Goldman Sucks
Something truly extraordinary has happened. The Securities and Exchange Commission (SEC) has charged Goldman Sachs, the greedy, grasping, Midas heart of the Old World Order, with fraud, prompting an immediate slump of over 12% in their share price.
For once, the victims of the evil empire of Goldman Sachs were not the ordinary people, but their own big clients, including the German bank IKB.
This is a momentous hour. Like rats in a sack, the Old World Order have viciously turned on each other. Their united front is disintegrating.
How did it come about? What did Goldman Sachs do that was so outrageous that the SEC could no longer turn a blind eye to the myriad of transactions performed by Goldman Sachs that should have attracted the most serious scrutiny long ago?
What happened was that the hedge fund Paulson & Co, one of the most spectacular beneficiaries of the Credit Crunch, earning billions of dollars while so many other were losing billions, put together a complex portfolio of subprime-mortgage-backed investments that it fully expected to slump in value i.e. it was actually assembling a collection of what it thought were the highest risk, most dubious investments available, and anticipating maximum downside on this portfolio. Its explicit strategy was to bet heavily against this portfolio i.e. to “short” it to the fullest extent. In other words, Paulson & Co regarded this portfolio as utterly toxic, a disaster in the making. This portfolio was “dead man walking” if ever there was one.
Paulson & Co arranged for Goldman Sachs to structure, market and sell this portfolio to its prestigious clients. Goldman Sachs gave it the full, glossy treatment, indicating to many clients that they would be sitting on a potential goldmine if they invested in this portfolio. They completely omitted to mention to all would-be clients that Paulson & Co regarded this portfolio as a collection of the walking dead – a zombie fund heading for the graveyard. Isn’t this a critical piece of information about which every potential client ought to have been made aware? It’s a bit like selling a house for full market value when you know it’s sitting on the edge of a crumbling cliff, a fact that you deliberately fail to tell the purchaser.
In fact, they didn’t mention Paulson & Co at all. They claimed instead that ACA Management, an objective, independent third party with expertise in analyzing risk, had assembled the portfolio. They must have known that if they had admitted the involvement of Paulson & Co, investors might have viewed it entirely differently, given the reputation of hedge funds.
The Goldman Sachs “vice president” at the heart of the scandal is a Frenchman called Fabrice Tourre. In an email sent to a friend a month before he helped to structure the toxic portfolio, Tourre said, “More and more leverage in the system. The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fabrice Tourre … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstrosities!!!”
Tourre was described as a “well-mannered, handsome guy from a very refined family.” He had a reputation for throwing noisy parties in his fashionable block of flats. He was a ‘straight-A’ student at the Lycee Henri IV, one of France’s most elite schools, housed in an exquisite 6th Century abbey in Paris. He then studied mathematics at the Ecole Centrale Paris, a top French university, before completing his elite education with the obligatory trip to the USA where he obtained a master’s degree from Stanford. He worked in a luxurious office in a prime location in London.
Revolutionising Awareness 