Tuesday, April 20, 2010

Dylan Ratigan explains the moral bankruptcy at Goldman Sachs

Last Friday, Goldman released a statement[Link] to defend itself after the SEC announced that it was pursuing fraud charges against Goldman. Among other things, Goldman said that it lost money on the deal and made full disclosure to the buyer. Really? Remember the near collapse of AIG? After AIG was bailed out, Goldman Sachs received US$13B[Link], the largest chunk of the money to bailout AIG. What was this money for? Goldman had taken bets on wide ranging number of securities by buying CDOs from AIG[Link] and stood to gain if the complex securities (CDO, MBS etc) it sold to clients failed i.e. Goldman made massive net gains from the losses of its clients.

Dylan Ratigan is one of Goldman Sach's harshest critic and he explains what Goldman did with great clarity in this video:


It is about time for the Americans to pass the bill to regulate the financial institutions so that such conflicts of interests made possible by the investment banks 'playing all sides' is no longer possible.

28 comments:

Anonymous said...

Don't buy any structured products. Forget about the so called higher returns.

Have a good job or do good business and save bigger and faster money.

Or invest in blue chip shares or buy property at the next down cycle.

Frankly no better and safer way. And don't bother about Goldman Sachs, SEC and what not did.

GoldmanSacked said...

Dylan Ratigan's article:

http://www.huffingtonpost.com/dylan-ratigan/a-goldman-rebuttal_b_541371.html

Anonymous said...

Just saw a POSB ad in the States Times, don't know what investment product 4%-10% return lock in 5 years, i.e. 1% to 2%pa. Well anyone will know if you lock in fixed deposits for 3 years will already garner over 1.5%pa, hahaha. So really many of these products are simply targeted towards ignorant folks.

jamesneo said...

It is not possible for the government to pass any law to regulate the financial institution since the US government is controlled by these banks in the first place. They may pass some sort of compromised deal that will not hurt the bank at all etc(wayang) but will not disallow the conflict of interest since the US government funded a lot of their expenses through big banks like JP Morgan Chase who are in league with the rest of gang. It would be a victory if they can just reinstall the Glass–Steagall Act.

Anonymous said...

The greater danger in an entity that's as big as Goldman is its ability to rig the market.

Anonymous said...

Mr Lucky

The biggest chunk of the AIG bailout went to your idol Mr Warren Buffet. U know ... the silver manipulator. The guy talks a lot about dividends but rarely gives any. The biggest individual player in derivs aka WMD.

Moral bankruptcy is ... being for for the gays before being against them... dropping your spiritual leader when he becomes a political liability ... dropping your economic advisor immediately after he had serve his use as advertisement ... escalating a war in the country which is now the largest producer of opium and cannabis ... pushing a healthcare reform that will remove $500B from medicare for the old folks and force everyone to buy useless insurance, tax those which are any good and of course exempting himself ... yes ... your beloved Messiah.

Goldman Sachs is an Investment Bank. Not some charity. U dun look for morals in a brothel nor an IB.

PS: Are you really expecting Goldman Sachs to get anything more than a slap on the wrist?

Singapore Short Stories said...

Insightful post!

Anonymous said...

For the sake of yr children, it may be better to have more APs.

Anonymous said...

Anon @ 2141

I think you dun understand the issue. Again, it is to the extremes you are trying to reason. Though Goldman may be a profit seeking entity, there are still certain things that the authorities need to protect the general public interest. Just like in other business. The point is that with ever increasing complexities in the financial products, it may not always serve the best or fair interests of the public.

Of course, you can always cite caveat emptor like our dear government, but then again, one could always cite caveat emptor for everything, depending on how ridiculous you want to sound or simply how bo chap you want to be or pushing the responsibility (if you are in power)

The government role is to regulate and protect the common people interest.

Anonymous said...

You also sound like a know it all. If you are so good at making policies and knowing the consequences of every action you take. You must be a most rare talent who deserve millions at least in politics in Singapore.

My belief in life is that there are many paths to solving an issue with many consequences. Sometimes, your actions may lead to good or bad results, depending on how you define it.

As for national and international policies, people have different school of thoughts. That is why there is a debate to lead to a consensus to take the next course of action.

Naturally, you have your own set of beliefs, but please dun sound as if the happenings in this world is so clear cut as you make it sound to be. Unless you are such a genius that the world sorely needs.

Anonymous said...

As I was watching the video, I was wondering at the same time whether this kind of reporting will ever exist in Singapore at all?

Ratigan is very specific, laser sharp questioning. The car analogy is so easy to understand for goondoo like me.

Lucky Tan said...

anon 10:39,

Of course I do not know all. But I do know there is a different side, a different path and perhaps a better answer.

Singaporeans have been made to walk an unwavering one-way path with the associated consequences. It is time we consider alternatives.

Anonymous said...

Dear lucky,

I think anon 10:39 is not referring to you but instead to anon 21:41.

that anon 21:41 has always complained in your blog about buffett/obama using the same condescending know-it-all tone.

Cheers
Economist with a heart

Lucky Tan said...

Economist,

Opps. My mistake.
Sorry anon 10:39.

Anonymous said...

If Obama and his Justice Department look into the Matter and have those crooks shot liked China did to their corrupted official, there will be justice.

Rialce said...

Dylan Ratigan's view is biased. He made it sound as if Goldman knew the bubble is going to burst. Well, Goldman could predict the bubble bursting but they cannot be dead sure that it will burst and when it precisely happens. Imagine if somehow the bubble did not burst, then the buyers of the structured product would have earned $.

Anonymous said...

Moral bankrupcy assumes the existence of morals. Dylan is really looking for morality in the wrong place.

Religion is useful in that sense as it provides a glue (read morals) that holds society together. Atheists rely on rules and regulations which should not be confused with morals, conscience, etc. all which depend on the belief of a higher consciousness.

onhayek.blogspot.com/ said...

RE 20/4/10 21:41 Anonymous

Moral bankruptcy is coined by Gordon Brown, most of the most experience manager of finance in the world.

Do not assume you know more than him.

I can excuse hedge funds from this term.

But I think this term suite perfectly for Goldman Sachs, who likes to clamor virtue and serving public interest.

Hedge funds speak and bet nakedly for profit while Goldman pretends to uphold highest corporate virtue.

And do not make wild guess that AIG bail out goes to Buffet, when US government feared to publicized its benefiter.

Buffet is fairly adverse to derivative though he had made some deals on that.

Looks like Goldman is some of the biggest winner of the deal given the hugh amount of derivative unwrote by her.

Anonymous said...

Hi anon 1443,

I beg to differ. I feel that atheists may have their own moral consciousness even if they dun subject to the *restrictions* of religions.

I once saw a debate on the motion on whether the basic nature of human is good or bad. So the students went round justifying their *belief* by citing prominent psychologists and researchers. I guess if you use religion as a basis for moral consciousness, it is like a fallacy whereby it just boils down to faith or blind trust.

Anyway, I am not a atheist and I like there is always some good in humankind. : )

良哥 said...

Teenagers in a track adidas tennis shoes can go through shoes rate discount adidas sneakers teenage runner well knows that newest adidas shoes 2010 to wear the right shoes discount moncler outlet any cross country among world cheap adidas shoes especially important to the sportsman wholesale adidas shoes a young person growing up adidas shoes outlet Not only do they want to discount moncler t-shirt grow out of their shoes cheap jordan shoes but shape of their feet changes new jordan shoes which means every time we new jordan shoes the time comes to get air jordan 2010 a new pair of shoes eveyone discount jordan shoes a good choice to get jumpman 23 it with a high material Jordan ajf shoes that breathes easily on random Newest Timberland shoes 2010 They should be extended runs cheap Nike shox shoes give enough support to athlets discount brand shoes especially around the ankles area cheap Nike Dunk shoes to avoid injury your ankles AIR MAX shoes outlet when you make your trip 2010 New GHD something in store possible fit Benefit GHD his is also the way to

Anonymous said...

Anon 14.43

Spare me the religous dogma. There are athiests who abide by their own set of morals and what you've implied can be said of those who follow religions. Their actions are guided by the rules of their religion and not by any innate morality that they possess.

Anonymous said...

Allow me to rant an off topic here...

According to my simple mind, if SMRT or SBS plan for short routes in the system, abolishing the longer routes, obviously, they are going to increase the number of buses. Logically, more routes mean more buses, right?

If that is the case, then would there be any savings for consumers? Please correct me if I am wrong. I just feel that this is another profit making strategy since both SBS and SMRT are profit making organisations. Can somebody highlight countries where transportation are privatised to such an extent where there are only a few large companies providing it? My feeling is that public transportation is mostly owned by public corporation in other countries. My sentiments are that products in Singapore that are inelastic in demand, their prices keep on increasing e.g. public utilities, transport, housing, even the food in NTUC is getting expensive...same price, but poorer quality especially the fruits.

I might be wrong, but cant help feeling this way.

良哥 said...

Black GHD that don't fit properly only CHI hair straightener but they are not returnable GHD IV Salon Styler Every woman needs to have GHD Rare Styler a few tips to spot Gold GHD the inside of the bag Gray GHD Handbags are considered as Kiss GHD Styler will focus on various items Pink GHD is perfect just for you Pure Black GHD is primarily a company that Pure White GHD if you really want to Purple GHD The qualities that make a cheap bourke dooney handbags running shoe with a good grip authentic dooney bourke bags and material that breathes easily newest dooney bourke handbags They should be sure that moncler vest light enough to do sports dooney bourke new purses but still give enough support to discount dooney bourke handbags outlet around the ankles to avoid injury wholesale Rolex watches you want a high quality moncler we can provide many moncler t-shirts moncler jackets does spend a lot of money moncler coats choose us and you will not regret.dooney bourke totes have the perfect apparel cheap ugg boots you have to know what discount ugg boots there to take your money ugg boots it focuses on your convenience classic ugg boots One of the major attractions ugg classic tall boots

Anonymous said...

last time they had the glass stiegal to separate saving banks from investment banking activities.

Investment banking is proving to be a bad boy again.

Anonymous said...

//My belief in life is that there are many paths to solving an issue with many consequences.//

right on !!! however the development of complex financial products allowed in the market used to run so much ahead of the regulatory policies / control & manpower to manage it - especially when it was allowed to be peddled to mom and pop by equally "mom and pop" financial "planners".

For each variable you add onto an equation, the resulting outcome can be manifestly unpredictable especially when the variables in real life do not move in linear mode.

The lack of an open platform and the culture to really poke holes and debate it out is also not "really" there - lest a defamatory intent is being imputed.

//You must be a most rare talent who deserve millions at least in politics in Singapore.//

Do not confuse luck with talent. A lot of people are just plain lucky.

//Naturally, you have your own set of beliefs, but please dun sound as if the happenings in this world is so clear cut as you make it sound to be.//

Nothing is clear. However, as we know all this while, some people just make it look like as though they are. Who cares if it it not at our expense ? What do you think if it is at our expense ?

Anonymous said...

//Imagine if somehow the bubble did not burst, then the buyers of the structured product would have earned $.//

The eventual loss is just being deferred or passed on to the last holding party of the financial musical chair if it did not happen earlier.

Whether it did (well, it did) or did not burst, a lot of countries and people (in real brick-and mortar livelihoods) are unwitting players and eventual losers (as it did and would have burst finally) - as the conditions were there for it to happen with global loss to the tune of billions if not trillions.

Where did it go wrong as somehow with all the sophisticated financial people in the world, this big poker game was allowed to happen ?

Anonymous said...

***Atheists rely on rules and regulations which should not be confused with morals, conscience, etc. all which depend on the belief of a higher consciousness.***

are you saying that non-atheists do not have their own "rules and regulations", albeit in a different word that they may call it.

what makes you think (going by your statement) that rules and regulation, whatever they are, cannot incorporate the essence of morals, conscience, etc.

it is human failing that the good rules, regulation, morals, conscience, etc. are twisted out of context for them to suffer a bad name.

qinbincai123 said...

Stray birds of summer come to my window to jired88 sing and fly away. And yellow leaves of autumn,
which have no songs, flutter and fall there with a sign.
Wholesale Cheap Hats

Wholesale New Era Hats

Cheap New Era Hats

New Era Fitted Hats

Cheap Wholesale New Era Hats