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9 Votes
11 Comments
How Goldman secretly bet on the housing crash
News Type: Event — Seeded on Sun Nov 1, 2009 6:23 AM EST
Article Source: NewsObserver.comadvertisement
In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.
Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.
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- Kent the Roofer's Column, All of Newsvine
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- Public Discussion (11)
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3.7
{"commentId":10405600,"authorDomain":"kent-the-roofer"}
Sounds to me like someone will be appearing in court to explain this one.
Every investor who was conned should file suit.
{"commentId":10405600,"threadId":"714117","contentId":"3448568","authorDomain":"kent-the-roofer"}
- 2 votes
#1 - Sun Nov 1, 2009 6:24 AM EST{"commentId":10405765,"authorDomain":"rickace"}
Sounds like GS is the "RSG Investment Bank of Wall Street" in this slideshow. The initials match closely enough.
Bad assumption my frigid Norweigan ass!
{"commentId":10405765,"threadId":"714117","contentId":"3448568","authorDomain":"rickace"}
- 1 vote
#2 - Sun Nov 1, 2009 7:19 AM EST{"commentId":10405816,"authorDomain":"eric-albert"}
These are the criminal elites, "expert" idiots, foxes watching the chicken coop, Wall street thugs, who Obama put in charge of the criminal bail out. They should go to jail. Dismantle the Goldman Sachs cabal or den of thieves.....ARREST THEM
Please stop rewarding them with our trillions of tax dollars. Congress and Obama are nothing but class whores, class politicians, who serve criminal corporations and the oligarchy.
{"commentId":10405816,"threadId":"714117","contentId":"3448568","authorDomain":"eric-albert"}
- 2 votes
#3 - Sun Nov 1, 2009 7:29 AM EST{"commentId":10405876,"authorDomain":"bluecollarbytes"}
This is one area that should unite the concerns of left and right.
As bad as things are in the 'markets' that push paper, I think we've only seen the tip of corruption.
{"commentId":10405876,"threadId":"714117","contentId":"3448568","authorDomain":"bluecollarbytes"}
- 2 votes
#4 - Sun Nov 1, 2009 7:39 AM EST{"commentId":10405969,"authorDomain":"Jivatmanx"}
This is one area that should unite the concerns of left and right.
Both will defend their masters at all costs.
{"commentId":10405969,"threadId":"714117","contentId":"3448568","authorDomain":"Jivatmanx"}
{"commentId":10406217,"authorDomain":"rickace"}
As bad as things are in the 'markets' that push paper, I think we've only seen the tip of corruption.
I'm not so sure that corruption is the dominant problem. It appears that the organizations that purchased those securities didn't bother to do their homework to determine whether or not they were making a sound investment. That's not corruption, it's ineptitude or sloth. As for Goldman, if they did indeed misrepresent what they were peddling, that's unscrupulous behavior, most likely motivated by greed and seasoned with a disregard for the welfare of their clients.
In any event, we've not seen the end of this. With a boatload of seething former clients demanding their day in court, law firms may even have to hire on new attorneys to build their cases against Goaldman, and maybe Goldman will have to hire some sharks as well. That bodes well for employment numbers.
Isn't that what Obama wants?
{"commentId":10406217,"threadId":"714117","contentId":"3448568","authorDomain":"rickace"}
- 1 vote
{"commentId":10407763,"authorDomain":"JohnRussell"}
A quote from the Congressional overseer of the bailout is appropriate here.
"I was talking to someone who spent many years as a prosecutor, and he said when that much money disappears it's usually because somebody broke some laws somewhere."
Elizabeth Warren
{"commentId":10407763,"threadId":"714117","contentId":"3448568","authorDomain":"JohnRussell"}
- 1 vote
#5 - Sun Nov 1, 2009 10:57 AM EST{"commentId":10408048,"authorDomain":"rickace"}
when that much money disappears it's usually because somebody broke some laws somewhere
Maybe yes, maybe no. The past decade has been unusual in that there was a huge expansion (bubble) in credit and a lot of money to be made off that. Many high-rollers thought the party would last forever, but apparently GS was smart enough to sense that it was coming to an end.
The question is then: did they exit legally or not?
{"commentId":10408048,"threadId":"714117","contentId":"3448568","authorDomain":"rickace"}
- 2 votes
{"commentId":10414426,"authorDomain":"JohnRussell"}
You are talking vague generalizations. There are a number of reports that something wasn't on the up and up. The bums belong in prison.
{"commentId":10414426,"threadId":"714117","contentId":"3448568","authorDomain":"JohnRussell"}
- 1 vote
{"commentId":10408058,"authorDomain":"jvin248"}
It was easy to see the coming storm. GS just acted on it early. They probably took some beatings (internally and/or by competitors and the press) after they sold and the housing market continued to go up. Remember that GS trades on their reputation - if too many shady actions happen then no one trusts them and their value as business partners plummets.
As for the purchasers .. they didn't have to buy. The buyers thought they were getting a deal and didn't really worry about what rating the assets had (no one did at the time, remember). They could have requested a full review of every home on that list. But they had to buy any scrap of the housing bubble they could or their company would fire them for missing out on the market run. If they didn't buy from GS then the guys down the street were in line. A bit of greed goes a long way.
Read some history... The Mississippi Scheme, South-Sea Bubble, Tulips, 2000 Tech Bubble, and the Savings & Loan Bubble. All driven by greed. While different security instruments are involved, the sign-posts along the way are always the same, as are the results.
{"commentId":10408058,"threadId":"714117","contentId":"3448568","authorDomain":"jvin248"}
#6 - Sun Nov 1, 2009 11:23 AM EST{"commentId":10408143,"authorDomain":"rickace"}
Read some history... The Mississippi Scheme, South-Sea Bubble, Tulips, 2000 Tech Bubble, and the Savings & Loan Bubble. All driven by greed.
I've heard of all those except the Mississipi Scheme.
While different security instruments are involved, the sign-posts along the way are always the same, as are the results.
One salient signpost this time around was the repeated mention of the "real estate bubble". How much clearer could it be? They all burst in the end. Those who don't learn from history are doomed to repeat it.
{"commentId":10408143,"threadId":"714117","contentId":"3448568","authorDomain":"rickace"}
- 1 vote
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