Hammer Time: Responsibility

Steven Lang
by Steven Lang
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.

I saw how crappy Aveo’s, Cobalt’s and Ion’s were once they came to the auctions and how little they sold for. I ran my fingers through the misaligned panels of $40,000 Corvettes and Cadillacs. I even studied GM’s future pension obligations and could only conclude that a low margin company with millions of sub-standard vehicles and hundreds of billions in obligations would go right down the Chapter 11 tubes. Did I warn anyone? Yes, my wife’s Grandma who eventually took a six figure bath with her ‘safe’ GM Bonds.

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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  • Undrgnd40 Undrgnd40 on Apr 28, 2010

    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.

    • See 1 previous
    • Windswords Windswords on Apr 28, 2010

      Warren Buffet just wants and exemption for himself in the ongoing financial reform. That's why his lap dog, Senator Bob Nelson, voted to filibuster the reform process. He's working for another cornhusker kickback. The sooner he's removed from office the better.

  • Steven Lang Steven Lang on Apr 28, 2010

    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.

    • Porschespeed Porschespeed on May 22, 2010

      @Steven Lang, Please explain how GS told the truth about the packages they were selling. Just because you bribed KBB to say that the Chevy Cavalier was worth 50% of sticker 4 years out, does not make it so. Sure, I know better, but when the 'objective rating agency' is saying different, how is it my fault for selling it to my clients? This was nothing more than a scam, perpetrated by the top 1% - spare me the BS, I'm not an idiot.

  • FifaCup Loving both Interior and exterior designs.
  • FifaCup This is not good for the auto industry
  • Jeff S This would be a good commuter vehicle especially for those working in a large metropolitan area. The only thing is that by the time you put airbags, backup cameras, and a few of the other required safety features this car would no longer be simple and the price would be not much cheaper than a subcompact. I like the idea but I doubt a car like this would get marketed in anyplace besides Europe and the 3rd World.
  • ScarecrowRepair That's what I came to say!
  • Inside Looking Out " the plastic reinforced with cotton waste used on select garbage vehicles assembled by the Soviet Union. "Wrong. The car you are talking about was the product German engineering, East German. It's name was Trabant.