Thursday, December 24, 2009
How to make a $Billion or two on Wall St.
The answer has been said so many times in so many ways, but Gretchen Morgenson and Louise Story take another look at how investment houses wrapped up a pile of the worst junk they could find, sold it as an investment vehicle and then bet against it. Or as one expert in the matter puts it,
“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”It is probably not a good idea to read about this just before Christmas. And with all the friends and loyal employees of Goldmine Sachs in the government, you can't even hope for an honest investigation of this. Anybody trying to do a Judge Sirica in this matter would be steamrolled by several million dollars worth of lawyers before he called his court to order.
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