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TonyGosling
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Joined: 26 Jul 2006
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Location: St. Pauls, Bristol, UK
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 Posted: Fri Oct 24, 2008 7:57 pm Post subject: Financial Crisis Orchestrated by Goldman Sachs? |
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Financial 9/11 Orchestrated by Goldman Sachs?
Bilderberg's main global bank holding company. Engages in investment banking, securities and investment management.
| Quote: |
What Does Goldman Know That We Don't?
Commentary by Michael Lewis
Jan. 17 2008 (Bloomberg)
What's odd about the subprime crash is Goldman Sachs Group Inc. A single firm took a position contrary to the rest of Wall Street. Giant Wall Street firms are designed for many things, but not, typically, to express highly idiosyncratic views in the market.
Even more surprising is how little Wall Street seems to have dwelled on how and why Goldman Sachs made its killing. There are insane conspiracy theories -- for instance, that former Goldman chief executive officer and current U.S. Treasury Secretary Henry Paulson tipped his old pals, etc. (But then, how did HE know?)
There is also the widely held opinion that people who work at Goldman Sachs are just smarter than ordinary people -- hence the lust to hire former Goldman employees to run other Wall Street firms, as Merrill Lynch & Co. did. (But why would any trader who could systematically beat the market waste his time at Goldman Sachs?)
So far as I can tell, there has been only one attempt to explain this strange event, and that was by a journalist, Kate Kelly of the Wall Street Journal.
This Little Piggy
Ms. Kelly's very good piece offered up the sort of irrelevant details -- this little piggy ate which sandwich for lunch as the market crashed, which trader went to the gym at which odd hour to relieve the incredible stress of gambling with billions of dollars of other people's money -- that leaves the reader, along with employees of Goldman Sachs, feeling as if someone inside Goldman must have spilled the beans.
But Goldman didn't cooperate with the Journal, was actually a tiny bit miffed about the article, and now says the Journal exaggerated the bonuses paid to certain traders and the profits made by certain departments. That's Goldman's only complaint, however, and so the Journal story is probably true, as far as it goes. The only trouble is that it doesn't go far enough.
Briefly, the Journal story runs as follows:
By the end of 2006, the people creating and selling subprime mortgages and other so-called CDOs (collateralized debt obligations), had put Goldman Sachs in exactly the same position as every other Wall Street firm. Left to their own devices, traders in subprime-mortgage bonds would have sunk Goldman just as they sank Merrill Lynch, Citigroup Inc., Bear Stearns Cos. and every other major Wall Street firm.
Smart Guys
Enter two smart guys who trade Goldman's proprietary books to argue to the CEO and chief financial officer that the subprime market feels soft and that Goldman should short it. This they do, in such massive quantities that they more than offset the long positions in subprime held throughout the rest of the firm, leaving Goldman short the subprime market and in a position to make billions when it crashes. End of story..............
http://www.bloomberg.com/apps/news?pid=20601039&sid=aEXlKAu61sYU&refer=home |
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