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Fraud*
According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

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Thursday, June 9, 2011

Goldman Sachs and Qaddafi: Partners in Crime

Matt Taibbi has been ferreting out the nuances of Goldman Sachs's methods of doing business. Apparently, we haven't learned how to make Goldman Sachs quake in its shoes as Qaddafi did. The story of these shenanigans could be funny if they weren't so indicative of how Goldman Sachs does its deals. I think the rules should be made difficult enough that Goldman Sachs will have to toe the line and not commit one more unethical transaction. Goldman Sachs seems to only understand a strong man's threat and would that that were part of the new reformed financial laws--one suggestion: three more suits against Goldman Sachs and they are broken up!

Goldman Tries, Fails to Sell Soul With Libya Deal
By Matt Taibbi - Taibblog, Rolling Stone

It was hard not to be amused to see this story by CNBC’s John Carney the other day with the following provocative headline: “Goldman Dodges a Bullet.”

In the story an unnamed Goldman banker told Carney that there was a widespread feeling of relief within the walls of the bank after news broke that Goldman a few years ago offered to sell Moammar Qaddafi a $3.7 billion equity stake in their company. The relief, it seems, stemmed from the fact that the deal was never struck – and therefore Goldman doesn’t have to answer charges now of having funded repression in the Middle East. From the Carney piece:

“The last thing we need right now would be headlines reading ‘Vampire Squid Profits Funding Libyan Dictator,’” one senior Goldman investment banker told NetNet.

I appreciated the shout-out there, but I also had to laugh: only a Goldman, Sachs executive would fail to see that offering to sell yourself to a ruthless anti-Semitic dictator/terror sponsor is just as bad as actually completing the sale. If anything, it’s worse. There is no modern-day Goethe or Faust with the genius to even invent an anti-hero pathetic enough to not only try to sell his soul to the Devil, but fail! But apparently, this shameful episode is what counts as a PR win for the esteemed i-banking King these days:

"Finally, we dodged a bullet," another person at Goldman told Carney.

The Libya episode is classic Goldman. They made the equity offer in the first place after blowing a giant pile of Qaddafi’s money on a complicated series of option bets, made before the 2008 crisis. In this deal they pulled the standard White-God conquistador routine, sending in a smooth-talking "rock star" salesman to dazzle the aborigines with cuckoo clocks and shiny things. From MarketWatch:

Libya was eager to join the big leagues of finance, and its investors were “awed” by an Arabic-speaking Goldman executive who urged them into an options deal that bet on the fortunes of companies including Citigroup Inc. C +0.23% , Allianz DE:ALV -1.33% and Italy’s UniCredit IT:UCG +2.08% .

The LIA, Libya’s sovereign wealth fund, was charmed by the demonstration and decided to go all-in with a $1.5 billion bet. Goldman very quickly lost them 98 percent of that money.

I never knew it was even possible to lose 98 percent of an investment that quickly. If you sent a blind, three-legged donkey into Caesar’s palace with $1.5 billion in chips, it could probably stay solvent longer than this options package Goldman sold to Qaddafi.

How could the Libyans be enticed to take such a crappy deal? See if this sounds familiar: according to the Wall Street Journal, the Libyan fund manager felt that Goldman had "misrepresented" the fantastic investment opportunity Goldman sold to them, and also made trades "without proper authorization."

Read the full article here



You can see the video here

6 COMMENTS:

Anonymous said...

Maybe they're Psychopaths????????


The Rise of the Second-String Psychopaths

How had our country disappeared? Vonnegut proposed that among the contributing factors was that it had been invaded – as if by the Martians – by people with a particularly frightening mental illness. People with this illness were termed psychopaths. (The term nowadays is anti-social personality disorder.) These are terms for people who are smart, personable, and engaging, but who have no consciences. They are not guided by a sense of right or wrong. They seem to be unaffected by the feelings of others, including feelings of distress caused by their actions. Straying from a decent way of treating people, or violating ethical codes causes no anxiety, the anxiety which is what causes the rest of us to moderate our more greedy impulses. If most children feel anxiety when they are pilfering the forbidden cookie jar, psychopaths feel just fine. They can devour the cookies, shatter the jar as evidence and stuff it in the trash can. When accused, they can argue with apparent sincerity that the cookie jar has been missing for at least a week. There suffer no remorse, no guilt, no shame. They are free to do anything, no matter how harmful.

The United States corporate and government spheres have become, Vonnegut suggested, a perfect habitat for psychopaths. What has allowed so many psychopaths to rise so high in corporations, and then government

To carry this out requires the employment of many ‘kept’ politicians to excite and misdirect scared and angry – and ignorant – voters.

http://www.commondreams.org/view/2011/06/05-1

Anonymous said...

Neil Barofsky: $5T in More Bailouts

http://www.ritholtz.com/blog/2011/06/neil-barofsky-5t-in-more-bailouts/



So I guess more bonuses for select few in the future?

Anonymous said...

Goldman Sycophants of the World Unite! You Have Nothing to Lose but Your Virtually Non-Existant Reputations!

The Goldman defense against the Levin report is so late and so pathetic that it looks increasingly evident that the bank is simply hoping to blow enough smoke so as to cause confusion and muddy the waters rather than mount a frontal, fact-based rebuttal. Mind you, sniping and innuendo can prove reasonably effective if done persistently and loudly enough. The book Agnotology describes how Big Tobacco managed to sow doubt over decades of the link between smoking and lung cancer well after the medical evidence had gone from suggestive to compelling.

http://www.nakedcapitalism.com/2011/06/goldman-sycophants-of-the-world-unite-you-have-nothing-to-lose-but-your-virtually-non-existant-reputations.html

Anonymous said...

The 'Big Short' and Goldman's New Story

What does any of this have to do with Sorkin? Not much, except to show that this latest story of Goldman’s about not having a “big short,” an argument they’re making with a slew of new numbers, is just that – a completely new story.

When the government of the United States officially asked for those numbers last year, the two executives who were in the best position to give those answers basically said they didn’t know anything about anything. They apparently wouldn’t have been able to tell Carl Levin the time, if he’d asked.

But all of a sudden, over a year later, when the bank is in deep shit both on the stock market and in the arena of public opinion, and multiple subpoenas are sizzling on their doorstep, suddenly the bank starts coming out of its amnesiac fog and coughing up numbers – to Andrew Ross Sorkin. As the Russians would say, I leave this without commentary.

http://www.rollingstone.com/politics/blogs/taibblog/the-big-short-and-goldmans-new-story-20110609

Joyce said...

Thank you for all the great links!

Anonymous said...

The 'Big Short' and Goldman's New Story

What does any of this have to do with Sorkin? Not much, except to show that this latest story of Goldman’s about not having a “big short,” an argument they’re making with a slew of new numbers, is just that – a completely new story.

When the government of the United States officially asked for those numbers last year, the two executives who were in the best position to give those answers basically said they didn’t know anything about anything. They apparently wouldn’t have been able to tell Carl Levin the time, if he’d asked.

But all of a sudden, over a year later, when the bank is in deep shit both on the stock market and in the arena of public opinion, and multiple subpoenas are sizzling on their doorstep, suddenly the bank starts coming out of its amnesiac fog and coughing up numbers – to Andrew Ross Sorkin. As the Russians would say, I leave this without commentary.

http://www.rollingstone.com/politics/blogs/taibblog/the-big-short-and-goldmans-new-story-20110609

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