Ex Parte Gilligan: Weaver95: i'm not sure we're going to see someone step up and do the right thing. call my cynical if you must, but I don't see any D.C. insider sacrificing their career to clean up wall street for the good of the nation. they're not known for their altruistic behavior!

So run for office yourself.

No. that would be a Really Bad Idea.

Ex Parte Gilligan:

Then STFU. Your "everything is ruined forever" crybaby routine is wearing thin.

oh right - because telling me to shut up has worked SO WELL in the past....c'mon dude, you can do better than be 'internet tough guy'.

And lets face it - we ARE screwed. probably more screwed than this country has ever been before. there's a slim chance for us to get out from under the hammer fall, but i'm guessing we're not going to even try. Best we can do is delay the inevitable collapse.

Ex Parte Gilligan:
So do something about it.

Oh we're long past the point of no return. the only thing I could do would be to accelerate the trend.

might as well sit back and enjoy the ride. Besides, decaying and decadent societies throw GREAT 'end of the world' parties!

Tjos Weel: probably more screwed than this country has ever been before

Assyria
Babylon
Sumer
Greece (Alexandrian)
Rome
Britain

Empires come and go, dont see how we are more screwed than them.

well collapse will be a new experience for us. the rest of the world is kinda used to it by now.

Tjos Weel: well collapse will be a new experience for us. the rest of the world is kinda used to it by now.


I dont know where your ancestors are from, but Im pretty sure there is long history of collapses in it.

Ireland. thieves, brigands, smugglers and (apparently) some of them managed to get burned at the stake for witchcraft and heresy but I don't know how accurate that last story was and kinda take it with a grain of salt.

This fiasco reminds me more of an Abbott and Costello movie than The Sting. Innocence and guilt are often mixed together, or, if not innocence, at least a reasonable facsimile called "naïveté". The most evil players can also be the most naff and delusional. Guilt and gullibility are as alike as Tweedledum and Tweedledee.

Abbott and Costello always pay the small time hustlers who try to get the better of marks who usually turn out to be big time hustlers or gangsters. There are no innocent parties in the complicated scams and counter-scams in an Abbott and Costello movie, only the comic heroes and the baddies.

Few, if any of the actors in the financial crises exercised due diligence. And that includes the "victims". They all had some obligations they did not fulfill, including the financial press and the regulators and politicians.

The question is: how much inside dope did the High Roller and the Bookie have about the horse they so confidently tipped to the suckers, er, bettors?

To switch metaphors, if the CDOs were a gift-wrapped turd, who put the turd in the box?

Paulson & Co say they were up front about thinking that there is a turd in the gift-wrapped box. That may be true. But it could also be a technicality. A con-artist can be frank and upfront when it suits his purpose: he says, look at this beautifully gift-wrapped box. It must be a really expensive item, maybe a fur coat or jewels. Personally, I think it is a turd so I'm going to let you have it--cheap! I'm being nice to you because I have strong doubts about what is in the box and I'm not greedy. Why not spread the wealth around?

Greed and stupidity conspire to do the rest of the con artist's job.

The thing is, Paulson wanted to short the contents of the box. He went out of his way to find a buyer for the box via Goldman Sachs. Goldman Sachs is left holding the empty box, but the SEC's case is based on the belief that it was Paulson who put the turd in the box in the first place.

Above, one or two people defend Paulson by saying he did nothing illegal and that there's always a short and long position in any deal. But if he knew the horse was lame or that there was a turd in the box, he was acting on inside information and intentionally used Goldman Sachs as a front to sell a known dud as if it was a precious jewel. He put the turd the in the box.

I have no idea whether Paulson put the turd in the box, or whether he had inside information on the horse, or whether he conveyed to Goldman Sachs all the information that it was Goldman Sachs responsability to convey to the buyer.

But my instincts say that this is the way Wall Street works more often than not. My instinct says Paulson wanted to short the CDOs because he had figured out that there was a turd in the box or had put the turd in the box.

If Paulson & Co selected the stocks that they were shorting, they were well aware that they were worthless or at least incredibly, unconscionably risky.

A lot of the players in the derivatives and colaterolized debt markets had no idea what they were buying. They were suckers. A lot of the sellers may have been clueless about what they were selling. But in this instance, if the SEC is right about Paulson & Co selecting the securities that went into the synthetic CDO, he was not an innocent player or even a particularly naff one. He knew what he was shorting because he selected it.

In that case, he was looking, not for a partner in the dance, but a greater fool to buy something that was not worth its market price.

Either story could be true. He could have been "innocently" shorting something based on financial acumen and sound analysis or he could have been playing a classic con game.

I have no problem with short selling--except when it is fraudulent, it seems to be natural and useful on the whole. Things are often over-priced and driving the price down to healthy levels is not necessarily a bad thing, even if some people lose money. You have to be able to lose and gain in a free market. If the market is rigged so that one party can not lose, however, it is not a free market. It's a fool's game.

Here's another FT article with more detail on what Paulson and the SEC are saying about each other:

http://www.ft.com/cms/s/0/61c497be-4cd3-11df-9977-00144feab49a.html

The FT limits views to 10 free views per month if you are not a subscriber, but basically Paulson admits that his research into what mortages would fail was really top notch (right down to the area code) and that he was open about his doubts in meetings with investors and in industry gatherings. He also points out that the company took open bearish positions. He also points out that, while he suggested 123 mortgage securities to be included in the deal, 55 of them were accepted and 68 of them were rejected. That amounts to claiming that Goldman Sachs, et alia knew what they were getting themselves in for, I think.

Much of these claims seem to boil down to "I was the short position and everybody knew it", which goes without saying. It does not prove or disprove anything.

Any hoo, I hope it all comes out in the wash.

I don't think Wall Street will ever change. The regulations get put into place after each new scandal or scam, each new market melt-down, but the regulators and the media are totally clueless or in the dark on deals far more dangerous and far bigger than the stock markets.

There are "dark pool" markets, for example, which are orders of magnitude greater than a day's trading on the exchanges of the world, and nobody really knows what is going on. They are like high stakes floating poker games where the players wear masks and have devices to disguise their voices so that nobody knows who they are playing with except the dealer.

Who needs conspiracy theories when $10 or $20 trillion changes hands each day in trades that are as anonymous as darkened back room sex in a sex club? That's more than the entire global economy! Sure, it is fairy gold, but when imaginary money disappears, it often sucks the real money into the black hole after it.

I think the one thing we can all agree on is that any financial regulations to come out of this will be feeble and insignificant no matter how earnestly the Administration tries to do right.

One theory about conspiracy theories is that they are comforting delusions which protect us from the horrible, horrible truth, which would kill us if we looked into its unshielded face.

Even in epiphanies, we see the truth, at best, like Moses, who saw God face to face, but only from behind, because the full frontal view of the Divine Awefulness would have crisperized him.