What’s Goldman Up to NOW?

“Certainly, our industry is responsible for things. We’re a leader in our industry, and we participated in things that were clearly wrong and we have reasons to regret and apologize for.”

–Lloyd Blankfein, Goldman Sachs chairman and chief executive (Nov. 17, 2009)

It is widely and correctly understood that Wall Street, with Goldman as a leader and with regulators in thrall, helped to inflate and profited from a credit bubble that burst and cost tens of millions of Americans their jobs, incomes, savings and home equity. American taxpayers continue to stand behind the bailouts and other government interventions that have stabilized the financial system, including Goldman, enabling the firm to post blowout profits in 2009 and to set aside $16.7 billion for bonuses so far this year.

–“Goldman’s Non- Apology“; The NY Times, house editorial (11/21/09)

The only question I have *right now is this:

If one of the most profitable investment plays at the moment is shorting (betting against) the U.S. dollar — also known as the carry trade — and Goldman is now making literally billions per quarter . . . is any of that money coming from shorting the dollar?

Would that really be any different than shorting mortgage-backed securities as it was busy selling trillions of them to investors (as Goldman did)?

It really does seem that what’s good for Goldman is bad . . . very bad . . . for the rest of us — and vice versa.

“Justice Delayed . . .”

Last thought on this for now:

Ohio’s Attorney General just filed suit against the credit rating agencies (Standard & Poor’s, Moody’s, and Fitch) for misrating billions in mortgage-backed securities, costing Ohio retirees hundreds of millions.

The securities blew up starting more than three years ago.

Should it really take government attorneys (federal and state) until, say, 2015, to bring appropriate legal action against Wall Street’s key players??

P.S.: Want to guess what Goldman Sachs’ defense(s) would be, were it to be proven that it profited, big-time, from shorting the dollar?

Pick one (or more) of the following:

A. That that’s perfectly legal to do (completely true).
B. It had a fiduciary duty to its shareholders to maximize profit.
C. Profits from the carry trade made it less dependent on Fed and Treasury guaranties and other support (that it otherwise denies benefiting from).
D. Goldman made much less shorting the dollar than many others.
E. The dollar’s weakness isn’t due to Goldman and others shorting it (also known as the “it’s not my dog” defense).

I’m sure I could double this list if I actually thought hard about it . . .

*It was Wayne Gretsky who said: ‘I don’t skate to where the puck is . . . I skate to where it’s going to be.’

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.
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