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| 2010-04-27 |
| Steven Lang, The Truth About Cars 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.... |
| Posted by:Mike |
| #4 The author's correct. The scandal about Gov't Sachs isn't that they bet against the US mortgage market-- they were absolutely right to do so-- or even, for that matter, that they screwed Wall Street and institutional clients. Those are big boys and the financial markets have no room for tears. What's profoundly disturbing is that a) when GS bet wrong with its own book, as it did with AIG FP, our politicos bailed out Government Sachs to the tune of $13 BILLION, and b) our idiot pols created the housing bubble in the first place by encouraging 70% home ownership in a nation where a majority has negative net worth and credit scores below 600. GS is a sideshow. We need a new political class. |
| Posted by: lex 2010-04-27 22:10 |
| #3 All investments without exception are bets on someone failing in some way and to some extent. If you bought GM stock you would be betting on the Japanese manufacturers failing to capitalise on their superior technology and manufacturing techniques. Otherwise, this is just another aspect of banks trading on their own account, which is the real problem. |
| Posted by: phil_b 2010-04-27 22:05 |
| #2 Funny that every time I hear about some really questionable financial transactions from sub-prime mortgage backed securities to the Greek crisis, Goldman Sachs is involved. The only organization that's dodgier is the one that was grilling Goldman Sachs execs on C-Span today. |
| Posted by: DMFD 2010-04-27 18:31 |
| #1 I contend there is a difference between betting right based on the same information and influence as everyone else, and 'betting' right based on privelaged information and influence. When we buy a used car we assume we are being lied to by the seller; we have not previously been advised to make the same assumption about securities purchases. |
| Posted by: Glenmore 2010-04-27 15:00 |