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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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Saturday, September 3, 2011

The Two Sides of Goldman Sachs: Both Dark

Two stories on the internet show the two sides of Goldman Sachs's character. As it is being sued (for $11.1 billion) by the Federal Housing Finance Agency (FHFA) for its fraudulent mortgage securities, GS is beginning new wagers on the weakening economies of Europe and the United States.

Goldman is advising its clients on how to profit from the turmoil in the European and American economies. When Goldman advises, many listen. GS can make money in any environment as it has proven by coming out of the the financial crisis richer than ever.

The article titled, Even Goldman Sachs Secretly Believes That An Economic Collapse Is Coming, found on the website called The Economic Collapse, states , "They (GS) will say one thing publicly and then turn around and do the total opposite privately." The financial system of the US is "deeply, deeply corrupt."

Excerpt from The Economic Collapse:
"It turns out that Goldman Sachs secretly believes that an economic collapse is coming, and they have some very interesting ideas about how to make money in the turbulent financial environment that we will soon be entering. In the report, Brazil says that the U.S. debt problem cannot be solved with more debt, that the European sovereign debt crisis is going to get even worse and that there are large numbers of financial institutions in Europe that are on the verge of collapse. If this is what people at the highest levels of the financial world are talking about, perhaps we should all start paying attention."
....

The following is how Business Insider summarized the advice that Brazil gave in the report regarding how to make money off of the impending collapse in Europe....
  • Buy a six-month put option on the Euro versus the Swiss Franc, thus betting the Euro will drop against the Franc (the Franc being the currency that an official Goldman report recently referred to as the most overvalued in the world)
  • Buy a five-year credit default swap on an index of European corporate debt—the iTraxx 9. This is a bet that some of these companies will default, and your insurance policy, the CDS, will pay off

Read the rest here

. . . . . . . . . . . . . . . . .

The second article entitled FHFA Sues 17 Banks Over Massive Mortgage Losses At Fannie and Freddie by Agustino Fontevecchia of Forbes says:

"...The financial crisis is an example of an organizational failure across a web of actors that involved primarily banks, credit rating agencies, and regulators, as well as mortgage buyers that possibly underestimated or didn’t understand the risks of buying a home. More than just a failure, there was complicity, to a certain extent, between many of the major actors, as banks looking for higher profits lobbied regulators, while credit-rating agencies took hefty commissions from rating as many securities as possible. Their house of cards, though, fell with destructive force."

The complaint against BoA filed by FHFA asks for trial by jury.

My comment is that the only thing missing in the story is the request for jail time from GS Executives.

Read the entire article here


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