Hammer Time: Responsibility
I’m a crook, and I’m glad to admit it. Back when GM was trading in the 20’s I decided to sell the company short. Way short. In fact I didn’t cover my short until GM’s price reached a bankruptcy teetering $3 a share. The reasons were endless… of course. But the crux of my decision was based on the very same observation Goldman Sachs had with American’s sub-prime mortgages… the books were essentially cooked.
Well let’s face it. Am I a villain for simply betting the right away? For betting ‘against America’ even though my upbringing left me little in the ways of GM’s country club cronyism? How about Goldman Sachs? Should the folks there be allowed to profit and congratulate each other for the collective stupidity of their competitors AND some holier than thou Americans? I think so.
I think we both just happened to have done our due diligence and bet right.To be frank, if the politicians du jour think that they are entitled to ‘reform’ our way of thinking they better think twice. Why? Because you can’t reform any company or industry (or country) by eliminating the opportunity to criticize their decisions by selling it short. If there are systemic risks out there, a short gives opportunity to give those things the notice and attention they deserve. Whether the powers that be listen in the end is not up to any of us. But as in investor, you have the right to put your money in whatever you wish. General Motors? Hey. I know what I know. As for Collateralized Debt Obligations and Derviatives… it’s all Greek to me!
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Caveat Emptor. there must be some metaphor here about buying a Cayenne Turbo and realizing it's just a hyped up VW "Too-rag." By the way, Warren Buffet who warned us all about the financial armageddon to come from CDOs and derivatives is now the biggest mouthpiece against financial instrument reform.
Porschespeed, now I believe you are putting ideology ahead of common sense. Warren Buffett has been an outspoken critic of the flat tax, deficit spending, free trade, and the current real estate laws in the state of California. All of these issues would hurt him considerably if the current governments (California and Federal) followed his advice. The issue isn't Warren Buffett. It's Goldman Sachs. I can see an argument against what Goldman Sachs did if the purchasers in question were not supposed to be well versed in CDO's. That would be a breach in fiduciary duty. But that's simply not the case at all here. The buyers, due to their role themselves as financial advisors were fully responsible for their actions. Now if Goldman had sold something that physically wasn't what it is they were buying... that would be a different story. But that's not the case.