Smartest Guys or Human Excrement

> do you have to go to an Ivy League Business school to learn to be a first class criminal and a public enemy

Well, you don't need to go to an ivy to be a good criminal... look at the guys who started all the sham mortgage companies, very few ivy guys in 'em... but at the banking level, it is a requirement.

Criminals at all levels, but you just get higher level access with a better degree.

btw, the goldman criminal didn't go to an Ivy...

http://www.linkedin.com/ppl/webprofile?vmi=&id=2407731&pvs=pp&authToken=bVXL&authType=name&locale=en_US&trk=ppro_viewmore&lnk=vw_pprofile

Stanford and some foreign school

Top top school in France.

Is that like the top school in Alabama?

FLMAO.... it's funny how all the pundits are asking "how much $" to make the SEC go away..... when the question will be within the current political climate, whether the SEC just doesn't order an orderly dissolution of Goldman. It's the least they could do after falling asleep or sleeping with Bernie Madoff and missing the entire ratings agencies and oh yeah, Lehman bro's leverage shifting "third" party.

FLMAO... yes but NYC RE will continue to rise....

put me in the human excrement w/ butter camp...

all class w67thstreet, all class. Envious rat.

http://vimeo.com/10864430

Envy is ugly.

Not the top school, but very close, very much like Princeton or Stanford. Not Harvard, but definitely good enough for I-banking.

Envy is ugly. greed and stupidity, particularly if found together, are uglier.

I would tend to disagree. But maybe you could ask a greedy and stupid person who took out a loan they couldn't afford if that is the case. Although it is easy to blame "Wall Street" and "the elites" for the financial crisis, there is more than enough blame to go around. Like I said, envy is ugly.

I would think your comment just proved my point.

I'm having trouble creating new threads. Anyone else?

10023, there have been issues starting new threads. i don't know why.

can we find any greedy and stupid banks who wrote loans to people they shouldn't have under normal underwriting standards, despite it being their business, the ones they proclaimed expertise in? please, ehm, your bias is showing.

will this end up in front of a jury or just a judge?

Can we find any borrowers who couldn't figure out their monthly payment was more than 1/2 their monthly budget. I've heard too many stories of people who knew they couldn't afford the payment and proceeded anyway.

I don't see how this get's pinned on Tourre. He was too junior and this went to committee.
Jonathon Egol's name is sure to come up. Also the Goldman defense that ACA management was free to kick out credits selected by Paulson is lame. Does anyone believe the other ABACUS deals didn't have credits selected in a similar process.

Regardless of whether the SEC's charges stick, I can't see how Goldman mends their reputation.

I also have to find it funny, how Goldman believes they earned their income on these transactions.

Did anyone read this on Michael Burry, he claims to have invented the short on mortgage debt.
http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004

The Abacus 2007 AC1 was created so the bank and some of its clients could bet against the housing market. The investors would only make money if the underlying bonds' values rose. Paulson selected mortgage bonds that he thought were most likely to lose value. Were the bonds' values inversely related to performance of the housing market? Or did they sell AC1 as a hedge against the market when in fact it would only make money if the housing market performed well?

As usual, aboutready just looks to blame one entity for all the problems that occurred, and when someone points out that others also share blame, like those borrowers who irresponsibly took out loans they knew or should have known they couldn't afford, ar gets indignant and crude. No individual responsibility for anyone in aboutready's view.

I heard of a story where an out of work person took on debt to buy an investment property they knew they couldn't afford, and then had their out of work relative vouch for their income both knew was false. Not saying the loan originator acted properly, but the borrower was not duped either.

bob, Paulson picked bonds that were backed by the worst subprime loans in the worst locations. They weren't inversely related, but they were of the worst quality and the ones Paulson believed would fall the hardest.
rs- even if ACA was free to kick out the credits, the SEC still has Goldman because Goldman didn't disclose to Abacus investors the extent of Paulson's involvement in selecting the credits and that Paulson intended, with GS' knowledge, to short Abacus while he was involved in selecting the loans. The failure to disclose issue, and GS' actions that blatantly harmed one client to benefit another, will at the very least drag Goldman's reputation through the mud. And who known how many lawsuits will follow.

Bob420. They key part of the story was the omission of explaining Paulson's role in the portfolio selection. The marketing material not only omitted it but highlighted the agent's role instead. It's also possible the marketing agent didn't act properly. Reminds me of the rating agencies. Did they ask or decide not to ask about the selected assets? It's like going into a casino and not being told the roulette wheel has been rigged.

LICC,
See my response that I wrote before reading your retort. I clearly agree. I suspect Goldman pre-selected in a similar manner the credits in other Abacus deals and not just this one.

Easy Street needs a profanity filter.

Lenders had a responsibility not to inflate appraisals, explain the mortgage terms to the borrower and not misrepresent or more to what they did, fail to disclose the mortgages characteristics. Key point, if you are are a lender selling a sub-prime loan, is it fraud to not ask for and report FICO, when you know the bank, rating agencies and customers will assume average sub-prime FICO if it is missing?

Borrowers knew if they were a good or bad credit. The borrowers were not duped to the same extent as the ultimate lenders. Those that purchased the loans sold.

how about a moron filter? starting with RS.

"borrowers knew if they were a good or bad credit." you state this as fact yet at best its your opinion that you made up based on nothing.

http://www.businessinsider.com/chase-mortgage-ad-from-2005-is-funny-and-scary-2009-6

i've posted it before, but it's so tragic and comic that it's worth a repeat.

http://www.businessinsider.com/chase-mortgage-ad-from-2005-is-funny-and-scary-2009-6

"CHASE Remember way back in kindergarten when you learned to write your name? It's payoff time.

SIMPLY SIGNATURE

The Simply Signature Loan from Chase Home Finance. Sign your name and let us do the rest. Simple mortgage process, low documentation. One call to your Chase Mortgage Specialist and you could be on your way to approval. So come on, put your kindergarten career to good use. Stop in and sign."

speaking of stories.

i heard one about an idiot who spends all day long copying and pasting articles that they didn't read onto a real estate site.

great, RS. so anyone who walks into a bank and says give me money should get it? bankers should just BELIEVE.

bullshit and you know it. and so do people who bought the shitty products packaged by the banks. do you think the investors are saying fuck those stupid homeowners for borrowing too much? no they're saying fuck those banks for selling us products containing such shittily underwritten loans.

http://www.thedailybeast.com/blogs-and-stories/2010-04-16/goldmans-fall-from-grace/?cid=hp:exc

The accusation that Wall Street’s top investment bank defrauded investors means the end of their golden reputation, says Charlie Gasparino—and only confirms what everyone suspected: They play dirty.

This case represents… a road map into how a firm that was once considered the gold standard of Wall Street behaves like a two-bit thug when money is on the line.

I say, the banks gamed the disclosure rules. A "debt" security is not a bet between two parties. It's a capital raising activity. It is as if Goldman said to their consigliere and said, tell me what I need to write in the offering document and what I do not have to disclose. And of course there's no fiduciary responsibility to investors. We'll just pass a law and call them "sophisticated" investors.

yes...we know...you've said the same thing 25 times on four different threads. so....why does this get you so excited?

ar you really do make lots of dumb comments. When Fannie and Freddie tell the banks that they will back the loans, even if subprime, and Congress (Barney Frank, Chuck Schumer) are pushing Fannie and Freddie to guarantee more loans to low credit borrowers, what does that tell the banks?
Yes, banks are to blame, along with Congress, multiple Presidential administrations, rating agencies, AND borrowers who irresponsibly took loans.
But you of course only want to blame big banks because you love a lack of individual responsibility and soaking the rich.
Keep asking for those handouts aboutready.

Ok, swear at me and rs and use profane language now . . .

I also blame the Federal Reserve, who kept interest rates low(just as they are doing now) which just encourages irresponsible speculation and leverage in the system. Then(Greenspan) as now (Bernanke) announces the Fed will keep rates low, which just encourages the bank to borrow at zero and invest in longer dated instruments and leverage up... and savers to invest for yield and take on unnecessary credit risk instead and future losses.

It's not either/or it's both/and. Smart isn't synonymous with ethical, honest or decent.

And it wasn't just Goldman (doing God's work) that was swindling its investors. Next up: Deutsche Bank, JPM Chase, and others.

Fannie Mae(I mean the tax-payer) bought something like 40% of the sub-prime loans out there and mis-classified the risk for quite some time. The gov't funded the writing of subprime loans at the behest of liberals in Congress like Maxine & Barney.

what handouts, licc? what lack of individual responsibility? could you elaborate?

and i have always said that there is blame to go around. but the banks ultimately held the loans, they signed on the dotted line.

http://www.hud.gov/news/release.cfm?content=pr03-140.cfm

oh, and piss off.

actually, the banks didn't hold them. they sold them knowing they were toxic to investors and the taxpayers.

We really do need a profanity filter. Anyone who can't write a paragraph without a swear word, clearly has no command of the English language.

RS, just because you think so? you're here to police the board? put me on ignore. it wouldn't bother me in the slightest and your priggish sensibilities would be spared.

And Fannie with it's years of underwriting experience knew the loans were bad credits. Amazing what people will do with other people's money. Having public money used to support the housing market is and was a disaster. The community reinvestment act and all that followed was a huge disaster.

i guess RS didn't read my post. what a surprise. funny how licc and rs forget Bush's "American Downpayment Dream Act."

Applauding Congress for authorizing the annual $200 million downpayment assistance program, Bush and Housing and Urban Development Acting Secretary Alphonso Jackson said the initiative will also help meet the Administration's "Homeownership Challenge" to increase minority homeownership by 5.5 million families by the end of the decade.

"Today we are taking action to bring many thousands of Americans closer to the great goal of owning a home," said President Bush. "These funds will help American families achieve their goals, strengthen our communities, and our entire nation."

Goldman was found guilty of submitting phony bids for govt bonds at primary dealer auctions in the 90's. Huge scandal. Millions in fines. They almost lost their primary dealer status. They survived. Then they were busted for usung inside information about the discount rate, they had an insider contact at the fed. More bad press. Goldman is stronger than ever today. I am still waiting for the scandal that even dents goldman.

well, hey if RS doesn't read its own posts, how can you expect it to read others?

I guess aboutready can't read unless profanity is involved. I said that multiple Presidential administrations are to blame.

Failure to be able to control yourself from using profanity is a sign of a weak mind.

according to whom? RS?

LICC -- you're blowing smoke out of your butt.

Frannie and Freddie aren't responsible for the $2.3 Thousand Trillion in derivatives that are estimated to be outstanding. If you knew anything about how we got into this mess you'd know that subprime mortgages were just where the toxic rot showed up first. But toxic garbage runs through securities backed by commercial mortgages, corporate bonds and consumer credit. And on top of this s*It pile the hedge funds and other speculators were betting on whether the toxic securities they did't own would go up or down. (And some of them, like Paulson, rigged the game so that it was a sure bet the underlying securities will flame out.) That's what crashed this economy.

These fraudulent securities are still out there waiting to blow up. They're still on the books of the banks and shadow banks -- which is why our banking system is on the taxpayer dole: it's insolvent. The banksters and their accomplices (Greenspan, Bernanke, Geithner) are the real culprits

http://www.ritholtz.com/blog/2008/10/07/

"The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren’t regulated banks. They were outfits such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand in glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn’t apply. There’s much more. As Barry Ritholtz notes in this fine rant, the CRA didn’t force mortgage companies to offer loans for no-money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on subprime debt.""

what do i care what your opinion is of my mind? really?

i guess it's better to criticize someone's mental facilities and ethics than it is to use profanity. classy, licc. very classy.

If Fannie & Freddie didn't exist the sub-prime market would not have taken off. They were the ultimate buyer, purchasing risky debt at AAA spreads. And as the biggest parts of a securitization, the AAA's were the deal driver. I agree with urban green that poor quality loans existed throughout all parts of the system.

Spot on, Aboutready (but don't confuse them with the facts).

See, also:

Joe Nocera NYT column: A Wall Street Invention Let the Crisis Mutate

http://www.nytimes.com/2010/04/17/business/17nocera.html?ref=business

Wrong, The mortgages that blew up were often not for purchase, but refi-equity take-outs. Borrowers kept taking more and more money out of homes with inflated appraisals. There just weren't enough homes purchased between 2005-2007 to explain all the defaults we are seeing.

GS isnt getting out of this one

“The whole building is about to collapse anytime now,”
Tourre, an executive director at Goldman Sachs in London, wrote
to a friend in a January 2007 e-mail, according to the SEC’s
complaint. “Only potential survivor, the fabulous Fab...
standing in the middle of all these complex, highly leveraged,
exotic trades he created without necessarily understanding all
of the implications of those monstruosities!!!”

Reminds me of Jerome Kerviel and SocGen. A lot of people thought Kerviel did not act alone. I don't recall anyone else taking the fall. Will be interesting what happens to the fab guy.

columbiacounty never takes risk, never gives opinions ,cc only makes little petty comments. CC" according to whom? more slogans." bla blablablabal.. Really pathetic cc.. Let us here your ideas and philosophy..Oh I know , "somebody else will always work hard and there will always be a cash cow to fleece... so all of us living off the dole will be safe"...( please please i hope i am right).

Good point Julia. Playing the part of Statler or Waldorf, does not add to the discourse.

how would you know RS---you never read anything that anyone posts?

" how would you know RS" Bingo!

Julialarge you little whining bitch. How does pointing out a pedophile that should be in jail and pointing out the police for no doing it's job turn into envy? WTF r you smoking?

And what r your accomplishments besides complaining about your govt but then using your other mouth to ask for medicine and care for your daughter's cancer?
Facts:
1) almost all cancer research is govt funded;
2) private cancer research only exists with patent laws, which is govt funded;
3) doctors is us is tops bc govt allows the existence of AMA which is in fact a union;
4) all medical research med schools (meaning the best in the world) are mostly govt funded;
shouldn't you be at some teabagging meeting? F'king half baked brain, more like cookie dough.

Riversider, ezplanglish to me why we have any financial regulations? Why do I determine what my kids should eat? Why is there a govt made 'age of reason'? Why don't we allow 15yos to sign up for army? Why do we have laws against rape?

Thatz right cause ppl a f'king crazy and stupid and most likely in combination. Guarantee you if we wanted to we could create a bigger re bubble in less time than the last one. Ponzi schemes happen all the time bc there are always gullible ppl. Now the bubble of 2001 to 2007 was a state sponsored ponzi scheme based on manipulating the financial rules that were in place. And as all you nimrods have pointed out, NO financial regulations have changed, the Goldman sec action is just the beginning. Obama to his credit and legacy knows that he doesn't want to be the president to fix the financial fiasco but leave in place the same rules which creates the same bubble 5 terms out. He's still young, ya think he wants to be interviewed when he's 80 and be asked why were the regulations not changed?

Think you fools bf posting about how Goldman and alll the financials are a ok! Slowby but surely, the time of the mega financials has come and gone. We are at glass- steagal 2.0.

I understand that Paulson picked the worst funds possible, had Goldman wrap them up and sell them and then bet against it. Completely shady but how was this Abacus AC1 a way for investors to bet against the housing market? Sounds like they created a fund to bet on the housing market going up, he loaded it with crap and then shorted it.

So back to my question. If the instrument was supposed to let the bank and investors bet against the housing market, how was it supposed to make money if it's performance was based on the bonds' values rising and it wasn't inversely related? I would think that betting against the housing market, you would want to be taking advantage of the terrible underlying mortgage bonds, not betting that they would do well.

W67 you spewed non-sense.
There is a time and place for regulation and I am for regulation when
appropriate. Keep in mind that Fannie, Freddie, Bear & AIG were highly regulated.
It's important to recognize regulatory capture and if rules are not well thought out they will get gamed. Add to that you had regulators sitting on Lehman's floors and they did nothing This is why two goals of regulation need to be about creating transparency(exchange trading of swaps for example) and treating clients as a fiduciary. If mortgage brokers had a "know your customer rule" they would've been held accountable to a higher standard and if Goldman treated their customers as counter-parties rather than clients they owed a fiduciary responsibility to.

Bob,
Abacus wasn't debt but a bet with Goldman acting as bookie. Goldman made money from fees. The point of Abacus was that it was a credit default swap with Paulson the protection buyer and the investors in Abacus tiered sellers of the protection. As the reference bonds blew up the lowest rated bonds in Abacus lost their principal followed by second lowest and up the chain. Paulson collected principal payments equal to the write-downs.

Bob, if none of the bonds defaulted the protection sellers would have earned their coupon.

"columbiacounty never takes risk, never gives opinions ,cc only makes little petty comments. CC" according to whom? more slogans." bla blablablabal.. Really pathetic cc.. Let us here your ideas and philosophy..Oh I know , "somebody else will always work hard and there will always be a cash cow to fleece... so all of us living off the dole will be safe"...( please please i hope i am right)."

julialg, that borders on incomprensible, but even so your unsubstantiated venom shines through. i love how posters here assume that anyone who shows any support for people must themselves be the recipient of "undeserved" aid. where the fuck do you get off assuming that cc is a part of "all of us living off the dole?"

you haven't been reading if you don't know cc's opinions. but just because you're new here and haven't read someone's opinions gives you no right to state what someone's opinions are. nasty.

Got it. Thanks!

Nice Ben Stein piece
http://spectator.org/archives/2010/04/15/same-old-liberals-then-and-now/print

I don't like the way liberals of any income group assume that they have a monopoly on morality and that the only conscionable position on issues is their position. A sanctimoniousness runs in the liberal mind which is a direct descendant of the Calvinist assuredness of moral superiority. Liberals assume that any challenge to their position comes from impure motives, often motivations having to do with "profit and loss" instead of the "human" factors that liberals allegedly consider. I resent the assumption of liberals that only they truly understand human needs and suffering.

I especially resent the claims of white liberals that they know best about how to solve the problems of the poor and the black. There is hardly any evidence that liberal programs to help the poor and the black have done much good. The ordinary operations of the capitalist system, however, have made enormous gains economically for the poor and the black. Liberals don't seem to understand that if they take a dollar from one person and give it to another, there is rarely any benefit. If the economic system produces new dollars for everyone, everyone benefits.

-----------------
I don't like it particularly when liberals say that more money for this or that project can come out of profits. Most people don't realize that profits are small parts of total earnings for most companies and that without the profits, people, even liberals, wouldn't invest their money. And there is nothing wrong with big profits. It's a sign of good management and creativity, which are rewarded in the artistic sphere as they should be in the management area. And the stockholders who get the dividends for those profits are often widows and orphans and most often of all, pension funds. The liberals' idea that profits all go into buying Balmain gowns is just dangerous nonsense.

Ben stein? You've lost all credibility. That dude is a tool

Good point on Ben Stein. But in this case his article was spot on.

I misunderstood the part that said it was a vehicle for the bank and some of its "clients". I thought "clients" were who was investing but I should have read rather than skimmed as it was obvious in the next paragraph.

This was my favorite part

I don't like the way liberals of any income group assume that they have a monopoly on morality and that the only conscionable position on issues is their position.

Yes, leave it to the guy who got fired for shilling for a sleazy credit report company to explain to us how morality works.

I didn't bother to read it RS, but I know you will:

http://blogs.reuters.com/felix-salmon/2010/03/24/iowa-cracks-down-on-ben-steins-sleazy-paymasters/

Inonada, I'm not a fan of Ben Stein. Just agreed with a piece he wrote.

"you haven't been reading if you don't know cc's opinions. but just because you're new here and haven't read someone's opinions gives you no right to state what someone's opinions are. nasty."

Well, I'm NOT new here and have been reading a LOT for a LONG time and I have no better idea than julialg of what cc's opinions are. This is because he essentially limits his participation to sniping at the posts of others (the Riversider stalking being the prime example - which reminds me, how's the grayed-out troll-controlled status treatin' you these days cc?), without taking time to make or add to an actual argument. julialg may be selfish, heartless and all sorts of other nasty adjectives, but her assessment of cc's (lack of) contribution to the SE discussion boards in right on the mark.

Wow, I just figured out the title of the thread.

sls, i have read many posts in which cc discusses opinions (there was extensive discussion in the important economic news thread before RS destroyed the thread with his discussions with himself). you haven't. but regardless that hardly excuses julialg for making assumptions about someone's opinions. in fact, it would be even worse.

RS constantly posts inaccurate material, stuff he's clearly not even read, and other material that he uses in a manner which distorts the content of what he is quoting. in short, he is the worst sort of obfuscator. maybe you saw or maybe you didn't see the threads where this became apparent. and then he just outright lies when it meets his particular purpose, and coyly notes that none of us "knows" what he "really stands for". julialg is indeed heartless, etc., but she isn't parading as anything but that.

The solution is never going to be about singling out one group and taking away their money. As soon as we can get past that, we may be able to start tackling the problem for real.

so...here's how we get started.

a politician stands up and says: there are no easy answers anymore. for a viable future, we need to have shared sacrifice. rather than try to figure out how and which programs to cut, lets start with a lengthy dialogue aimed at creating a process that is fair.

i naively thought that obama was that guy; i think he may have thought he was as well.

fair is not about winning or losing. and the old adage about life not being fair is true. while i'm citing cliches, how about: we are where we are. whining and complaining about how we got here and trying to retroactively change things is never going to work. i don't pretend to have answers; as i said earlier, i think a conversation needs to begin about defining a process to go forward. without slogans, without agendas other than to make the most of what we have.

careful. we're trying to have a dialogue about process and you're citing details. for every stupid policy on one side of the equation, there is an equally stupid one on the other side. fox news is making $700 million a year pointing fingers; good for them and bad for the rest of us. msnbc just isn't as good at it.

help me out: why are you so enamored of julia? she seems like a hate mongering sycophant. what am i missing?

case in point. "nice ben stein piece" when called on his use of a total tool for a source, he backtracks and says he doesn't agree with stein generally just liked the piece. really? he just happened to be reading a stein article, liked what he was saying and quoted from it, but wants to take no responsibility for the source.

maybe he finds stein "provocative." the same way he finds rand "provocative," but is unwilling to delineate exactly how he agrees or disagrees with rand.

but somehow in the last few years or so, it has become so much easier to hate everything, facts be damned. things don't quite feel right anymore and it must be somebody (else's) fault because it can't be mine.

i work hard, god damn it. and if everyone were just like me, they would be fine. so, get out there and work you lazy bastard.

and, i'm working so hard that i don't have time to read the fine print--just the headlines. so stop trying to confuse me with endless details. (can you imagine that it takes 2,600 pages to redefine health care in the united states? why can't it be done in 5 pages?)

http://www.interfluidity.com/v2/784.html

Goldman argues that the nature of the security was such that “sophisticated investors” would know that they were taking one of two opposing positions in a disagreement. On this, Goldman is simply full of it:

Extensive Disclosure Was Provided. IKB, a large German Bank and sophisticated CDO market participant and ACA Capital Management, the two investors, were provided extensive information about the underlying mortgage securities. The risk associated with the securities was known to these investors, who were among the most sophisticated mortgage investors in the world. These investors also understood that a synthetic CDO transaction necessarily included both a long and short side. [bold original, italics mine]

The line I’ve italicized is the sole inspiration for this rambling jeremiad. That line is so absurd, brazen, and misleading that I snorted when I encountered it. Of course it is true, in a formal sense. Every financial contract — every security or derivative or insurance policy — includes both long and short positions. Financial contracts are promises to pay. There is always a payer and a payee, and the payee is “long” certain states of the world while the payer is short. When you buy a share of IBM, you are long IBM and the firm itself has a short position. Does that mean, when you purchase IBM, you are taking sides in a disagreement with IBM, with IBM betting that it will collapse and never pay a dividend while you bet it will succeed and be forced to pay? No, of course not. There are many, many occasions when the interests of long investors and the interests of short investors are fully aligned. When IBM issues new shares, all of its stakeholders — preexisting shareholders, managers, employees — hope that IBM will succeed, and may have no disagreement whatsoever on its prospects. Old stakeholders commit to pay dividends to new shareholders because managers believe the cash they receive up front will enable business activity worth more than the extra cost. New shareholders buy the shares because they agree with old stakeholders’ optimism. The existence of a long side and a short side need imply no disagreement whatsoever.

So why did Goldman put that line in their deeply misguided press release? One word: derivatives. The financially interested community, like any other group of humans, has its unexamined clichés. One of those is that derivatives are zero sum contests between ‘long’ investors and ’short’ investors whose interests are diametrically opposed and who transact only because they disagree. By making CDOs, synthetic CDOs sound like derivatives, Goldman is trying to imply that investors must have known they were playing against an opponent, taking one side of a zero-sum gamble that they happened to lose.

Of course that’s bullshit. Synthetic CDOs are constructed, in part, from derivatives. (They are built by mixing ultrasafe “collateral securities” like Treasury bonds with credit default swap positions, and credit default swaps are derivatives.) But investments in synthetic CDOs are not derivatives, they are securities. While the constituent credit default swaps “necessarily” include both a long and a short position, the synthetic CDOs include both a long and a short position only in the same way that IBM shares include both a long and a short position. Speculative short interest in whole CDOs was rare, much less common than for shares of IBM. Investors might have understood, in theory, that a short-seller could buy protection on a diversified portfolio of credit default swaps that mimicked the CDO “reference portfolio”, or could even buy protection on tranches of the CDO itself to express a bearish view on the structure. But CDO investors would not expect that anyone was actually doing this. It would seem like a dumb idea, since CDO portfolios were supposed to be chosen and diversified to reduce the risk of loss relative to holding any particular one of its constituents, and senior tranches were protected by overcollateralization and priority. Most of a CDO’s structure was AAA debt, generally viewed as a means of earning low-risk yield, not as a vehicle for speculation. Synthetic CDOs were composed of CDS positions backed by many unrelated counterparties, not one speculative seller. Goldman’s claim that “market makers do not disclose the identities of a buyer to a seller” is laughable and disingenuous. A CDO, synthetic or otherwise, is a newly formed investment company. Typically there is no identifiable “seller”. The investment company takes positions with an intermediary, which then hedges its exposure in transactions with a variety of counterparties. The fact that there was a “seller” in this case, and his role in “sponsoring” the deal, are precisely what ought to have been disclosed. Investors would have been surprised by the information, and shocked to learn that this speculative short had helped determine the composition of the structure’s assets. That information would not only have been material, it would have been fatal to the deal, because the CDO’s investors did not view themselves as speculators.

RS changes the subject by posting a needlessly long piece (one in which the author says bullshit by the way).

here's one from cc about 11 months ago. sls there are plenty more where these came from.

yes, but....

it did not help that the banks engaged in a massive ad campaign to promote taking out loans and spending, spending, spending. i can't remember citi's slogan that was plastered all over the city but it was something about, live now, don't wait.

here's the rub...one of the reasons that everything has come down so far and so fast is that people are now trying to live within their own means. on the one hand, we love to criticize people for spending too much; on the other hand, no one has any idea of what the economy will look like if consumption drops by 15-20%.

"he is the worst sort of obfuscator" Disagree. somewhereelse is much worse. Also disagree because I don't think Riversider intentionally obfuscates; I think he sometimes (and recently more often) makes muddled arguments that are not well supported by his sources or by logic. somewhereelse actually obfuscates but does a poor job of even that and ends up wallowing in muddled obfuscation, which is truly special. And don't even get me started on eric-the-ho75.

"there was extensive discussion in the important economic news thread before RS destroyed the thread with his discussions with himself"

Is this that much worse than the first few hundred posts on that thread which were a running discussion between ar (poster) and cc (cheerleader)?

so...you don't like me or what i post. so what? as i've asked you before, how come its ok for you but not for me?

oh please, sls, there were any number of people on that thread. and at least it was a DISCUSSION. you must now admit that there was commentary by cc. but thanks for the snark.

but i both agree and disagree with your other points. swe goes out of his way to manipulate info, and does so blatantly and oddly. the ho is indeed in a league of his own. but RS has been caught very clearly quoting info when the very next sentence minimizes or belies his point.

"here's one from cc about 11 months ago. sls there are plenty more where these came from" It really doesn't help your case that you had to go back 11 months to find this. If you want me to admit that cc posts an actual argument at least once a year, I can give you that one

Better evidence for you would be the cc posts just above the (needlessly long and predictably tangential) RS spam post, in which, yes, cc makes an argument. A series of them, in fact. The funny thing is that now that he makes a few I see that I agree with essentially every word. He's basically saying what's going through my head on these issues.

sls, i just picked one randomly, from the beginning of a thread where i knew it would be easy, but there are plenty more that are more recent.

many of us got to know cc, including me. we DO know what he stands for. and having been a part of the process in which he became so irritated at RS (actually i was integral to that process), i understand it as well. i gave up generally reviewing all of RS's misleading posts, but cc wasn't so inclined to let the BS go without comment.

those posts were copied from my posts from a thread from a couple of days ago---so happy that you agree.

btw, the posts from CC? they're points he made on other threads recently.

No that's not it.
You liken yourself to an expert. You considered the Economic thread your property and greatly disproved of a different point of view or posting errors of fact. My views are complex, sometimes we even agree. And I sense you get a degree of comfort in your leftist views which I do liken to champagne socialism.

"but RS has been caught very clearly quoting info when the very next sentence minimizes or belies his point." The only difference between us is that I think he is sloppy and you think he is trying to mislead

"cc wasn't so inclined to let the BS go without comment" That isn't the problem. The problem is that cc isn't inclined to let any RS post go without comment. He doesn't even take the time to screen for BS before attacking. When CC pounces on one of RS's lengthy spam-o-grams with a personal attack (not an attack on the content of the post itself) within a minute or two, then cc can't even have had the time to read the post and RS's argument. and you accuse RS of posting things he hasn't even read.

i suspect that i read a lot faster than you think.

note above from rs: complaining about being caught at "posting errors of fact."

"columbiacounty
1 minute ago
stop ignoring this person
report abuse
i suspect that i read a lot faster than you think."

and I suspect that you operate off a reflexive assumption that RS = BS. if your attacks were more at the content of his posts than at him, then there might be more empirical support for your speed-reading theory

i still don't understand why you continue to defend RS. what's your angle?

no RS, that's not it at all, and you know it. for a good deal of time we had quite a pleasant interchange on that thread. i can appreciate a well-posited argument from any side of the aisle. and i'm not nearly as liberal as you continue to claim, i am just highly intolerant of intolerance and simplistic thinking. problems are complicated, and by insisting that isms are appropriate one isn't getting anywhere. and by posting inaccurate information when i think you are often aware of how you are being misleading you piss me off.

there you go again calling me a name "champagne liberal." please, yes we have money. yes, we don't mind paying taxes although we wish that less would be necessary. yes, i believe that financial regulation is essential to prevent abusive practices by BOTH consumers and banks, and yes i think that the abusive behaviors resulted in significantly more pain to the general populace than to the banks, at least to date. does that really make me a champagne liberal? oh, and i think kids should have enough food and a decent education and i feel that our healthcare system is an embarrassment. i'm also in favor of free trade, incentivizing investment, lower taxes on small businesses, research and development, an educational system that promotes developing trade skills at a much earlier point, obligatory training programs/public work for those receiving public assistance, access to child care to make this feasible, etc.

sls, i think cc is a fast reader (sort of a joke).

"note above from rs: complaining about being caught at "posting errors of fact.""

Yes, that was sort of funny on its face. I think we'll hear from RS shortly that what he meant was "pointing out errors of fact [by others]". My point about sloppiness...