Friday, April 16, 2010
ToDaZeD Mental Image
KAOS
In his self-styled war against Wall Street, President Obama appears to have a powerful ally: Goldman Sachs.
Shocked. Shocked, I tell you.
"Given that much of the financial contagion was fueled by uncertainty about counterparties’ balance sheets,” Goldman Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in a letter at the beginning of the annual report, “we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions.”
Goldman’s executives are calling for two regulations here. First, they want the federal government to restrict free-wheeling, heavily leveraged, high-stakes financial risk taking. Second, they want government to set more rules of the road for trading derivatives—financial products that are often complex.
Will the derivatives market of Carbon Credits be included? [srsly: a derivative based on the non-delivery of an invisible substance to no one. gotta regulate that]
If you take Blankfein and Cohn’s word, stricter federal liquidity and capital requirements would amount to regulators doing Goldman’s work for Goldman. They want Uncle Sam to mitigate “uncertainty about counterparties’ balance sheets.” That is, they want the government to reduce the risk that Goldman’s debtors or insurers will run into trouble.
Good thing the Eeeevil Capitalists are on top of this, eh?
Like Sorros:
“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.
“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”
erm, wha?
Mental Image: the kid who would have a nice, stable Sea Monkey colony to watch but cannot resist “experimenting” by dropping in milk, sugar, pieces of peanut butter sammich, cookies, goldfish, toilet cleaner “just to see what happens.”
.
Oh! My....
The SEC filed a civil fraud complaint against Goldman Sachs and one of its employees Fabrice Tourre, accusing Goldman of failing to disclose vital information to investors regarding a collateralized debt obligation that one of its clients helped create, and then shorted.
According to the SEC, Goldman did not disclose the role Paulson & Co., one of the world’s largest hedge funds, played in the portfolio selection process, and the fact that it had taken a short position against the security, a CDO known as ABACUS 2007-AC1. Specifically, Goldman’s marketing materials for the CDO all represented that its portfolio was selected by ACA Management, a third party with expertise in analyzing credit risk in residential mortgage-backed securities.
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