Tuesday, May 4, 2010

Government Sachs In The Cross-Hairs: What The Scandal Is All About

Goldman Sachs (GS), aka "Government Sachs" has been exposed for being what readers of Marko's Take, as well as anyone with a brain, already knew:  the most corrupt and greedy institution on planet Earth!  (But Marko... how do you REALLY feel?)

With so many allegations and opinions flying about, it's easy to get confused as to exactly what prompted the SEC complaint and how it relates to the Obama Administration's formerly cozy relationship with Government Sachs.

Goldman was accused of fraud by the Securities and Exchange Commission (SEC) in a lawsuit filed April 16.  The SEC claims Goldman duped investors in a Collateralized Debt Obligation (CDO) called Abacus 2007-AC1, by failing to disclose that it was created with the help of hedge-fund firm Paulson & Co., which made a profit of about $1 billion when the investment collapsed in value.  John Paulson became an overnight celebrity within the investment community by virtue of his huge score shorting the real estate market.

The CDO is a bet against the value of mortgages and the housing market overall.  The securities themselves were allegedly created specifically to give hedge fund manager John Paulson a means to profit from the real estate meltdown.  Goldman, for its part, put its own clients into these CDO's, which defaulted in droves.
Paulson and Goldman got rich as America and the world got poor.

Warren Buffett, the richest man in America, and the most hypocritical man in America, sees ABSOLUTELY NOTHING WRONG!  Why should he?  His investment in Goldman, made at terms not available to anyone BUT him, is in the money.  What him worry?  (But Marko... how do you REALLY feel?).

Goldman's defense filing included copies of six lawsuits, as well as a "demand letter" from the Louisiana Municipal Police Employees Retirement System, that the company's board launch an internal probe of "officers and directors responsible for the Abacus 2007-AC1 incident."

In addition, Goldman clients are up in arms, believing not only that they had been misled, but that GS used its trading operation to benefit itself at their expense.  Goldman, trade against its clients for its own profit?  You're kidding, right?  NOT!  (But Marko... how do you REALLY feel?).

Prosecutors have demanded trading records as part of a probe that has ensnared several hedge-fund managers, including Galleon Group founder Raj Rajaratnam.

The U.S. Attorney's office in Manhattan has alleged Mr. Rajaratnam was at the center of a massive insider-trading ring that generated millions of dollars in improper trades.  Mr. Rajaratnam has denied wrongdoing.

The SEC move came as President Barack Obama is making a final push for financial reform in the Senate next week.  “Wall Street titans still recklessly speculate with borrowed money,” he told supporters. “We cannot delay action any longer.”

And this explains the sudden ploy by President Obama to throw his cronies at "Government Sachs" under the bus.  It's 2010, and the elections are coming up.  How better to show the American people that you have their interests at heart?   He's gotten what he can out of Goldman.  They're no longer useful.  No honor among thieves!

Suddenly, the market impression of GS has taken an extreme turn for the worse.  Not only has its stock plunged, but now market fears that the cumulative effects of the SEC and the private lawsuits will imperil Goldman's excellent credit-worthiness.

The cost of insuring Goldman Sachs’ debt against default has risen to about the level of Morgan Stanley and Citigroup, two less profitable rivals, as Goldman’s regulatory woes take a toll on investors’ confidence and its standing on Wall Street.

Credit Default Swaps (CDSs) leapt to 160 basis points yesterday, a real market sign that this is no slap on the wrist, but a real threat to the most corrupt institution in the world.  Couldn't happen to a better bunch of guys!  And that's how I REALLY feel!

Marko's Take

Our newest video entitled "Social In-Security:  The Problem" will be uploaded in the next 24 hours.  You can access all our videos by clicking here:  http://www.youtube.com/markostaketv.


  1. Marko,

    What is your "take" on the prospect of the current administration taking control of our 401k plans, pensions etc...so they can supposedly set up annuity's for "the people". Another way for them to get their hands on our money!?

  2. Hi Anon:

    I've read about that plan. I can't say, with any certainty, that it will happen, but here is the url to an article which speculates about it. http://market-ticker.denninger.net/archives/1830-401kIRA-Screw-Job-Coming.html.

    There is more about it on the net, but suffice it to say that this Administration is not above forfeiting all civil rights in the furtherance of its agenda.



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