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Did Josh Birnbaum Make a Slip? Did the Senators Catch It?

Bruce Krasting's picture




 
In the last 45 minutes of the testimony Josh Birnbaum (Co-head of the
Structured Products Group (“SPG”) was asked a series of questions by
Senator/Dr. Tom Coburn (R.Ok).

There was a document produced that was Josh’s year-end plea for bonus
big bucks. A list of his accomplishments. Amongst the many swell things
that Josh touted was his contribution to the accelerated use of the
equities market in the SPG hedging and trading activity.

Bingo! Josh may have opened up to something that could blow up
for Goldie.

Senator Coburn produced an internal Goldman report for the fall of 2007
that showed that Goldman had an open short on the stock of Bear Stearns.
Coburn asked Josh if he was responsible for that short position.

After thumbing through the book Josh finds the report in question and
looks back at the Senator, smiles, and says, “This is a firm wide
report. I can’t determine if this is my department’s short position or
not.”

Next Coburn asks, “How did you select the shorts you used?” Josh
responded, “We had a macro view. I had a list of stocks that were
correlated to the sub prime industry.”

For me this is a bit of a bombshell. It shouldn’t be. It was a perfect
strategy for the sole reason that it worked. But consider the
consequences.

In 2007 the SPG had gains from hedges of ~$3b and losses of ~$2b on
write down of inventory. It was described that the hedges included (1)
shorts on the ABX index (2) shorts on single name ABS (3) long CDS
against a variety of single names and (4) they shorted common stock of
companies that had a high beta to a downfall of the Sub-Prime/Alt.A
market.

We know from the testimony Bear Stearns was on that “short” list. That
entire list is public. I have not seen it so I will just guess that in
the fall of 2007 GS was shorting the likes of New Century, WaMu, the
mono lines, Countrywide, Bear Stearns, and Lehman. That list could have
been broader; it might have included Fannie Mae and Freddie Mac, Citi,
and BoA, even the likes of a Northern Rock or RBS.

One aspect of the collapse of 2008 was how destructive capital markets
had become. The shorts pushed equities down so fast that managements and
regulators lost control. The shorts were clearly predators. For me it
was the shorts that destroyed the equity values. It was a near daily
event.

My questions on this is (A) How much of this did Goldman do? (B) How
much did the rest of the market do? (C) Did this exceptional demand for
short interest in financial stocks accelerate the collapse of Bear,
Lehman and all the others?

In the fall of 2007 the size of the Sub Prime and Alt.A market was many
multiples of the market-cap of the financials that were the target of
the short interest.

Essentially Goldman Sachs bought WaMu no-dock loans; against this they
shorted Bear Stearns common. The hedge worked just fine. Unfortunately
it cratered Bear Sterns and a few others and damn near took out the
system.

As the broader disclosure of what happened in 2007-2008 (this ain’t
stopping with Goldie) takes place we will see how much this predatory
hedging actually upset the applecart. Its effect is unlikely to be zero.

I am conflicted on this. Hedging is only an option when selling can’t be
done. Therefore hedging is integral to the capital market process. But
there are degrees. I think that if one was long sub-prime ABS and hedged
that risk with a short in the ABX index that is a commercial
transaction and is part of risk management. However if this crosses over
to where one could go long troubled mortgages and short the common
stock of the Royal Bank of Scotland against it, I would say that is not a
commercial hedge. I would call the later transaction a Prop Trade. It
is a bet, not a customer transaction. I have no problem with prop
trading. It should be funded with equity and there should be
limitations. If that had been the case in 2007 that discipline would
have constrained the growth of bad credit.

It is possible that the Goldman hedging strategy was predatory. It added
to the systemic problems that later occurred. Possibly Senator Levin
should ask a few questions on this line. I doubt that he will. I watched
the proceedings and was convinced that the good Senator had no clue how
things actually work.

Did the (admitted) shorting of BSC in
October, November and December by GS lead to the collapse in March?

 

 

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Wed, 04/28/2010 - 16:25 | 322620 dpbnyc
dpbnyc's picture

HAS ANYONE HERE FORWARDED BRUCE'S THEORY TO THE SENATE SUBCOMMITTEE???

Wed, 04/28/2010 - 18:00 | 322776 Bruce Krasting
Bruce Krasting's picture

I don't think they care. All of these guys are lawyers. Those that aren't lawyers have lawyers working for them. So they had to connect the dots. They have been looking at that big book of exhibits for weeks. Tyler Durden publish the list of shorts today. Took him an hour or so to  put it together. So my guess is they know, but don't understand the implications.

However there were at least 1,000 of GS's legal guys who looked at this......

Wed, 04/28/2010 - 16:00 | 322539 hedgie
hedgie's picture

Ridiculous!  Bear didn't die because it was being shorted, it died because it was deeply insolvent.  The real criminal activity is connected to the survival of Goldman Sachs, not the failure of Bear Stearns.

Wed, 04/28/2010 - 16:24 | 322618 dpbnyc
dpbnyc's picture

Have you considered the possibility that Bear died BOTH because it was insolvent AND because of NAKED short selling?

Wed, 04/28/2010 - 16:23 | 322615 giddy
giddy's picture

...agreed... the crisis was never liquidity (except maybe for a few days at most)... these firms were insolvent... many still are...  

Wed, 04/28/2010 - 15:58 | 322537 mbasham
mbasham's picture

It was the shorts that pushed the equity markets down? Really? Are you kidding me? How does Zero Hedge let a total dunce like this publish? You should go work for CNBC where this kind of lobotamized thinking is valued. Give me a break!

Wed, 04/28/2010 - 16:15 | 322588 Bruce Krasting
Bruce Krasting's picture

If you read my stuff you would know that I am totally in the camp of free markets with no restriction. But yes, I am troubled by the SPG short equity strategy. The equity market for a small group of names became the "go to" place to hedge a long MBS book. That creates a different class of sellers. (they were  were "market neutral") So they had different motives than the rest of the sellers. But they added to the supply of sellers, and that did accellerate what happened in 2008.

Wed, 04/28/2010 - 14:48 | 322369 Chopshop
Chopshop's picture

Bruce, great eye and you may in fact have caught a verbal slip-up, but shorting BSC in July '07 (which was an explicit technical time / price zone where many were looking for a mkt top) didn't bring down the house.  It might be an egregious use of 'hedging' loopholes by the desk in question but certainly was not the cause of Bear's demise.  If anything, GS dealt the death blow in the 3 days ahead of BSC's official execution when they retracted their counter-party status ... i've yet to see anyone actually look into all of the utterly insane put activity that occurred in those 2-3 days, specifically the last half-hour before Bear died when front-month puts umpteen strikes OTM were being bought en masse in block scale and at market into close.  Great catch / piece Bruce, just don't think shorting a technical breakdown at 140 in july leads to BK in march.

Wed, 04/28/2010 - 15:05 | 322439 moneymutt
moneymutt's picture

yes, no one in MSM talks about those puts...some major insider illegal activities..

Wed, 04/28/2010 - 14:11 | 322255 rawsienna
rawsienna's picture

I think the bigger issue is that Paulson was in contact with ACA (dont know why they would be if ACA was independent) and that Birnbaum in his review claims that he saved the correlation desk a few billion dollars.  If correlation desk was part of the PROP biz, where was the Chinese wall?

Wed, 04/28/2010 - 10:33 | 321666 Forbes
Forbes's picture

Naked shorting is a compliance issue--and to the extent (how much) it exists, you have to ask yourself: Where is the regulator, who performs surveillance, oversight, and enforcement?

Regulatory capture or ineptitude?

Wed, 04/28/2010 - 11:31 | 321788 Bruce Krasting
Bruce Krasting's picture

This shows up as hedging activity withing the SPG. I doubt very much that any regulator actually looks at "hedging" (vs Prop Trading). I doubt that any regulator who looked at this made the conclusion, "Hey! That's not a hedge. That's a bet!"

So, ineptitude.....

Wed, 04/28/2010 - 08:02 | 321394 Johnny Dangereaux
Johnny Dangereaux's picture

I appreciate your efforts as ususal. As far as naked shorting etc. I did see a presentation on the whole Failure To Delivery process and how rigged the system is. I just can't remember where I saw it.

Wed, 04/28/2010 - 07:57 | 321390 doggis
doggis's picture

the thing that was missed was one word - FRAUD. they took risk and sold it, but they made sure that risk would blow up so they could make a sure bet against it. the only way you can wrap up crap and sell it as a bar of silver is through FRAUD. lack of information, or misrepresentation is fraud.

the only way they could buy the insurance against the risk they sold was also fraud. They had to convince AIG or others to sell them insurance at a price less than price of the 'real' risk. again you can do this with fraud. make it so complicated that the mind spins and you  lose the real information. this is misrepresentation. this is fraud

with their mastery of 'information' they committed FRAUD....fraud fraud fraud!!!

Wed, 04/28/2010 - 05:41 | 321346 John_Coltrane
John_Coltrane's picture

As other commenters indicated, short sellers are the buyers of last resort in a downtrend.  I can attest to that personally with both BSC and LEH which I shorted synthetically by buying naked puts during that period.  When I sold the puts back for a profit (a little too soon, I'll admit), I was supporting the price just as shorts covering their borrowed stock by buying it back support the price.  Without shorts there is no price support in a strong downtrend as new buyers are very unlikely to try to catch a falling knife.  Shorts can never sink a company with real cash flow.  Highly levered entities like IBs are a different story as they borrow short term and invest long term creating a fundamental liquidity problem when short term credit freezes due to a lack of trust among banksters.

Wed, 04/28/2010 - 04:39 | 321334 Tapeworm
Tapeworm's picture

For the retail slobs, BSC and LEH were not available for borrowing quite a long time prior to their price collapse, yet the boyz were able to short them with hypothetical shares. The real shorts that actually borrowed the shares paid up at a higher price than did the ersatz shorts. Why?

 Some are more equal than others?? Is that the correct answer?

Wed, 04/28/2010 - 03:59 | 321324 SmittyinLA
SmittyinLA's picture

What do ya mean "predatory"?   So what if it was, is being a shark illegal?

I got the impression the senators and GS employees had all the questions and answers in advance and may have even discussed the hearings in advance, and essentially this whole thing was a media charade.

 

Wed, 04/28/2010 - 06:34 | 321359 BoeingSpaceliner797
BoeingSpaceliner797's picture

"I got the impression the senators and GS employees had all the questions and answers in advance and may have even discussed the hearings in advance, and essentially this whole thing was a media charade."

Why I don't watch any of this BS any longer.

Wed, 04/28/2010 - 03:54 | 321322 dcb
dcb's picture

I suggest folks take a look at this clasic zero hedge article:

http://seekingalpha.com/article/135785-goldman-sachs-why-aren-t-trading-profits-raising-any-red-flags

pay particular attention to the quantity being traded by the goldman prop desk as a percent of the nyse. note how the action correlates with strange market action. remmebr the time down day after day jan into march.  draw your own conclusions about what the goldman desk did. It's clear to me. as i recall that quarter they had somethng like to loosing trading days. to me they drove the market down day afeter day after day. clear as hell to me. but you make your own conclusion

Wed, 04/28/2010 - 03:20 | 321318 chindit13
chindit13's picture

As much as I love shorting, and would hate to see it banned, I believe there is some connection between a heavily shorted stock of a highly leveraged company, and such a firm's subsequent collapse.  A tumbling stock price alone will prompt creditors to call in loans, and if a firm is levered 40:1, the firm is going down.  A buyout on the cheap for the firm would not be an option since their cash would be depleted paying down the called borrowings.  An outside suitor could have come in and picked up the pieces, but at that time fear was rampant and deals were falling apart overnight.  Then again, I suppose 40:1 leverage is a capital crime punishable by death.

Interesting would be seeing if Goldman delivered on its shorts on schedule, or was operating naked.  Of course their status as a prime broker probably gave them access to ready amounts of any company's stock, so perhaps they were okay.

And to state the obvious, the reason they never went the way of BSC of LEH clearly had much to do with the former position of the then SecTreas.  Actually, everything to do with it.

Incidentally, if one reads body language, one can guess that Birnbaum had all he could do to keep his arrogance in check the entire day.  He had the look of one irritated by the flies swarming about him, outraged that any mere human thought himself worthy to question anything Birnbaum might do.  A truly unctious character.  Sparks was trying to be contrite and seemed as if he's spent his time away from Goldman questioning his own morality.  Swenson looked like he had visions of spending years in Rahway with Bubba and his Five Pound Salami sneaking up behind him.  Fab was just out for a walk in the park.

All of them had been schooled about breaking the rhythm of the questioner by pausing, asking for clarifications, searching for documents, etc., as well as answering by saying nothing.

Wed, 04/28/2010 - 08:05 | 321395 Hansel
Hansel's picture

Birnbaum reminded me of Christian Bale's character in American Psycho.  There is something demented about him.

Second, I worked for a firm that cleared/borrowed through Goldman when Bear went down, and I was shorting Bear at the time.  There were days when we could not borrow Bear.

During the testimony, one of the exhibits said Goldman's strategy was to short names with ABS exposure, and I think it was even Birnbaum's idea even though he wouldn't own up to it.  I do have a problem with a firm selling ABS securities and then shorting the companies buying them explicitly because they had exposure to ABS securities.  That is a major conflict of interest.  I don't have a problem with shorting Bear Stearns in general because they were overleveraged, poorly run, and deserved to go down.  I also think Goldman deserved to fail too, but the government thought otherwise when it bailed out AIG and let Goldman borrow at the discount window.

Wed, 04/28/2010 - 16:19 | 322600 dpbnyc
dpbnyc's picture

"...I do have a problem with a firm selling ABS securities and then shorting the companies buying them explicitly because they had exposure to ABS securities.  That is a major conflict of interest..."

It's not only a conflict of interest but potentially it's insider trading. In pursuing such a strategy, Goldman would be relying on material non-public information. I hope the SEC fully investigates this possibility.

Wed, 04/28/2010 - 15:03 | 322431 moneymutt
moneymutt's picture

thanks, interesting comment...only problem I have with shorts is naked shorting/illegal coordinated market manipulation and trading on insider info, someone knew exactly when BS was going out and a made big oney on puts...

Wed, 04/28/2010 - 02:56 | 321315 williambanzai7
williambanzai7's picture

If we consider this to be legitimate economic activity, we deserve to be sucked down the sewer together with the rats swimming in it every trading day.

Wed, 04/28/2010 - 02:51 | 321313 A Man without Q...
A Man without Qualities's picture

"For me it was the shorts that destroyed the equity values"

The one thing that shorting a stock can never do, and that is destroy value of the assets.  Of course, aggressive shorting leading to price declines can lead to a jump in interest costs, but all a short ever really does is say, "show me the money"  

Now, as for GS and Bear, the question I have is how can GS claim to be unaware of material non-public issues.  They will know better than most Bear's reliance on short term funding, its exposure to mortgage markets, so on the one hand, they are happy to short, but did they raise any concerns with the regulators?  They were happy to watch their competitors collapse, as they were covered on their bets, but when they realized the contagion would mean they could not collect on their bets, they relied on the government to bail them out.

One final point, plenty of the shorts and puts on Lehman and Bear were either directly with employees or via proxies for them.  I am aware of numerous employees who had a "big short" on their own companies (which alos happened with Enron.)

I am struggling to find any evidence that GS was exceptional in their practices.  They survived because they were smarter and better connected, but they are not the stand-out villain of the piece.

Wed, 04/28/2010 - 01:10 | 321274 GoldmanSux
GoldmanSux's picture

Goldmans prop desk is outsized big. | would venture to guess their prop desk revs/profits dwarfs investment banking or brokering. The conflicts here are enormous. I bet they told some clients they couldn't borrow some of these stocks to short because they were short. I bet their equity research dept. had buy recommendations out on many of the stocks they were shorting.

Wed, 04/28/2010 - 01:47 | 321293 bingocat
bingocat's picture

Outsized big is just what it is. Conflicts are managed. Does every employee of every company know every aspect of every customer relationship? No. Does every sister tell her brother that her best friend has a crush on him? Every well-managed broker which has a significant prop desk only performing prop functions fully segregates that prop desk from the customer side in terms of systems and information. At worst in those cases, the prop desk is a customer of the franchise business. However, most fixed income businesses are 100% principal and therefore prop creeps in anyway (one does not deliberately lose money because the customer is a nice person). In most fixed income departments, there is no such thing as "agency business" except in futures execution.

It is all a matter of conflict management. As long as research does not make its research at the request of prop, then it should be OK. Believe it or not, prop traders don't always believe what the analysts believe, and certainly not necessarily on the same performance horizon.

Wed, 04/28/2010 - 03:23 | 321308 sweet ebony diamond
sweet ebony diamond's picture

deleted.

i just read this:

"One final point, plenty of the shorts and puts on Lehman and Bear were either directly with employees or via proxies for them.  I am aware of numerous employees who had a "big short" on their own companies (which alos happened with Enron.)"

did they buy an iPad with their capital gains?

Wed, 04/28/2010 - 04:11 | 321329 bingocat
bingocat's picture

Most firms pay significant portions of bonuses in restricted stock which vests over years. Some firms allow(ed) employees to hedge those. Some did not.

Wed, 04/28/2010 - 05:42 | 321347 sweet ebony diamond
sweet ebony diamond's picture

of course, it is just hearsay.

but you don't comprehend english.

it says "big short".

Wed, 04/28/2010 - 00:37 | 321247 bingocat
bingocat's picture

I have no problem with prop trading. It should be funded with equity and there should be limitations. If that had been the case in 2007 that discipline would have constrained the growth of bad credit.

I do not see the connection between "limitations on prop trading" and the discipline constraining growth of bad credit unless the vast majority of bad credit extension can be attributed to "prop trading."  The problem people have with banks being bailed out is not their prop trading but the fact they lent to people who couldn't pay it back. The problem people have with prop trading is that they made money when the decent thing would have been to lose so those who lost didn't get their faces rubbed in it. The people who prop traded and lost, and got fired or those in firms which failed so their bonuses from past years went down the drain when their stock went to zero are conveniently ignored.

 

As to HCSKnight's comment, I am wondering whether shorts "accomplished anything." When someone is long and rides a slow bull market upward, we don't say the longs "accomplished something". They were just long. People make far too much noise about shorts as if shorting is bad. Buying a house with a mortgage is effectively shorting a bond. It seems like everyone on ZH is willing to comment on what a short America is now, but get up in arms when someone else figured it out before.

 

As to GS shorting mortgages and housing... Market makers are long half the time and short half the time and getting to zero the rest of the time. Does it matter which comes first - the customer trade or the covering trade? If it does, tell that to the store who takes your order without owning the inventory. And as to GS not telling ACA and IKB who the seller was... it would have been wrong for GS to tell them it was you if you had been the seller (whether you had shorted it, or were just unwinding your long CDS position against GS into the structure).

 

Wed, 04/28/2010 - 10:23 | 321640 Forbes
Forbes's picture

Yeah, this is spot-on. Shorting is part of the price discovery process--it's selling at a price, and someone takes the other side. No different than buying long on margin.

When the tech stocks ballooned-up a decade ago, how many longs pointed out the distortion created by the 10-15% public float of these companies that created stoopid market caps? No, everyone bought long so they could stuff their portfolios with hot names, and pretend to be part of the smart money crowd. Only to get burned on the unwinding...

Anyone who watched the tech bubble burst should have known the housing/mortgage bubble would burst--and prepare for the long ride down.

Wed, 04/28/2010 - 00:34 | 321243 Hephasteus
Hephasteus's picture

Bruce hits another home run. Way to go. I'm going to call you Mr Focus.

Wed, 04/28/2010 - 00:33 | 321241 glenlloyd
glenlloyd's picture

True about Levin I would say, but he did recognize the word "shit" when he saw it.

Wed, 04/28/2010 - 00:32 | 321238 been there done that
been there done that's picture

I also caught that. The BIG thing is that "someone" bought boatloads of puts on Bear or Lehman, (I forget, maybe both) That were 20$ out of the money and with something like 10 days left on them. Then, "someone" naked shorted the hell out of Bear or Lehman making those puts IN the money very quickly.  I was hoping that more would come of it today.

Wed, 04/28/2010 - 09:37 | 321504 FEDbuster
FEDbuster's picture

Must see three part video on this exact subject:

http://www.youtube.com/watch?v=xUKSU1qahgE

I am sure crimes were committed, but of course no one in power cares.

Thu, 04/29/2010 - 02:28 | 323240 covered
covered's picture

Those Bear Stearns puts are a proverbial smoking gun. We will see them again if this investigation is going where I think it's going.

Wed, 04/28/2010 - 01:06 | 321268 Apocalypse Now
Apocalypse Now's picture

Yes, this should be the focus.

With no enforcement of naked shorting restrictions, companies were shorted in excess of 100% of shares issued - not only is that not possible in a legitimate system, anybody with a working brain should say that it is criminal.

Leverage without having to put up adequate capital is criminal.  Most don't realize that without proper enforcement a market maker can "make markets" pricing assets at whatever price is most advantageous to their positions.

Leveraged derivatives and naked shorting are symptoms of the same problem with lack of proper enforcement - all must be on an exchange to manage systemic risk.  There is no systemic risk and no bailouts in the case of adequate capital backing up these off balance sheet bets.  Private leveraging of the public treasury is treason and is punishable by death in the coinage act due to the bailouts required and subsequent debasement of currency.  It is that serious.

Wed, 04/28/2010 - 08:17 | 321405 MachoMan
MachoMan's picture

Doesn't this just exemplify what is happening?

This is simply a recreation of the stress tests.  A completely insincere endeavor designed to bring confidence back to the market.  The issue, just like the stress tests, is that those at the end of the barrel must be a part of and help shape future policy (i.e. the trigger can't ever get pulled).  As a result, do not look for any viable destruction of the status quo.

From our current position, the first step is to pretend like our regulators and representatives have our best interest in mind.  This means giving the SEC the green light to investigate.  The SEC will issue a de minimis fine (to everyone with god's money) and life will go on, as it had.  This will give the American Idol crowd the psychological seed that reform has arrived and those responsible for their dire economic straights are going to get theirs.

The next step is to have a public trial and really involve the judiciary.  Given that politicians are risk averse, the act of politics is to ensure victory regardless of the outcome.  In this sense, the judiciary will either be approached to be bribed (implicitly or expressly) or (more likely than not) the matter in front of the court will simply not be prosecutable against GS, et al. 

Whereas the first step put a floor on our tolerance for the GSes of the world, the second will put a ceiling on our bite.  After that, it will be very difficult for prosecutors to step up to bat and take a swing, others having wiffed before them.  They'll forge ahead, mopping up the small fries. 

The continued PR campaign, "we paid our tarp loan back early with interest," etc., will ensure that America falls back in love with its corporate overlords.  The end battle has, and always will be, who has control of the airwaves. 

Not saying this will necessarily come to fruition...  There is a wild card in the deck so to speak (the political mobilization of disgruntled, shaved monkeys)...  but we can all benefit from some brainstorming sessions regarding "The Playbook." 

Wed, 04/28/2010 - 00:35 | 321234 Mercury
Mercury's picture

If Bear really wasn't insolvent and was worth much more than their single digit stock price implied they sure missed a golden opportunity to take themselves private on the cheap.

That said, shorting was way too easy back then and probably still is. You shouldn't be able to "borrow" or even borrow stock that isn't there.  If you had the money you could essentially give a "short the float at the market...held" order and just watch the stock collapse.

I think Bear screwed themselves though and shockingly GS probably figured it out first and found a way to hasten the inevitable and profit off it.

Wed, 04/28/2010 - 14:59 | 322419 moneymutt
moneymutt's picture

by the way, did the SEC ever investigate who did those last minute puts on BearSterns that we, like a week out at the most and made a killing? was it the Fed? GS?

Wed, 04/28/2010 - 00:43 | 321248 bingocat
bingocat's picture

Not sure how one borrows stock which isn't there. I have never heard of a compliance department at a bulge bracket which would allow a prop desk to naked short stock on purpose, knowing they could not borrow it. Not saying it was not done by the trader, but naked shorts have been the ugly stepchild of shorting as an activity for years and everyone is aware of it. In my firm, I would have been fired if I had done that.

Wed, 04/28/2010 - 02:33 | 321309 AR15AU
AR15AU's picture

I remember seeing Cal-Maine foods (CALM) with a short % of float over 100% circa 2008...  and yet the SEC and Nasdaq did nothing and the situation persisted...

Apparently not all people play by the same rules.

Wed, 04/28/2010 - 03:59 | 321325 bingocat
bingocat's picture

I agree that activity borders on the criminal (and is not simply because it is/was not ever deemed as such). Some of it obviously happens unintentionally but some obviously did not in the past. That said, just because it happened and just because GS shorted mortgages doesn't mean GS' shorting was what caused the run on Bear.

 

Wed, 04/28/2010 - 00:25 | 321232 SheepDog-One
SheepDog-One's picture

The 'predatory shorts' cause the collapse...to me thats like saying the unfairly sharp pin caused the otherwise perfectly fine balloon to pop.

Wed, 04/28/2010 - 02:25 | 321306 AR15AU
AR15AU's picture

Sure, the market was built on a house of cards and credit bubbles.

But when it went down, it felt like it was being "taken down"...  And a few weeks later, Obama was swept into office, promptly appointing new goldmanites and releasing trillions of dollars to the usual suspects.  

There could be more at play here...  its not just efficient markets clicking along.

Wed, 04/28/2010 - 14:58 | 322412 moneymutt
moneymutt's picture

ups and downs will always happen, but it seems they are manipulated and exaggerated to insiders benefit....of course, GSacs was playing a dangerous game and would have been killed by the blow-back if Uncle Sam wasn't there to protect them...

Wed, 04/28/2010 - 00:09 | 321219 Hillbillyfreak
Hillbillyfreak's picture

I was going to write something like what HCSKnight wrote.  But HCSKnight already wrote it.  Better than I could write it.  So there is nothing more to write. 

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