On 2010-08-17, at 1:51 PM, Eric Beck wrote:
> On Tue, Aug 17, 2010 at 12:39 PM, Doug Henwood <dhenwood at panix.com> wrote:
>> It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
>>
>> Could you imagine a bourgeois economist saying something like this today?
>
> They wouldn't say it because it wouldn't true or relevant: there are
> no real attempts to deceive anymore; it's all out in the open.
================================ You're a wicked ironist. You must have had this in mind:
S.E.C. Accuses Goldman of Fraud in Housing Deal By LOUISE STORY and GRETCHEN MORGENSON New York Times April 16, 2010
Goldman Sachs, the Wall Street powerhouse, was accused of securities fraud in a civil lawsuit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly intended to fail.
[…]
The focus of the S.E.C. case, an investment vehicle called Abacus 2007-AC1, was one of 25 such vehicles that Goldman created so the bank and some of its clients could bet against the housing market. Those deals, which were the subject of an article in The New York Times in December, initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank.
As the Abacus portfolios in the S.E.C. case plunged in value, a prominent hedge fund manager made money from his bets against certain mortgage bonds, while investors lost more than $1 billion.
According to the complaint, Goldman created Abacus 2007-AC1 in February 2007 at the request of John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst. Mr. Paulson is not named in the suit.
Goldman told investors that the bonds would be chosen by an independent manager. In the case of Abacus 2007-AC1, however, Goldman let Mr. Paulson select mortgage bonds that he believed were most likely to lose value, according to the complaint.
Goldman then sold the package to investors like foreign banks, pension funds and insurance companies, which would profit only if the bonds gained value. The European banks IKB and ABN Amro and other investors lost more than $1 billion in the deal, the commission said.
Full: http://moneymorning.com/2010/04/19/goldman-sachs-fraud-case/