Friday, April 16, 2010

Deception 2 Step

Selling short is one way to make money in stocks. Selling short against an investment while selling the same thing to a client is fraud, something played to perfection by Goldman Sachs, the company who not only runs America but also is being charged by the SEC for doing just that.

"Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc., an investment company whose parent firm was overseen by Lewis A. Sachs, who this year became a special counselor to Treasury Secretary Timothy F. Geithner." - 

To see how this scam worked, click on the NYTimes graphic seen below.

No doubt, this kind of unregulated deal was greatly facilitated by the actions of Bob Rubin and Phil Gramm in gutting the Glass-Stegall Act thus eliminating the separation of commercial banks from investment banks to allow unregulated deals of unprecedented size and complexity (derivatives, subprime mortgages etc., etc.) to be sold to the unwise (Greece anyone? etc., etc.)  while gaining profit at the expense of the entire world. BRT has discussed the complexities and deceptions of finance at length (Type finance in search & stand back. :)) but to get other takes on this fascinating topic, one will not go wrong by checking out Zero Hedge  and Washington's Blog as resources knowledgeable in how money works in the dark caverns of Wall Street. In every way, finance is so interesting particularly when the thieves doing it make Willie Sutton a piker when it comes to stealing money from us while laughing all the way to the bank.  

1 comment:

Anonymous said...

When you invest in a stock you expect that it will go up in value and you'll be able to sell it for more than you paid for it This of course is possible provided you use good business acumen. A solid research about the stock you want to invest in, plus a great stock charting tool, would make you confident about your investment.