

Goldman Sachs, Facebook, the SEC and Bubble 2.0 - bensummers
http://broadstuff.com/archives/2373-Goldman-Sachs,-Facebook,-the-SEC-and-Bubble-2.0.html

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mikeryan
"Bigger Fool Theory" has officially been added to my vocabulary for explaining
the current spate of ultra high valuations for companies like Facebook and
Twitter.

* Greater fool theory <http://en.wikipedia.org/wiki/Greater_fool_theory>

~~~
narrator
The investment banks are stuffed full of money they got from the fed buying
all their worthless MBSs they sold to them at par. They are just dying to find
some other bubble to invest it in.

You see, when too much money is idly sloshing around the economy it sooner or
later finds a bubble to invest in. It has to be something new and shiny though
with "unlimited" growth potential in order to really get the bubble going
though.

As usual the Onion does a better job explaining it than I ever could:

[http://www.theonion.com/articles/recessionplagued-nation-
dem...](http://www.theonion.com/articles/recessionplagued-nation-demands-new-
bubble-to-inve,2486/)

------
jbail
Great article.

The last sentence is what I thought when I first heard about this: "The one
sure thing you can tell from this is that Facebook clearly can't self fund
itself enough for what it needs, even on $2bn turnover a year."

It will be really interesting to see some actual, real-life numbers from
Facebook regarding their profit/loss/revenue/expenses. My guess is that we
will soon enough.

~~~
barmstrong
This is what I thought too- they can't be profitable if they are raising more
money. But then I read it wasn't Facebook selling equity, but early investors
selling their private shares.

[http://finance.fortune.cnn.com/2011/01/04/five-reasons-
why-i...](http://finance.fortune.cnn.com/2011/01/04/five-reasons-why-im-not-
buying-facebook/)

So maybe Facebook is not getting the cash infusion.

------
shivannaidoo
My 2 cents - Facebook will be releasing a phone timed just right for their
expected IPO in 2012 - my guess is that they wouldn't be able to approach any
handset manufacturers directly without telegraphing their intentions to G and
Apple - perhaps a social OS wrapper around Android ?

~~~
marknutter
I give a Facebook Phone 1000:1 odds. More likely is that they are banging
their heads against their desks trying to figure out how to make money off 500
million users.

------
cagenut
so you're saying goldman figured out how to sell debt that will never get
repayed and collect fees (pay bonuses) on the deal?

i'm shocked, shocked

------
roman-m
Ask HN: what about the law of 500? Is it a good law ?

------
wh-uws
Can you have a 2001 style bubble.. with one company?

~~~
michaelty
With a side of Bezos, Pets.com, and an AOL-Time Warner merger?

------
chailatte
Reminds me of...

Goldman Sachs says Ireland will be ok

[http://www.politics.ie/economy/143357-goldman-sachs-says-
ire...](http://www.politics.ie/economy/143357-goldman-sachs-says-ireland-will-
ok.html)

How Goldman Sachs Helped Greece to Mask its True Debt

[http://www.spiegel.de/international/europe/0,1518,676634,00....](http://www.spiegel.de/international/europe/0,1518,676634,00.html)

How Goldman Sachs Made Tens of Billions of Dollars from the Economic Collapse
of America

[http://www.globalresearch.ca/index.php?context=va&aid=16...](http://www.globalresearch.ca/index.php?context=va&aid=16744)

Oh, Goldman Sachs. Are there no depravity which you are absent from?

~~~
cynicalkane
I submit that your links are not appropriate for Hacker News. They are not of
sufficient quality that someone with a hacker's interest in finance would find
them interesting.

Link 1 is an exceptionally low quality discussion about a Goldman analyst
report. I can stop there, but I'll add further that if you actually read the
report under discussion, it says quite clearly that Ireland will _not_ be OK
unless there is a bailout, due to the risks that all financial institutions
regardless of capitalization face during a crisis. In other words, Goldman's
analysts believes Ireland will be OK given a good bailout, which is not a
shocking opinion at all.

Link 2 I have little comment on, because it provides no useful contextual
information. Trying to read this account of financial engineering is like
trying to read about a science study in the daily paper. All the details are
left out, and a newspaper cannot be trusted to get the big picture right. The
phrase "special kind of swap with fictional exchange rates", for example,
might be accurate, but it just smells like the writer misunderstood a forward
contract or something.

Link 3 is Matt Taibbi-level flamebait, except Taibbi is a better writer. I
have no patience for this stuff anymore.

None of these links have been accurate or meaningfully informative, yet they
seem to be very popular. The financial news discussions on HN is becoming
increasingly frustrating as it becomes more and more like r/economics. If
someone disagrees with any of my assessments, I would appreciate a reply.

