SEC charges GS with fraud

[ElCubano]

Quote from nitro:

Next time you deliberately try to short someone's house, and further take pleasure and profit from it, just be aware that you are going to war. You are trying to deliberately destroy people and their families.

they didnt short a families home or a bundle of family homes, they went long insurance against bundled shit paper disguised as tripleA which also came in synthetic form just to compound the problem (when supply couldn't keep up with the demand of the institutions, that's when they brought in cousin vinny better known as Synthetic CDO). The housing market came crashing down because of people defaulting on their loans which in turn exposed the CDO's and its synthetic cousin for what they were which triggered the CDS's to explode in value...which is what happens when something is overvalued. When Companies like AIG and the other numbnut institutions got left holding the wrong side of the paper is when all hell broke loose and CREDIT FROZE. Because the insurance would not have been paid off if they were let go under...hence the reason we got muscled into paying of the insurance or credit would have just froze until who knows what...

but yes this was all done behind the scene with no transparency and absolutely no regulation..Talk about inefficient market, the credit default swaps for mortgages had in essence no market...until it all started to unravel.

 

[Gabfly1]

Quote from Daal:

Funny you dont seem to apply the same logic to your habit of shorting stocks. whats you rationalization?

I think there's a difference between shorting crap and creating a ball of crap to sell to others and then short. Arguably, the ball of crap was intentionally created with the end in mind.

 

[ElCubano]

Quote from Gabfly1:

I think there's a difference between shorting crap and creating a ball of crap to sell to others and then short. Arguably, it seems the ball of crap was intentionally created with the end in mind.

Back in 1999 and 2000 a bunch of crap dotcoms came to the market. They were created in the same way bundled paper was created now....Demand.

 

[Gabfly1]

Quote from ElCubano:

Back in 1999 and 2000 a bunch of crap dotcoms came to the market. They were created in the same way bundled paper was created now....Demand.

Except, perhaps, that the more recent ball of crap had much farther reaching consequences well beyond the scope of direct stake holders. It seems that some folks were playing chicken fast and loose, testing the boundaries, and now it's time to see if the golden-egg-laying goose has been cooked. Stay tuned. Film at 11.

 

[ElCubano]

Quote from Gabfly1:

Except, perhaps, that the more recent ball of crap had much farther reaching consequences well beyond the scope of direct stake holders. It seems that some folks were playing chicken fast and loose, testing the boundaries, and now it's time to see if the golden-egg-laying goose has been cooked. Stay tuned. Film at 11.

Yes the reason it reached more people is because they brought in more people to the party this time in the form of loans( free money in the hands of the wrong people ) and rising home equity which in turn fuled more demand. The average joe could not buy $400k in a dot-com company back in the day, but they were able to buy that in the form of a house in this last bubble and many with no money down.

 

[Gabfly1]

Quote from ElCubano:

...The average joe could not buy $400k in a dot-com company back in the day, but they were able to buy that in the form of a house in this last bubble.

True. The lenders were complicit because they knew they wouldn't hold the paper and would just sell it to GS, which bundled it and then parceled it off. So they didn't care about credit criteria because they were just playing hot potato. The moral hazard was widespread. Of course a lot of homeowners were caught up, but had the lenders had any scruples, starry-eyed homeowners would have been nipped in the bud. The affected homeowners share some of the responsibility, but less than any of the other participants who better knew what was going on and were still playing and selling blue sky.

 

[ElCubano]

Quote from Gabfly1:

True. The lenders were complicit because they knew they wouldn't hold the paper and would just sell it to GS, which bundled it and then parceled it off. So they didn't care about credit criteria because they were just playing hot potato. The moral hazard was widespread. Of course a lot of homeowners were caught up, but had the lenders had any scruples, starry-eyed homeowners would have been nipped in the bud. The affected homeowners share some of the responsibility, but less than any of the other participants who better knew what was going on and were still playing and selling blue sky.

I don't think the home owner has any blame if you ask me. They did ( as proven by our recent debacle ) what was expected of them....bite off more than they could chew. It would happen again if given the same opportunity...

 

[nitro]

Quote from Daal:

Funny you dont seem to apply the same logic to your habit of shorting stocks. whats you rationalization?

Shorting a stock is shorting the performance of a company relative to it's price, whose very act of becoming public is to be judged on performance or lack thereof in executing it's business. The very act of valuing a stock suggests that a stocks price may be too high, and either the longs themselves correct for this, or shorts are required to do so. Shorting a stock is imperative for the operation of fair and efficient markets. That's the logic. But when people spin this as "the shorts are making a dime off your back", people get angry and we get uptick rules.

Now, one can make similar arguments against people that bought second homes, or the flippers, or the people that treated their house like an ATM machine so they could live well beyond their means. There is one big difference. If you short stocks and make the market go down, people will look at their 401K statements and mostly shrug that off with some semblance of rationality. But when you get evicted from your house, and by "you" I mean people on a massive scale, with the police coming to your front door, and you have no place to live, and you have kids whose life is traumatically affected, do I need to go on? Meanwhile, you watch how these people give themselves bonuses and wear T-shirts that say, "I shorted your house" in bold letters, and well, if I need to explain the difference further, it is a lost cause.

But the fact that you asked the question and did not grasp the answer on your own suggests that you are not in tune with perception and reality, with the human condition - only with logic and theory.

 

[nitro]

It is a mystery to me what people will or will not get outraged by, even though the stakes are often equally high, or the corruption as bad.

Take MRK, or PFE, that will do anything for a buck, even let drugs loose on the market that are potentially extremely dangerous, then lie about it. And this is not just a recent phenomenon, these drug companies have been lying to doctors and patients repeatedly for decades. For example:

http://online.wsj.com/article/SB122342420313813411.html?mod=testMod

And yet, all that happens is, people read these stories and go on with their lives. How can this be allowed to happen? Americans used to be people of integrity. Where did we go so wrong that we became desensitized to outright dishonesty? To me this is more indication that we are on the same road that Rome went down before it's ultimate demise.

Corporations are out of control, with the government in their pocket through special interest groups, e.g.,

http://www.msnbc.msn.com/id/16593606/

But hey, at least the shareholders are happy, especially if you are not allowed to short their stocks no matter what without an uptick.

But I digress. This thread is about GS, guilty or not guilty.

 

[flytiger]

We could never get the SEC to do anything. We believe Bush told Cox not to touch naked shorting, and a hell of a job he did!

As early as last week, I talked to a very powerful State guy who told me the Feds would do nothing, that they cut the States out, and he was throwing in the towel. Then, this.

This is Obama. It's the only way the SEC could move. Now, the Democrats can get their reform package going, and when the Republicans balk, they can point fingers.

Now, Capitalism is cooked. These morons stole everything, and from now on, every liberal will say what they did proves Capitalism doesn't work. What GS and Paulson are accused of doing is not Capitalism, but fraud.

I think I mentioned here a few times this is what would happen. What a nightmare. And it just the beginning. The DOJ will follow. I dont think they can indict the firm, that would collapse it. But they can selectively prosecute the officers. Then, Barney Frank can be CEO, Dodd CFO. It'll be great.