation was (and still is) significant, but unbearable for management and board should such a court ruling (in 2011 or 2012) not be heading their way…. without any distractions as to daily routines. This would have been a poker game to continue such a case in court all of which the SEC would have understood.

My business partners and I believe that GS was the best managed financial institution reducing their housing risk significantly by hedging initiatives. However, it appears that they did not hedge their exposure to AIG sufficiently, riding towards significant losses if AIG went into Chapter 11 or final bankruptcy.

We believe that the previous government made a significant error of judgement when the former GS executive Hank Paulson was left in charge in the September / October days of 2008 because of his potential conflicts of interest. Potentially, this cost the tax payers dearly and equally bad, has led to America’s declining financial market superiority in Europe and in emerging markets in Asia.

Blankfein performed in late 2008 a brilliant job from the perspective of GS’ shareholders by eliminating GS’ exposure to AIG. Who should or could blame him for doing so?

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By: breezinthru http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31181 Tue, 27 Jul 2010 00:34:41 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31181 Brilliant, jstaf! Outrageously entertaining! Brilliant…

and what makes it so good is that it is a lot closer to the truth than the conventional straight-shootin’, hard workin’ fellas in the white hat who just happen to be the smartest guys in the room’ image they would like us all to see.

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By: jstaf http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31179 Mon, 26 Jul 2010 19:47:51 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31179 Let’s continue the poker analogy a bit longer.

What Goldman did was arrange the cards in the order that gave them the best hand in conjunction with a large client and then dealt those cards to pension funds and other investors as if they had been shuffled, in other words real risk.

Even then they were losing so they sent one of their players, Hank Paulson to work for gambling commission, where he worked out a deal that moved Goldman’s losses to the people watching the game, tax payers in this case, even though they had no chance to win.

They then shot one player in the head (Lehman) while breaking the kneecaps of an other (AIG).

Now does it start to make sense as to what is wrong with this picture, this would be gangster movie in real life, just cause they wear better suits than you doesn’t mean that the vampire squids aren’t corrupt and evil and deserve punishment.

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By: breezinthru http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31178 Mon, 26 Jul 2010 10:13:18 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31178 As long as the “bluffing” is within legal limits and it only effects the parties involved, most Americans will have no problem with that.

However, as a simple American citizen, I stood little or nothing to gain during the run up to the economic collapse and the financial consequences of that collapse have harmed me, my family, and my cohorts great harm that can never be undone.

The people and corporations who raked in great profits have not been punished in any real sense. They continue to do very well financially and the people in Washington, DC who should be representing the interests of people like me are instead doing everything they can to help Lloyd Blankfein and his ilk.

Many bank loans have been paid back, but no one sees Freddie Mac and Fanny May’s red ink as the responsibility of the people who caused the collapse.

The economy is still stumbling about like a skid row alcoholic while the banking industry does everything it can to shape the financial reforms in their own best interests.

My unspeakable anger is not at all misplaced.

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By: breezinthru http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31175 Sun, 25 Jul 2010 20:56:37 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31175 One business “bluffing” another is all fine and well as long as they money gained or lost remains between those two parties.

As soon as their nefarious business dealings begin causing great financial harm to people who had no part in those transactions and who stand little or nothing to gain when one party or another wins, then the matter of right and wrong comes into play.

When several parties lose big in widespread complex transactions, that is all fine and well as long as only those involved parties incur those losses.

When the losses are shoved down the throats of ordinary taxpayers and people who nothing to gain from transactions of which they had no direct knowledge, that is something very, very wrong.

I’m not surprised that this kind of reasoning is beyond your grasp, Dana Radcliffe. None of the players on Wall Street seem to get it, either. Neither do our representatives in Washington, DC who are only giving it lip service.

I get it. The financial collapse has effected me and my family, friends and peers in a myriad of painful, negative ways. A lot of the harm that has been done in the past couple years can never be undone.

A lot of ordinary people would like to see a day of reckoning loosely based on the early days of the French Revolution.

I wonder if the greedy, amoral bastards who caused all this trouble can ever grasp that simple concept. If you finally find a way to wrap your head around it, please try explaining it to them.

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By: HBC http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31174 Sun, 25 Jul 2010 19:01:06 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31174 So. Three spineless pundits on “a popular current events TV show” failed to say what millions of people think, namely that Goldman Sachs is a global disgrace to capitalism itself… and this makes *the people* wrong?

Cornell used to be a good school. But now in the prevailing “business” climate of suck-up expediency it’s clearly taken to gambling its reputation into the sewer – just another place *not* to go if you want to learn anything worth knowing, from anybody with a conscience.

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By: Benny_Acosta http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31173 Sun, 25 Jul 2010 11:52:51 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31173 It astounds me that the author of this piece lectures on ethics.

Sachs accepted money from its clients in exchange for sound investment advise. Sachs takes advantage of their privileged position to dupe the very clients that paid for that sound advise by advising them to “invest” in a game that was already rigged against them.

If Sachs was a car dealership they would have been sued/prosecuted by now. They violated the trust placed in them by their clients. They sold their clients out in exchange for some quick profit. That is NOT ethical. It also astounds me to think that people would be taught to expect ethical behavior from corporate institutions when the only “ethic” these organizations have is to “increase shareholder value”. And if you really look even at that so called ethic, you will find that share holder got the shaft as well.

Dana, for all of your so called knowledge, how is it that you think public anger is misguided when it is the public itself that had it’s safety net destroyed in order to save the collective corporate ass. GS and other execs get huge bonuses for causing the rest of us to have to do without basic needs and we’re supposed to be okay with this?

You must be lecturing to people who don’t live in the real world where consequences must be dealt with. Corporations survive on publicly sponsored socialism, but when talk of unemployment benefit extensions arise we are told that such a thing is “socialism” and “bad” for America. You must have a Phd, (Piled Higher and Deeper).

If business is a “poker game”, then why all the BS about how companies can “trust” the Goldman, or any other institutional name? At least in a poker game all of the parties involved understand that they are each looking out for their own interests. What GS did was to instill confidence and then use that confidence to extract profit from a “gullible” client.

That’s not poker. That, is the fine art of the con. GS deserves a huge hit to its profits and its reputation. So do the others that played the same game. Banking has proven itself to be unfit as a business model. Usury leads to destruction of societal trust. But since business cares nothing about society, it makes sense they are willing to destroy it.

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By: CDNrebel http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31171 Sat, 24 Jul 2010 19:27:16 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31171 Well, what’s next… should we chastise workers at fast-food restaurants because they transact in food that is completely unhealthy and make their franchises millions? Maybe we should attack car companies for not making sure that people that buy their cars know how to drive at a sufficient level?

GS pushed the envelope on their dealings a bit too far… and they paid for it dearly – let’s move on with our lives.

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By: penman12352 http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31169 Sat, 24 Jul 2010 14:37:12 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31169 How can opprobrium be misplaced when one concocts “…investments” that are nothing more than high-risk gambles…” with millions of people. That’s like a customer thinking he’s ordering a Cadillac when talking to the salesman who really know what he’s talking about and is trusted, signs the dotted line and is actually delivered a clunker. “But it’s a car, isn’t it? That’s what we do here at Obama Car Central. We do it all the time. All dealerships, haven’t you heard? And we do it all the time.”

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By: GPatton http://blogs.reuters.com/great-debate/2010/07/23/goldman-anger-is-misplaced/#comment-31168 Sat, 24 Jul 2010 14:20:28 +0000 http://blogs.reuters.com/great-debate/?p=7597#comment-31168 Well, since “there is something deeply wrong with an industry that has been…savings of millions of people” and Goldman is considered to be the preeminent firm in that industry, then the anger isn’t really misplaced, is it? Logical this argument isn’t. Who paid you to write this, Lloyd Blankenfein? George Patton

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