Tuesday, Apr 20, 2010
Let's hope it goes all the way
Times Online: Goldman under fire on all sides – and Obama turns up the heat
I remember suggesting that we've had a minimum of negligence and that legal action can't be far away. Now that people are calling a spade a spade and examinally Government Sachs and others, it won't be long and anyone else involved in the CDO creation market will also find it impossible to avoid action. If this goes all the way, expect a wave of liquidations.
Posted by growler @ 07:22 AM (697 views) Add Comment
10 Comments
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1. Cusinvinnie said...
Goldman and West Ham.
They're Forever blowing bubbles.
Pretty bubbles in the air,
they fly so high, nearly reach the sky
then like my dreams they fade and die.
Fortunes always hiding,
I've looked everywhere,
I'm forever blowing bubbles,
pretty bubbles in the air!
2. mark said...
sounds like payback time from governments.. if my history is correct
3. jack c said...
The Goldman Sachs fraud case explained - www.citywire.co.uk/adviser/-/news/other/content.aspx?ID=394871&re=9145&ea=118560
4. uncle tom said...
There is little to be gained now from duffing up the banks for their past excesses..
..what is important is to understand what went wrong, and make sure it doesn't happen again.
The number of investment vehicles that can be traded needs to be dramatically slimmed down, and limited to those that provide a significant benefit to the economy. To discourage short term betting, all transactions (other than for sovereign debt) should be subject to a stamp duty.
But the US can't easily go it alone, as their financial heartland would emigrate if it did. This has to be a G20 level deal, complete with sanctions to discourage small countries like Iceland from opting out, and becoming casino states...
5. another alan said...
Am pleasaed the article reminds us of this:
Mr Blankfein, below, told The Sunday Times in November 2009 that he was doing “God’s work”. The comment went down badly with the Government and the public at a time when thousands of people were losing their jobs every month as a result of a crisis caused in part by financial firms.
6. letthemfall said...
It strikes me that investment banking nowadays is a kind of quackery. Where once dodgy doctors pedalled all sorts of efficacious treatments as a cure for all ills, enriching themselves greatly in the process, modern bankers pretend that what they're doing is oiling the wheels of capitalism, whereas in truth they are oiling their bank accounts while injecting the economy with toxic substances.
GS are the biggest quacks of the lot, and like the quacks of the past, they need facing up to and exposing.
7. another alan said...
letthemfall, great analogy
8. growler said...
My view is that the CDO is like any other product a supplier creates. It's simply not a defence to say "I didn't know it could be dangerous". The answer is, if you're the manufacturer, you have a duty to describe the product correctly. The fact that a lot of people trade in the products doesn't mean they're OK - it just means they've all been duped. Since, if you KNEW that it was a bad product, then you'd not buy it. Trouble is, when a market-maker like GS backs the product, they'll be the last to want to acknowledge it's dodgy. Anyone holding them will have a dose of amnesia so long as they have it in their hands.
Since the regulators did no policing, the trade in dodgy goods carried on. Thank you very much say the rapacious traders.
So now we are to accept that knowledge that people in your own concern were starting to bet the game was up is OK because of caveat emptor.
Sorry - if you build a faulty airplane, sell it as sure-fire - and years later crashes and kills lots of people, no judge says - sorry airlines, you ought to have known before buying it.
9. 51ck-6-51x said...
uncle tom said, "what is important is to understand what went wrong, and make sure it doesn't happen again."
agree in principle, but how about just getting rid of all the previous attempts to stop these kind of things happening and put the onus firmly on the investor (thus making it natural for market participants to demand product transparency, product standardisation, and exchanges wherever they make sense) and break this endless, inevitable cycle of tightening and loosening regulation with it's various, adverse effects.
(Note also this strategy should be easier to implement as a lone implementer, since other markets will naturally be compelled to follow suit in order to attract their share of capital back. Not that it's easy to implement in the first place, or that it would stay that way, given the current political system.)
10. charlie brooker said...
letthemfall's analogy is indeed spot on and so too is growler's point about airplanes.
The same principle applies to every supplier. Would politicians, regulators and judges turn a blind eye if pharmaceuticals companies, architects, engineers, car manufacturers behaved in similar ways?
Goldmans Sachs and others can (and should) be dealt with in the severest of terms; their greed damaged the entire world economy; its just a question of 'Is there the will to punish GS and Co appropriately?'
If you're looking for a precedent you need look no further than the Toyota Recall debacle.