Wow - Listen To The Goldman Sachs Hearing......

Carl Levin is sure giving it to this guy Sparks from Sachs. And now Collins is giving it to them. The guy Sparks looks like a deer in the headlights. He can't and won't answer direct questions as to whether GS had a duty to act in the best interest in their clients.

If you have any mutual funds - you know you get these mailings that absolve the financial institutions of any liability. This guy keeps putting out there that disclaimer - that the clients had a chance to evaluate and make their own decisions.

oh-oh, the jig is up!

when they are asked a question and directed to the book of exhibits in front of them - they are pretending they can't find the exhibit so as to waste the time of the questioner. They are being arrogant jerks on this. And they are hoping that the time is on their side - if they can continue to stonewall.

It's clear that they are out their to take advantage of the dumb investors and make as much money off of them as they can.

it's infuriating.

Any bets?

And there's nothing evil or wrong with short selling. Practically every stock transaction is between someone who thinks the price is going to go down (the seller) and someone who thinks the price is going to go up (the buyer). Short selling is just a way of making money when a stock price goes down instead of up.

The real question is whether Goldman Sachs was advising their clients to buy instruments they knew were likely to fail, just so they could pocket a commission on the sale, dump a bunch of bad paper, and turn a big profit for one of their other, more favored, clients. The disingenuous advice that investors should be aware that the value of their investment might go down is based, in part, on the fact that investors went through Goldman Sachs as a means of vetting their investments. Goldman Sachs sold some of their clients down the river to benefit themselves and some of their other clients.

Somebody loses and somebody wins and nothing is produced. Would I be wrong?

Shell game.

If you buy a stock and it goes down you lose money.

If you short a stock and it goes down you make money.

In neither case is there any effect on the real economy. It is only the price of the stock that has changed.

If corporate heads knew their company was in trouble they could have their relatives and friend short the stock and make a fortune. And those same corporate heads can deliberately cause their business to fail and make a fortune off if its failure. I believe shorting should be illegal. Betting on the demise of anything leaves the door too wide open for corruption. Shorting is not a zero-sum procedure. When insiders know the company is going to fail and short the company they shouldn't be rewarded for their failure.

When GW Bush was a director at Harken Oil he knew a bad audit report was going to drive prices down. So he sold all of his shares for $848,000. He used insider information so he could get out before everyone else could. Bush said he didn't know anything about the bad audit report, but he was one of the directors who signed the report. Bush violated four federal laws but he was never prosecuted. Why you ask? Well, for one his daddy was president at the time. And secondly, the woman who headed the SEC was appointed by his daddy, GHW Bush.

GW Bush then used that $848,000 to buy 1.8% of the Texas Rangers baseball team. They owners of the Rangers, including the billionaire Richard Rainwater, then duped the taxpayers into building them a new stadium in Arlington, Texas. This added value to the team and Bush eventually sold making an additional 10 million bonus he received from Richard Rainwater, who only had Bush as a team owner so he could have government access.

The SEC needs to have an Elliot Ness at its top and go after all the corruption that is awash in corporate America. And we need to have severe penalties for any white collar criminal who is involved in bilking others. I have proposed a forfeiture law similar to those that involve drug dealers, where the government can seize all of the assets from any white collar criminal, like bush, and make it mandatory that anyone who hurts thousands of millions of people financially should never be allowed to amass more than $20,000 a year for the rest of their lives. Currently, any white collar criminal who steals billions gets away with their crimes or is sent to a country club prison for a few months. Then, once they are freed, they somehow become instantly wealthy again. Who says crime doesn't pay?

I wrote an article ten years ago "If you steal, steal BIG'. Because the more you steal equates to a lesser punishment.

But basically, a person "borrows" some stock from someone who holds it. Let's say it's 100 shares of Widgets, Inc., selling for $10 a share. I take the borrowed stock and sell it for $1,000 on Monday. I've promised you that I'll replace the stock at the end of the day Friday. You want to hold your Widgets stock, but you're fine with letting me borrow it for a week, as long as I replace it. Besides, you're getting a little fee for that. I also know that Widgets, Inc. is coming out with its earnings report on Thursday (actually, everyone knows that, because it's been publicly announced).

Ideally for me, Widgets reports that it lost a boatload of money in the last quarter. Everyone starts selling their Widgets stock, and I buy back 100 shares for the bargain price of $6 a share. On Friday, I deliver your 100 shares back. The shares I borrowed were worth $1,000, the shares I returned are worth $600, and I pocket the $400 difference (less my fees to you for borrowing the stock and any trading/brokerage fees). Nope, nothing was produced, but that $400 difference in the value of those 100 shares of stock now becomes a real gain for me that wouldn't otherwise have happened if I hadn't shorted the stock.

The problem for me, of course, is if Widgets, Inc. announces it had robust earnings, is launching a new product line, and is going to merge with Gadgets, Inc., and their stock price takes off. Come Friday, I still have to buy 100 shares of Widgets, Inc. to return to you, but now it's selling for $17 a share. I get clobbered and lose a lot of money. You're happy because you got the fee for lending me the stock, and it's gone way up in value.

They are not financial advisors.

Plus, these guys wouldn't necessarily know what the firm's overall position (long or short) would be.

concurrently. They willfully and knowingly pushed crap - and shorted it knowing that it they would make money when it tanked.

So they would get $15mm in fees for creating the synthetic CDO. Whether the GS prop trading desk took a position would be a separate decision. In principle both sides of the synthetic CDO would be sold to customers who were interested in long and short positions.

I've always assumed that I would hire a broker if I had a substantial amount of money to invest. It is their job to maximize my portfolio. That is what I have hired them to do. By hiring a broker I am acknowledging the fact that I don't have the education or the time to invest in the market wisely. If it isn't a broker's duty to do his JOB, what the HELL is?

by making as many sales as possible.

Did you get a bonus from your employer, GS, the last quarter? Was it over a million dollars? Does that affect the way you answer your questions today?

GS is admitting that they don't do anything except steal investor money and tank economies.

Fascinating!

They have probably spent many days with a team of lawyers before going before the committee.

They are much better prepared than was Sara Palin at the debates.