Goldman Sachs charged by SEC with fraud; stock market giggles.
[Update: Might not be too big a financial hit if Goldman loses. Still, my schaden has spilled several teaspoonfuls of freude in the last few minutes!]
The "giggles," as you call them, are international, so this is a BIG HIT.
The Good Doctor |
17 April 2010 at 09:00 PM
What exactly do you find pleasurable about this?
19 April 2010 at 02:30 PM
Is there no satisfaction in justice?
This is barely a slap on the wrist, in any case. If we were serious as a society about addressing the problems in our financial system, we would reinstitute a strict division between commercial and investment banking, not just file civil fraud complaints against global financial ne'er-do-wells.
19 April 2010 at 02:57 PM
What exactly do you find just about this?
I guess these days it's hip to portray all financial institutions as Dr. Evil with no explanation whatsoever. Needless to say, the single transaction at issue here is directly relevant to ... oh ... almost no one.
19 April 2010 at 06:00 PM
Is this fraud, Jesse?
If so then I'm happy to see fraudsters made to face the law. That seems straightforward to me.
19 April 2010 at 07:04 PM
The market's 'skittishness' in response to the suit doesn't bother me. The market will 'correct' for fantastic/speculative valuations, on occasion, and so the price of stocks will build up again if companies are perceived to offer value to investors. As they do (and so they will). Blah blah blah.
A huge percentage of American business profit comes from the financial sector, as I understand it, and (as I understand it) in the long term that's not healthy. Not even the slightest tiniest little pretend oh-it's-not-so-bad-really bit. If Goldman aided the commission of fraud then Goldman can not be trusted. G'bye stock price. It seems to me the stock market is now working its magic on those who happily took money from the pockets of their brothers and sisters; my perception of this situation gives me pleasure.
Honestly, Jesse, what the fuck could possibly bother you about this? Do you think Paulson and his (alleged) coconspirators are being hard done by? Is this going to make it harder for small numbers of people to make vast sums of money? Wherever will that money go if not into those few pockets?
19 April 2010 at 08:01 PM
Facing the possibility of punishment when wrong has been done is pretty much a minimal definition of justice.
In other news, I don't demonize people or institutions for no reason. I'm not sure I demonize them at all! But let me give you an example of a set of financial strategies that I admire, but which appall me: Pretty much any strategy focused around making many (or high-volume) trades quickly in order to take advantage of tiny fluctuations in stock prices. They're the financial equivalent of borrowing energy from the vacuum, and thermodynamics should apply as well here as anywhere else.
20 April 2010 at 02:00 AM
I am bothered by your attitude. I believe that you had decided GS was guilty (of what? I'm not sure. why? I don't think you know.) long before this news broke. Now you feel justified in pointing your finger and saying "yes! evil! I told you so!". You are one of the most thoughtful people I know, but that attitude is childish. Am I wrong here? Are you an equal opportunity hater?
How do you feel about the vast sums of money that startups happily take from the pockets of their brothers and sisters to develop imaginary "products"? I don't think I've ever heard you rant about that. Note that the technology sector is currently more than twice as large as the financial sector (http://biz.yahoo.com/p/s_mktd.html) and note also that the NASDAQ composite is currently less than half of what it was at the peak of the dot-com bubble.
I don't even want to address the specific news in question. It has very little to do with the issue. I guess that's sort of the point.
 - a mutual friend expressed exactly this sentiment to me mere days before this news broke - pardon me if I'm falsely transferring it to you, although I'm pretty sure you've expressed it to me in the past.
20 April 2010 at 09:25 AM
I am bothered by your attitude.
Fair enough. As I said, I'm indulging in schadenfreude, which is not a particularly admirable feeling. Or rather, I was indulging. Now I'm trying to think. Last night or a couple of nights ago there was a segment on the PBS Newshour (the only TV news we watch) about the Goldman case. The broadly 'anti-Goldman' law professor said what you'd expect and was gently devastating (referring to Goldman and its sister institutions as 'gambling casinos'), but the surprise came from the broadly 'pro-Goldman' lawyer who'd defended several financial institutions against the SEC. His best defense of Goldman - I shit you not - was 1) The SEC's case isn't very strong, and 2) It's an open secret that many institutions did exactly what Goldman and Paulson-no-relation did, so it's not appropriate to punish Goldman for it. When that fucked up attitude is no longer acceptable, I'll happily refrain from gloating when Goldman's stock price tumbles.
I have this whole long response written but at this point I'm too tired and it's just not worth sharing. It boils down to this: I'm not worried about the sectors of the global economy involving the making of things, nor am I particularly worried about the layer(s) of the global economy that directly channel money from investors to the makers of things. Goldman is heavily involved in another layer of the economy, which (as near as I can tell) is an effectively unregulated multitrillion-dollar gambling operation whose size and airiness threatens the stability of the mere on-the-ground human economy. I dislike the culture of huge VC investments in stupid shit like Pets.com - but when Pets.com crashed out it didn't threaten to take half the economy with it. The bubble burst. That's what bubbles do.
Maybe this post is unseemly, but I don't think I should apologize for sympathizing with the gambler instead of the house. Even if the gambler is an idiot or an addict, he's not the house. If you can convince me - even a URL will do - that what Goldman did in this case, and more importantly what it and its sister institutions make vast amounts of money doing every day, is not unapologetic predation, I'll happily change my tune.
My basic attitude is this:
[Goldman, like its sister institutions,] is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.
That's the histrionic narcissistic asshole Matt Taibbi, from his notorious, nearly unreadable 'vampire squid' article. Even allowing for the ostensible 'resource allocation' function of investment banks - a function at which they are perhaps not quite as efficient as they might be? - Taibbi's characterization seems reasonable. A machine for taking money and centralizing power is not one I feel any responsibility to cheer for. And funnily enough, I find myself kind of enjoying seeing it take a hit.
So what's the 'childish' part?
20 April 2010 at 02:43 PM
One more quick thing: As for 'equal-opportunity hater,' I'd have a hard time responding now beyond the obvious: no such non-psychopathic person exists. I know I hold plenty of unfounded opinions and unexamined resentments - about finance and much else besides! - but I think it's fair to harbor a special dislike for Goliath when millions of Davids have recently seen their future plans and safety net disappear in smoke due in no small part to Goliath's actions. Of all the forms of 'childishness' I might display that doesn't seem so bad.
Is it that this is your field and you dislike the appearance of dilettantism? That'd be fair too - if I were misrepresenting what I know or acting the expert, which I'm not (unlike, for instance, the fellows under discussion)...
20 April 2010 at 03:01 PM
I think I'm mixing in unproductive defensiveness with genuine outrage/bemusement/wonder here, making my previous comments scattered. Blah.
21 April 2010 at 09:19 AM
"So what's the 'childish' part?"
The "yes! evil! I told you so!" feel of the initial post is childish. The subsequent commentary, while clearly biased, is not childish.
"the surprise came from the ... lawyer ... His best defense ... I shit you not"
Oh, come on! That's what lawyers are paid to do! How about lawyers who use every shady tactic/loophole possible to defend murderers?
"Goldman ... threatens the stability of the mere on-the-ground human economy ... threaten to take half the economy with it"
GS may have some of the above qualities, but the SEC charges you initially posted deal with a single transaction that is far removed from such qualities. Those qualities are not inherent qualities of all financial institutions. Lehman Brothers collapsed and the economy moved on. Those qualities are not strictly isolated to financial institutions. If Wal-Mart, Microsoft, or Exxon suddenly collapsed it would have some drastic far-reaching effects on the economy.
"[Goldman, like its sister institutions,] is a huge ... engine for converting the ... wealth of society into ... pure profit for rich individuals."
How do you define this umbrella of sister institutions? I was under the impression that you disliked all financial institutions, not strictly the huge ones. Leaving that aside, I think the sentiment is extremist and ridiculous. In so much as there is truth to it, I think it applies to nearly all businesses. In other words, businesses exist to make money. No surprise there.
"As for 'equal-opportunity hater,' ... no such ... person exists."
Fair enough. I admit that I've got my own unfounded biases. I don't typically taunt people about them on the web. Then again, I don't typically put much of anything on the web.
"Is it that this is your field and you dislike the appearance of dilettantism?"
I don't think you're particularly misrepresenting your knowledge of the subject. I'd prefer I were more impartial, but it's surely true to say my reaction is based on my personal connection to the field. You've attacked me personally before, and it does hurt my feelings, so I think it's only natural that I take this a little personally as well.
22 April 2010 at 06:07 PM
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Prose and cons.