Goldman Sachs bet on housing meltdown -- and won
- Thread starter jficquette
- Start date
You suggest that GS is smarter than the rest of the pack and that may be true but that doesn't mean that GS is not complicit. They were repackaging mortgages and selling them knowing full well that they were bad. If what you say is correct -- that GS is smarter than the rest -- then GS knew they needed to hedge their risk. So what GS did was package bad mortgages on the left hand and hedge them, and then sell them with the right hand to pension funds and such. If the mortgages were really AAA why would they need to hedge that kind of risk? AAA is one notch below the Government's debt and as close to default free as you can get w/o buying debt from the government. Why the hedge?
That is fraud in the purest sense. If I did that with my clients I would be in jail.
That is fraud in the purest sense. If I did that with my clients I would be in jail.
I agree what you described is fraud. The problem lies with large banks having MANY internal teams and no, they don't all know what each other is doing. GS is famous for encouraging their employees to talk-back to management and do things on their own. Don't misunderstand - it's not an excuse, but you have to understand how large companies work before you start calling for people's heads.
so you seriously think the investors who bought those mortgage obligations did not know they were bad? lol. You mean someone who collects 15+% returns on such products should not reasonably expect that there is some inherent risk, higher than the risk on government bonds? Dont make me laugh please...
and the rating was given by rating agencies not GS. And investors knew all along that the rating stood for nothing more than get the deal out of the door. GS is a bit smarter than the rest of the crowd but dont assume everyone else among the institutionals is completely dumb either.
and the rating was given by rating agencies not GS. And investors knew all along that the rating stood for nothing more than get the deal out of the door. GS is a bit smarter than the rest of the crowd but dont assume everyone else among the institutionals is completely dumb either.
People need to stop treating Blogs as news - they are Opinion/Editorial outlets, like tabloids. Elvis and space aliens? Yeah, the National Enquirer makes good arguments why Elvis is still alive too....
People seem to forget that before the meltdown GS was killing it - for YEARS. Their success is nothing new. Everyone on the street always wanted to work for them because they hired the best and brightest. Those valedictorians you graduated with? They went to work for Goldman. Those Rhodes scholars? At Goldman. Suddenly, because they had the least downside in a massive market correction, they must be gaming things? They've nearly ALWAYS been the best. GS hasn't changed, the market has. Suddenly people are looking for something to blame, so blame the successful - the ones that managed their risk properly, like this board always tells traders to do!
I'm not defending Goldman because they are Goldman, I'm making this point because they are at the top right now, and most of the arguments are how "fixed" or "rigged" the market is so attack the guy on top. Run a search on here: the majority of negative GS threads started AFTER that Rolling Stone article.
That RS article has turned people into the sheep they sware up and down they aren't! This is such a bandwagon issue: GS must be thee devil!!11!@ When people can't come up with valid facts to discuss other than pointing to "success as evidence of wrongdoing" it just doesn't work. Too many logical fallacies and not enough paper trails. I see infinitely more fraud that occurred with the underwriters, appraisers and mdd-level lenders related to MBS and CDOs than with the large IBs.