Goldman Case Simple as Pie (not)

Accused secret Tea Party co-conspirators brought to justice by Obama Justice Department IRS Secret Police. The pudgy duo linked to the Wall Street scandal were caught red handed laundering Goldman money in their hidden trailer park hideout. They claimed they were working for "Golden Sacks" and were just doing their job. Links to Sara Palin not proved "thus far" say the Feds but the search for her involvement will continue.

Picture on Left shows Congressional Aides brought to justice in vote fraud case attempting to bribe honest congressional personnel. Links to Tea Party, Republicans, and other right wing hate groups are suspected but thus far not proven.

One of my early lessons in morality relating to what's right and what's a crime is this one: "If I sell you a car with defective brakes and don't tell you because you didn't ask have I committed a sin?" My crude ol' man let me know I would be a prick, a liar, and completely wrong. In law if that car I sold with defective brakes is involved in an accident wherein brakes were even a small contributor I will be charged both civilly and criminally for the accident. So it is with Goldman regarding the "sure to lose" mortgage package sold on the market as if it had a chance to succeed when in fact it was designed to lose. This is a legal as well as a moral no brainer. Period. My buddy Ridholtz lays it out here and Barrons lays it out here. All this bullshit about "no case" and so on is just that, pure Wall Steet bullshit and will be the main reason Congress finally puts the lid on these liars and crooks, and as a former member of that mob I can tell you that lying about profit potential is what makes the wheels go round. Face it, you don't have to be a fucking socialist to see the difference between right and wrong.

Anmother POV, this one from the more or less inside. As most of you know I have relatives that are high up in both Goldman and Merrill Lynch and both have read this blog entry and the Goldman guy, in particular, gave me another POV. First, you must understand the term "make a market." This means when a new (some might say phony) security is launched there must be a market of both sellers and buyers with the security underwritten at a certain price. The large underwriters "make" the market by launching securities with both sells (Puts, short (futures) or outright shorts) so that there is a market. However this does not mean listing on an Exchange for trading. These securities are traded privately between individuals without any oversight at all. Once created, people from the outside can now either go long or short the security. The reality of the market players in these off market or phantom securities are very high net worth people ($30 mil and up), have tons of market experience, and do not have to be told anything because they are "sophisticated" investors. Not "accredited investors" who are those with capital and investment experience far below those playing in this market, chumps who are just accredited are not wanted. So why would a sophisticated high net worth individual go long a security if he knew it was designed to fail? The answer is complex and far beyond the "probably didn't know it." Remember that the broker dealer (Goldman) is trusted and the "investor" is a lot more than just a gambler looking to make a score with money he can afford to piss away. Yes, he puts up a little to make a killing. However there is also the possibility to "short" the security while being long, thus insuring against catastrophic loss and a monster player with thirty mil or so will probably "hedge" with multiple positions thus limiting loss. It's the hedge "how" in investments where the complex chains of CDOs, SWAPS, Forward Rate Agreements and other stuff (would you believe a "Swaption" exists?) comes in. Because of all the hedges it may not be possible to convict Goldman since they will show a "no harm no foul" type of defense. Very close here. I mean very close.

Late add via phone: Guy tells me that it's the high net worth longs creating another series of markets that is the real story here. He thinks there may be as many as fifty or more alternate "shorts" on the Goldman position and it is these alternates that have fucked up the market big time.