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Did Goldman's hole just get a little deeper?
Topic Started: Apr 25 2010, 08:17 AM (149 Views)
John Galt
Fulla-Carp
Goldman execs cheered housing market decline

and

Goldman and IKB
Let us begin anew, remembering on both sides that civility is not a sign of weakness.
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Piano*Dad
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Bull-Carp
Yes, it did. But stories and leaks like this are not about a search for truth, they are about grabbing and holding the microphone to shout your political message. This email dig is a classic example of cherry picking your evidence. Give me 200,000 internal emails within any organization and I can practically guarantee you that I'll be able to fashion a story to hang just about anyone. And that goes for Goldman-Sachs or Mother Teresa's Orphanage.
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jon-nyc
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Cheers
The first one only affects their trial in the court of public opinion, which I'll admit is non-trivial for the firm.

The second piece is interesting, I suspect they'll get cooperation from IKB. They'll be stuck trying to argue that Paulson's role in selecting the securities wasn't material, which is at best dubious. (in fact I wouldn't be surprised if IKB really didn't understand that a synthetic CDO is actually made up of short positions of another counter party, let alone that the counter party in question helped select the securities).
In my defense, I was left unsupervised.
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jon-nyc
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Piano*Dad
Apr 25 2010, 09:08 AM
And that goes for Goldman-Sachs or Mother Teresa's Orphanage.
How interesting you choose two organizations doing God's work. :tongue:
In my defense, I was left unsupervised.
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John Galt
Fulla-Carp
Piano*Dad
Apr 25 2010, 09:08 AM
Yes, it did. But stories and leaks like this are not about a search for truth, they are about grabbing and holding the microphone to shout your political message. This email dig is a classic example of cherry picking your evidence. Give me 200,000 internal emails within any organization and I can practically guarantee you that I'll be able to fashion a story to hang just about anyone. And that goes for Goldman-Sachs or Mother Teresa's Orphanage.
I don't know if you were referring to me as an individual or to people in general "shouting your political message".

Just for the record, PD, I didn't have a political message when I posted this. I really was wondering if this was as damning as it sounds at first blush. As a refugee from the financial services industry, I understand it is perfectly reasonable for a firm to take a short position to protect itself against losses.

The question is, did they do so "honestly" or were they taking advantage of the situation and/or information they had about customer positions?

As always, best to go to the source, so I dug up a link to the emails that were released. I haven't had a chance to read them but am posting it so we all have the "raw data":

http://www.finfacts.ie/biz10/goldman-emails-subprime1.pdf

(That link was from this article: http://www.finfacts.ie/irishfinancenews/article_1019533.shtml)

edit to add: I took a quick look at the emails. I'm not too familiar with these instruments, so I'm hoping others with greater knowledge can comment after reading the actual emails.
Edited by John Galt, Apr 25 2010, 10:05 AM.
Let us begin anew, remembering on both sides that civility is not a sign of weakness.
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Piano*Dad
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Bull-Carp
Actually, I wasn't referring to you at all. Sorry if it appeared that way.

The 'shouting people' in this case will be in Congress and they will be shouting so that the chances of getting their pet projects passed and the possibilities of getting reelected both go up.

I don't know the truth of this matter, but I do know that picking out four emails (or however many the small number may be) is not the same thing as building a careful case that would stand up in court, except perhaps for that court of public opinion Jon refers to.

In the end, I would not be shocked if GS had indeed bet against its own clients. I'm very skeptical of investment houses that serve many masters. For a small client like me, the incentives just don't line up well. I have an instinctual fear that my assets may be thought of as their food, and not as a thing to be nurtured to full growth. This 'scandal' simply reinforces my skepticism. In the end, if you're going to work through a financial representative who works for one of these firms you just have to trust your relationship with them. Scary.
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John Galt
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Glad we clarified our respective positions! And I share some of your skepticism regarding the motivation of the members of Congress.

While I dealt with clearing and settlement issues for derivative instruments, the ones being talked about in the emails are not ones with which I have a working knowledge. So even reading the emails, without a lot of background work, I don't know if what they are talking about amounts to fraud.

Waiting for someone with the right background to read those things and comment...(I'm such a lazy bum....)

:whistle:
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