

Goldman executives cheered housing market's decline, newly released e-mails show - eplanit
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/24/AR2010042401049.html?wprss=rss_politics

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bushido
Facts:

1) The stock-market itself is theoretically a zero sum game. So regardless of
the instrument being trade someone is always betting against a trade. ex. over
and above a long/short combo, even if person X is going long and person Y is
booking profits. Person Y is theoretically betting against X.

2) GS is a clearing house among other things. Hence there is a high
probability that on any given day they have hundreds of transactions that are
long/short withing the same client pool.

3) Most transactions take place on a level 2 platform, i.e. the maximum
someone can see if which company cleared the transaction, not which client
etc.

4) Even if it is the same advisor, it would be illegal to disclose the
transaction details of a client to another client.

5) I have never come across a retail investor that invests in CDOs and other
exotic instruments.

6) There is a difference between hedging and naked/un-hedged trade. If someone
is smart enough to be willing to trade an exotic instrument in the later
category they better have the ball s to take ownership of the losses.

7) I wonder if people would have whined at all if GS did not make money on the
hedge, since that happens in the majority of cases. Even in the case of GS.
Like a number of other activities/sports a 30% win rate can be awesome.

8) This article is baseless is theory and practicality...

Because(Opinions):

a) Either they are trying to say, hedging should not be allowed. If it should
be allowed the ones hedging should not make a profit(??). If they do make a
profit they should feel sad about it.

b) If making a profit is a bad thing then, I guess they are trying to promote
a way to eliminate losses. If thats the case I wonder what they would like to
do. More bailouts or close the stock markets completely.. what would be the
use if no one should make a profit??

c) I guess to make the article/issue clearer the next thing they could say is
underwriting of any kind is also an illegal practice, since the institution
assuming the risk is only entitled to risk and losses, go forbid if they make
a profit, well we can see GS getting bashed for now :)

d) Anyone who lost money, even if they were GS's clients ought to have done
their own due diligence too, if the people investing do not understand the
inherent risks involved with doing business they are better of staying away
from the markets as much as possible.

e) lastly, IMO the intent of this article is not to do anything but upset
people who lost money or know someone close to them who lost money (includes
all most everyone)to help gracefully without opposition let others implement
speculative unhedged measures to curb speculation, hedging, profit making,
angel funding etc..

Cheers!!

~~~
wrinklz
Fact:

1) Your argument is baseless...

Because (Fact)

a) We (the taxpayers) were compelled to bail GS out to the tune of 12 billion
dollars to prevent a catastrophic worldwide economic collapse.

b) GS has access to huge amounts of credit at zero percent interest from the
Fed.

Conclusion

1) We the people don't require evidence of a "crime" to take further action to
protect our interests going forward.

~~~
bushido
LMFAO! Where did you get this from: "GS has access to huge amounts of credit
at zero percent interest from the Fed"?? whereas in fact: They had "10
billion" shoved down their throats in Oct-Nov 2008, in exchange of preferred
stock, with the condition that they had to take the money, and had to keep it
for six months.

Which they repaid in full in April-May 2009 along with 23% interest. 23%!!!
thats more per annum than a sub prime individual with no security would pay!

Your interests in what exactly? You don't even know the facts of your own
investments.. if at all you would like to call it that. i guess you meant
interest as in the 23%!

Go dig up the archives for 14 Sep 2008 - 30 Nov 2008, since I dont remember
the exact date for the statements "We dont want or need any funds from the
TARP".

Why not, because in Sep 2008 they had already raised 10 Billion from buffet.
Not to cover their asses etc. but to use the money to make more money.

Of course this also brings up the question whether the motive of force funding
GS was to save them or just get a slice of an awesomely lucarative delicious
pie! something you the taxpayer profited from!

But of course you could have easily missed that, due to a beautiful blame
shifting concept called "dissonant discomfort/cognitive dissonance". google
it.

Question: 1\. Which we the people are you referring to, the ones who
understand issues, or just carry a vote without any knowledge? 2\. If everyone
understands the issue, I am sure you realize that "don't require evidence of a
'crime'", is an unlawful non-democratic statement in every way. ..... and
hence you could definitely not mean "we the people"? 3) Again, what interests
exactly?

in conclusion: are you really under the illusion that you are going forward ?
LMAO!

~~~
hga
Goldman was one of the 9 banks at that infamous meeting where Treasury
Secretary Henry Paulson (not to be confused with the selling short hedge fund
counter party of this deal) said "Take this money or else".

Here's Judicial Watch's page on this meeting:
[http://www.judicialwatch.org/news/2009/may/judicial-watch-
fo...](http://www.judicialwatch.org/news/2009/may/judicial-watch-forces-
release-bank-bailout-documents)

The talking points that were coughed up 3/4ths of a year later for Judaical
Watch's FOIA request match the leaked substance of the meeting including these
details:

" _We don't believe it is tenable to opt out because doing so would leave you
vulnerable and exposed.

"If a capital infusion is not appealing, you should be aware that your
regulator will require it in any circumstance._"

The leaks said that they were told they weren't leaving the room until they'd
signed on the dotted line. This is the sort of thing you expect from the Mafia
or in a Third World country, not the USA! Not to mention that the 23% interest
they were charged was Mafia like.

Too many envy the successful, and in this case technical excellence was part
of the story. Goldman developed their own computer language "Slang", and while
it's not too hot today, their overall system for using it gives them a
_fantastic_ advantage. When their leadership wants to play "what if", or the
world changes, they can use their system to query all their units and get an
answer in something like a few hours at the most.

Other firms keep this embedded in a zillion different (and by definition often
broken) spreadsheets and the like. Finding out which end is up is a largely
manual and error prone process taking days (or so I read; whatever the time
amounts, Goldman's system is going to be a lot faster and more accurate).

------
grandalf
Why is this bad? Are investors supposed to be cheer leaders?

Any time a stock transaction takes place, one party believed it was a good
idea to sell and the other party believed it was a good idee to buy.

How is the housing market any different? Should we all be made to believe it's
always a strong buy?

~~~
jhancock
Its my understanding that GS is being accused of playing both sides: telling
clients to continue to invest while GS was internally hedging for a fall. This
article possibly points out some evidence of this.

~~~
endtime
> telling clients to continue to invest while GS was internally hedging for a
> fall.

I think it's slightly more subtle than that. They didn't actively tell clients
to invest - rather, they had clients who wanted to go long housing, and
facilitated the trade without telling the buyers that GS thought it was a bad
idea. At least, that's my understanding, based on talking to some people who
spent decades at GS and left between six months and three years ago.

~~~
shrikant
Ah the age-old corporate cop-out: commission vs omission.

~~~
gloob
It's not Coca Cola's duty to keep you thin. It's not your bank's obligation to
keep you solvent.

------
philk
Personally I cheered the housing market's decline as well. It's interesting
how we're always told it's a disaster when there's a market correction but
never when an asset class is getting overvalued.

~~~
arch_hunter
Yes, and then the government 'has' to do something to 'correct' the market's
own correction.

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lsternlicht
These articles have sensational headlines that don't point to the real issue.
The possible fraud committed relates to GS recommending securities that they
were betting against.

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davidw
I'm cheering for its decline too: I don't own a house, so lower prices are
good for me.

------
wrinklz
I liked Bill Black's comments on the Bill Moyer's Journal last week. He said
(my paraphrase) that if corporations are to have the privileges of personhood,
most notably free speech and rights to political contributions, then they also
should have the same consequences: As in losing civil rights for felony
convictions, and the "three strike" rule, meaning I guess they should be
permanently dissolved upon the third felony conviction.

~~~
gruseom
Somehow it's controversial to argue that corporations should have
responsibilities other than to their shareholders. You don't have to take many
steps back from our present-day paradigm to see that as awfully weird.
Personally, I'd have thought the controversial view would be that corporations
_shouldn't_ need to balance shareholders' interests against, say, employees'
and public's. _That_ seems like the ideological dogma to me: this idea that if
you place one set of interests above all others, magic will happen.

~~~
hga
Logical error: "place one set of interests above all others" is not the same
as does not have "responsibilities other than to their shareholders".

------
toddh
Would you like your surgeon who is charging you money to save your life to
also take out a life insurance policy on each operation?

~~~
hga
Well, he _does_ take out an insurance policy on his making a mistake, or at
least being accused of one.

~~~
toddh
A general policy to keep from being sued. Far different than profiting from
your death.

------
motters
To me this seems like unethical behavior of a very profound nature when you
consider the human consequences.

