Goldman Sachs (Symbol-GS)

[jimmyjeblonski]

Just look at this graph, courtesy of Big Picture; Goldman is generating very little in asset mgmt and investment banking now - they are just trading their own book into orbit. I know they have the best tradebots and high frequency algorithms on the street but how sustainable this is?

http://www.ritholtz.com/blog/wp-content ... evenue.JPG

[newguy]

[url=http://www.zerohedge.com/article/absolute-perfection-goldman-loses-money-just-one-trading-day-q3]Goldman lost money on just one trading day in Q3, making money on all the other 64
[/url]
Who says market timing doesn't work.

newguy

[newguy]

Arming Goldman With Pistols Against Public

The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits.

Maybe their smartest purchase this year

newguy

[newguy]

Goldman charged with fraud
About time

newguy

[iluvnascar]

Looks good on them. As I hear it, it's only one transaction at this point....but there may be much more to come....including charges at other firms.

Main Street must be saying "I Told You So"!

[Bylo Selhi]

But not criminal fraud. That means that a conviction will cost GS shareholders some money, but no one is going to get to join the two Bernies, Conrad, Dennis, the Rigas family et al at Club Fed

[broke]

Goldman charged with fraud
About time

newguy

Show me a perp walk, cuffs, big fines, jail time, and maybe even a couple of water boardings and I'll give a thumbs up too.

[kcowan]

Could this be the tipping point that turns the market?

[mw]

While many large US financials are being hit to some degree or another today, of all of them Morgan Stanley MS has a chart that is *similar* to Goldman Sachs GS (except for the blow up today of course)

A victim of "Sell any bank that has two letter symbol ending in 'S'" ?? Or are there other shoes to drop there?

[chinamansteve]

While many large US financials are being hit to some degree or another today, of all of them Morgan Stanley MS has a chart that is *similar* to Goldman Sachs GS (except for the blow up today of course)

A victim of "Sell any bank that has two letter symbol ending in 'S'" ?? Or are there other shoes to drop there?

Maybe have to do with this?

"Morgan Stanley Property Fund Faces $5.4 Billion Loss"
http://online.wsj.com/article/SB1000142 ... 45864.html

[mw]

Here's a PDF containing the full complaint made by the SEC, including emails which support their case:

http://www.sec.gov/litigation/complaint ... 010-59.pdf

Named are GS and a 31 year old vice president of the company, Fabrice Tourre.

At the same time, GS&Co recognized that market conditions were presenting
challenges to the successful marketing of CDO transactions backed by mortgage-related securities. For example, portions of an email in French and English sent by Tourre to a friend on January 23, 2007 stated, in English translation where applicable: “More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!” Similarly, an email on February 11, 2007 to Tourre from the head of the GS&Co structured product correlation trading desk stated in part, “the cdo biz is dead we don’t have a lot of time left.”

Yet in that time frame and subsequent to it Tourre / GS was hyping the long-side partner, ACA, it had apparently suckered into the deal, using ACA's credibility and brand name to market these CDOs, and without disclosing that Paulson intended to short the selected RMBS via CDS.

Investors were assured that the party selecting the portfolio had an “alignment of economic interest” with investors. This document contained no mention of Paulson, its economic interests in the transaction, or its role in selecting the reference portfolio.

[WishingWealth]

It will be interesting to watch Paulson huffing and puffing at some next interviews.

Quite a bit on Paulson's role. @ The Big Money
http://www.thebigmoney.com/articles/jud ... ?page=full

It's Not Just Goldman—It's the Clients
What the SEC's surprising charges really mean.
By Heidi N. Moore
Posted Friday, April 16, 2010 - 1:04pm

Can money be made on Wall Street without manipulation? These days, if you believe it can, you're in lonely company.

Take the remarkable example of the Securities and Exchange Commission's case announced today against Goldman Sachs (GS). While Goldman headlines are as rare as air molecules, the Securities and Exchange Commission nonetheless got everyone's attention with this one: "SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages."
...
That's why the SEC's allegations are a real watershed in our understanding of the financial crisis. Instead of the crisis being a story about dastardly banks (although it may be that, too), it is really a story of how far banks will go to prostitute themselves for big clients. They will do for big clients what they won't do for the little guy: Burry details the various evasions of his banks to Lewis, all of which were taking place while Goldman slavishly served its own balance sheet and reputation on a platter to John Paulson. And, after all, Goldman Sachs suffered the subprime losses in its Global Alpha hedge fund and eventually had to forgive those Abacus contracts with AIG. But John Paulson got to keep all his money.
...

WW

[kcowan]

I was watching CNBC (I know I shouldn't) but I wanted to see the train wreck in action. I saw this live:
Guest disconnected for being truthful

Enter (or rather, exit) R&R Consulting's Sylvain Raynes, a structured finance expert, who at 3:10 into the clip takes on what he calls the "public relations officers" for Goldman, and asks "is it all right if I am a little critical?" Apparently the answer is no. First, Sylvain completely destroys Cramer's false "breaking news" about Goldman being long Abacus, using the same logic we discussed earlier: "It's quite possible that Goldman had an equity position, they probably wrote it off on the closing date. So they stood to lose a few million and make a few hundred million... Goldman was clearly in the know, they knew what they were doing. In fact, if they are defending themselves against a fraud charge they will have to make a case that they didn't know. I think too highly of Goldman Sachs to think that they didn't know what they were doing... These deals were made to be shorted." And the kicker "We don't have time to go into details, I want to remain shallow in deference to Mr. Cramer."

Meanwhile Cramer had been cheerleading for GS all along ad nauseum!

[2 yen]

If these allegations are true, I hope they get nailed. Period.

[agraham]

This American Life this week has a story about the exact maneuver Goldman is getting busted for:

http://www.thisamericanlife.org/radio-a ... inside-job

A hedge fund named Magnetar comes up with an elaborate plan to make money. It sponsors the creation of complicated and ultimately toxic financial securities... while at the same time betting against the very securities it helped create. Planet Money's Alex Blumberg teams up with two investigative reporters from ProPublica, Jake Bernstein and Jesse Eisinger, to tell the story. Jake and Jesse pored through thousands of pages of documents and interviewed dozens of Wall Street Insiders. We bring you the result: a tale of intrigue and questionable behavior, which parallels quite closely the plot of a Mel Brooks musical.

[Shakespeare]

which parallels quite closely the plot

The basic plot appears to be "Ha, ha; you're a sucker and I'm not."

I've seen that movie before....

[carnet]

I'm not quite sure I understand the nature of the alleged fraud. Perhaps, I just haven't found the right clipping but is the allegation that someone at GS lied about the deal?

As far as I can tell, GS didn't force someone at gunpoint to buy anything. Presumably, there was some due diligence on the buyer's side. It seems like the buyer had influence about some of the deal details. Though, it's not the buyer that seems to be complaining here.

[newguy]

I'm not quite sure I understand the nature of the alleged fraud. Perhaps, I just haven't found the right clipping but is the allegation that someone at GS lied about the deal?

As far as I can tell, GS didn't force someone at gunpoint to buy anything. Presumably, there was some due diligence on the buyer's side. It seems like the buyer had influence about some of the deal details. Though, it's not the buyer that seems to be complaining here.

It's that what they were selling was designed by Paulson to fail.

newguy

[kcowan]

I'm not quite sure I understand the nature of the alleged fraud. Perhaps, I just haven't found the right clipping but is the allegation that someone at GS lied about the deal?

As far as I can tell, GS didn't force someone at gunpoint to buy anything. Presumably, there was some due diligence on the buyer's side. It seems like the buyer had influence about some of the deal details. Though, it's not the buyer that seems to be complaining here.

It's that what they were selling was designed by Paulson to fail.

newguy

And with a rating that suggested little risk.

[Shakespeare]

[mw]

Leaked GS slideshow on the ABACUS Synthetic CDO - a marketing document.

http://www.scribd.com/doc/30054003/Abac ... TIVE-TERMS

Note how much they built up ACA's management to assuage investor's concerns about risk. Pages and pages of reassuring boilerplate completely out of odds with the statements made by Tourre.

[kcowan]

Michael Burry shorts the subprime market
A good backgrounder on the CDS mess.

[kcowan]

Insights into the tactics by the SEC

GS appears to have dug the whole deeper with their press release on Friday.

[WishingWealth]

RE: The Abacus slide show.

a company for carrying out an undertaking
of great advantage, but nobody to know what it is.”

From
Mackay's
Extraordinary Popular Delusions and the Madness of Crowds

WW

[Bylo Selhi]

NPR's Weird Show Tune About A Hedge Fund

A huge report on Magnetar's creating a bunch of CDOs and then betting against their creation came out over the weekend. You can read all about it here.

The reporters, Propublica and NPR, also coined a show-tune to go along with it.

The song is catchy. The tune, the lyrics, the mix of giddy and sinister plotting all come in a nice package.

Hopefully now people will realize that you can only boil the housing crisis down to "betting against the American Dream in six steps" if you have a great voice and a trombone.

Watch the video below. Here are the lyrics:..

Video: Bet Against The American Dream