But opacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead […]
Read more...In the various blogosphere efforts to dissect the Goldman Abacus transaction now in the SEC’s crosshairs, some commentators have characterized it as unusual, a “bespoke” CDO“, or “a very complicated deal…a supersynthetic CDO.” Effectively, the view is that Abacus is a multi-tranche variant on the single tranche CDO structure that was developed with corporate CDS, […]
Read more...Reader Hubert sent along this post, with permission, and the following note: My friend Erwin has published a book out of ten years of columns for the German paper “Die Welt”. He put an Intro in front of it where he lays out why Germany will go down the tubes as everybody else. It is […]
Read more...Enjoy! View the segment here.
Read more...Enjoy! You can view the segment here.
Read more...One of the things that has been striking as revelation of bad behavior in the collateralized debt market has gotten more press is that a number of commentators who had taken the “nothing to see here, move on” stance have gotten religion. Even more dramatic has been the change in perception of Goldman. The firm […]
Read more...A Bloomberg story today on Neil Barofsky, the head of the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, contained this explosive little item (hat tip Tom F): The TARP watchdog has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of […]
Read more...A version of this post appeared yesterday at Credit Writedowns. I am running a poll on whether Greece will default. Please click here to vote. And feel free to comment on why you voted as you did. German Chancellor Angela Merkel is feeling pressure to force German banks to take a haircut on Greek debt […]
Read more...By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. Economists have joined the debate about the merits of requiring the downsizing of too big to fail (“TBTF”) financial […]
Read more...The Financial Times indicator is looking more and more reliable: when the pink paper starts playing at the top of its form, the wheels are about to come off. The most troubling aspect of the Standard & Poors downgrade of Greece to junk and Portugal’s downgrade came in its release. It isn’t just that Greece […]
Read more...Opening Remarks Overview: The Senate committee presented a case that sought to refute the prior public statements of Goldman Sachs and establish that Goldman was, in fact, betting against clients and had rampant, and unacceptable, conflicts of interest. Senators Levin, Collins, McCain and McKaskill made statements that seem to anticipate many of the defenses that […]
Read more...Enjoy! You can view the segment here. PS Reader Independent Accountant correctly chided me for giving the bill too high a grade. This part was a classic example of anchoring.
Read more...As Goldman and the Senate Committee on Investigations are duking out The Battle of the E-Mails, with each side claiming the other has painted a misleading picture, it is becoming pretty clear that Goldman, contrary to its sanctimonious twattle about putting clients first, actually puts its fees first. This should come as no surprise to […]
Read more...By Eliot Spitzer and Bill Black, cross posted from New Deal 2.0: For those who have spent years investigating fraud, it was no surprise to hear that Goldman Sachs, the (self-described) jewel of Wall Street, is the latest firm to emerge from the financial crisis with tarnished reputation. According to a lawsuit brought by the […]
Read more...I’m mystified as to the cheerleading in some circles on Greece. It is not clear that its €45 billion EU-IMF band-aid will be deployed (among other things, it faces a legal challenge in Germany) and even if it is, it falls well short of Greece’s anticipated needs beyond one year. More important, a successful deal […]
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