Discussion
turbotongue said:
Anybody got a link to a video of the senate hearing?
It's on Bloomberg now if your interested. You can watch it online.Edited by turbotongue on Tuesday 27th April 18:24
http://www.bloomberg.com/tvradio/index.html?Intro=...
Murcielago_Boy said:
Weren't these "subprime" securities rated AAA by the rating agencies based on what banks, that were doing the securitisation, were telling them?
No, not really (certainly not as flippantly as you imply), but what's that got to do with anything here?Murcielago_Boy said:
IMO - these banks were mis-selling junk. Part of the blame lies with greedy fund managers - definitely! However some must also lie with the banks.
As said before, it's not Joe Public saving for his retirement on the other end of these trades. The large, sophisticated, institutional investors who were involved have their own research teams, risk managers etc, and they know exactly what they're letting themselves into as they can see exactly what they're investing in. Whilst not exactly professional, whatever they'd been told Paulson's interest was it doesn't change what they were investing in (Paulson wasn't even regarded as a big mortgage player anyway, because he wasn't). Fixed Income markets follow the rule 'Caveat Emptor' (buyer beware), after all.The banks, who are merely intermediaries, structure products to satisfy the strategies of their clients. The clients on one side of the deal are always going to lose out as values can't go in favour of both sides, and there's little here to suggest anything out of the ordinary or untoward here.
Murcielago_Boy said:
Blankfein called his mate Paulson and said:
B: "hello mate -you're going to sort out our $10bn via AIG right?"
P: "yeah"
Goldman was hedged against AIG. The thing is, if AIG is bailed out to keep their other counterparties sweet, Goldman's hedges don't pay out. Would it really be fair to penalise their prudence?B: "hello mate -you're going to sort out our $10bn via AIG right?"
P: "yeah"
Murcielago_Boy said:
B: "nice one mate - I'll short their stock - wont anyone notice?.
So what if they did?Murcielago_Boy said:
P: "No - everyone needs AIG - ref shorting their stock, yeah do it - I've got $1bn in GS stock still which I'll need when i'm not working in the treasury so we could do with GS making back some money.
Paulson had to liquidate all of his holdings before taking his position at the Treasury, so he had no financial incentive. It was only half a billion anyway 
.Edited by ZondaMark on Tuesday 27th April 21:45
ZondaMark said:
The banks, who are merely intermediaries, structure products to satisfy the strategies of their clients. The clients on one side of the deal are always going to lose out as values can't go in favour of both sides, and there's little here to suggest anything out of the ordinary or untoward here.
One set of clients thought they were buying products supported by AAA debts is the thing though. GS etc packaged up lead as gold.ZondaMark said:
As said before, it's not Joe Public saving for his retirement on the other end of these trades.
Given that a lot of large institutional investors, and hence archetypal clients of investment banks, are pension funds, that is exactly where a lot of this crap ended up.Ask most Americans about their 401k and see if they are quite so relaxed about it.
Durruti said:
ZondaMark said:
As said before, it's not Joe Public saving for his retirement on the other end of these trades.
Given that a lot of large institutional investors, and hence archetypal clients of investment banks, are pension funds, that is exactly where a lot of this crap ended up.Ask most Americans about their 401k and see if they are quite so relaxed about it.
They inflated a massive bubble of paper, trading it back and forth, each time taking a cut of it and trading that cut of paper for goods and services in the real economy. When that bubble popped it was deemed good and necessary for the tax payer to re-inflate it, thus completing the wealth transfer, as the taxpayers have sacrificed a portion of their future spending power.
anonymous said:
[redacted]
So despite dealing with the primus inter pares of the banking world, we should treat every single deal on the basis that they are absolute crooks and swindlers trying to stitch us up by flogging us the s
ttiest cut and shut they can cobble together.Really?
So that would make all investment bankers robbers liars and thieves in your eyes then?
QED.
anonymous said:
[redacted]
So you'd buy a brand new Rolls but get it independantly checked because you suspect they are really trying to sell you two golfs welded together.I thought I was paranoid. Jesus.
You can watch Lloyd doing God's work now by the way..... he's live http://www.c-span.org/Watch/C-SPAN3.aspx
anonymous said:
[redacted]
It's not as simple as that. Even a car trader is legally bound by certain duties etc.Besides the general point is that GS have a conflict of interest. They can potentially profit by playing one side of against another. It's quite extraordinary the way their world works...the chinese walls are no doubt VERY permeable.
Durruti said:
ZondaMark said:
As said before, it's not Joe Public saving for his retirement on the other end of these trades.
Given that a lot of large institutional investors, and hence archetypal clients of investment banks, are pension funds, that is exactly where a lot of this crap ended up.Ask most Americans about their 401k and see if they are quite so relaxed about it.
SmoothRB said:
ZondaMark said:
The banks, who are merely intermediaries, structure products to satisfy the strategies of their clients. The clients on one side of the deal are always going to lose out as values can't go in favour of both sides, and there's little here to suggest anything out of the ordinary or untoward here.
One set of clients thought they were buying products supported by AAA debts is the thing though. GS etc packaged up lead as gold.It's not the issue here anyway.
Edited by ZondaMark on Tuesday 27th April 22:28
SmoothRB said:
Besides the general point is that GS have a conflict of interest. They can potentially profit by playing one side of against another. It's quite extraordinary the way their world works...the chinese walls are no doubt VERY permeable.
Every trade has a short and long side; for someone to go long another has to be short. Paulson & Co were the shorts and Goldman didn't fancy going long (they do run a pretty tight ship) so they offered it to other buyers - of which there was no shortage, as many at the time still thought the mortgage market could only go up - who knew exactly what they were getting into. Nothing sinister - they are an INTERMEDIARY anyway.anonymous said:
[redacted]
It depends on who I'm buying it from. If it is the worlds premier second hand Bangledeshi airliner trading company, that has been in the business for decades and has a worldwide reputation for being extremely well run and highly respected in the industry because of its history and ongoing relationships with an established customer base - which includes many of the worlds premier airlines - I'd probably feel comfortable with it.If it was Achmeds cousin who'd just moved into airliners from goat herding as a career change, probably not so comfortable.
The comparison doesn't stack up.
In your world, the only people that would ever be employed would be the lawyers (funny that), as the billable hours rolled into days and weeks and months whilst you all chased each other round about the true meaning of Clause 4.2b sub-para 6. whilst the rest of the economy froze up - and as much as I enjoy your postings, if I had to choose between being f
ked by a banker or a lawyer, I'd choose the banker.
Ace, Goldman bashing. How about:
"Hank Paulson, took the usual Goldman senior alumni route into government, "critics feasted om the connection", says Time. All the more so when Paulson was found to have putno fewer than 24 calls through to Blankfein when deciding whether to pump $85bn into the rescue of AIG: a bail-out that ensured Goldman got $12.5bn out of the firm."
"Hank Paulson, took the usual Goldman senior alumni route into government, "critics feasted om the connection", says Time. All the more so when Paulson was found to have putno fewer than 24 calls through to Blankfein when deciding whether to pump $85bn into the rescue of AIG: a bail-out that ensured Goldman got $12.5bn out of the firm."
SmoothRB said:
ZondaMark said:
many at the time still thought the mortgage market could only go up - who knew exactly what they were getting into. Nothing sinister - they are an INTERMEDIARY anyway.
Right 'cos intermediaries can't lie or distort facts?No false pretences were made about the assets underlying the structure themselves; the allegations regard the disclosure of Paulson's involvement to those on the long side. Whether these are true or not (and I'm not denying it is unprofessional if true) it doesn't somehow magically alter the fundamentals of said assets. As said before, Paulson wasn't a big mortgage player and nor was he regarded as such anyway, so this shouldn't change anything for the buyers. Frankly, if all you're going on is what you're told others are doing, you probably deserve whatever losses come your way.
Remember: Caveat Emptor. Like it or not this is the rule in Fixed Income markets, and it's always (AFAIK) been the case, with everyone accepting it.
Fittster said:
Ace, Goldman bashing. How about:
"Hank Paulson, took the usual Goldman senior alumni route into government, "critics feasted om the connection", says Time. All the more so when Paulson was found to have putno fewer than 24 calls through to Blankfein when deciding whether to pump $85bn into the rescue of AIG: a bail-out that ensured Goldman got $12.5bn out of the firm."
Already been through the AIG bailout. "Hank Paulson, took the usual Goldman senior alumni route into government, "critics feasted om the connection", says Time. All the more so when Paulson was found to have putno fewer than 24 calls through to Blankfein when deciding whether to pump $85bn into the rescue of AIG: a bail-out that ensured Goldman got $12.5bn out of the firm."
anonymous said:
[redacted]
If a firm can't be allowed to fail (which I disagree with, I don't think the result would have been as bad made as those with an interest in FS say), should it be allowed to exist in the first place. Surely private enterprise should be able to stand or fall without the involvement of the state. Edited by Fittster on Tuesday 27th April 23:33
Fittster said:
anonymous said:
[redacted]
If a firm can't be allowed to fail (which I disagree with, I don't the result would have been as made as those with an interest in FS say), should it be allowed to exist in the first place. Surely private enterprise should be able to stand or fall without the involvement of the state. These big bad bankers that scream free enterprise and buyer beware and free markets and all the other big boy phrases that they learnt from Michael Douglas in Wall Street don't like being reminded that their first reaction to loosing a few quid was to run to mummy government crying for money else they would scream and scream until they were sick and make sure that everyone else was jolly well sick too......
Communist b
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