SPECIAL PRESENTATION
FOR Goldman Sachs, and the DOOM RELATIONSHIP OF GREECE, ENGLAND,
GERMANY, Given the current poor economic situation in Greece which embroiled the U.S. bond rating agencies such as Goldman Sachs thought to inform the English speaking Greek, Cypriot; and our Emigrant brothers, various reports circulating in the Greek press and also to present a special presentation on to Goldman Sachs. The texts are from translation of the websites listed below:
The U.S. government attempts to introduce a new tighter supervisory framework for derivatives, which, if implemented, many gray areas that take advantage of the recent past, Goldman Sachs to win billions of dollars will disappear. The bank side is said to have approached almost all the members of Congress, so that such changes do not adversely affect its interests. Such an agreement (swap) is also made by the U.S. bank with the Greek government in 2001, EUR 2.8 billion. But what is striking is the ease with which serious newspapers abroad, such as "N.Y.T., violating the open ports. This is because the entire agreement of Goldman Sachs with the Greek government was rushing to submit to the National Assembly in May 2007 the then Deputy Finance Minister Petros Doukas. According to the same publication, Goldman Sachs suggested that Papandreou to enter into a similar agreement (swap), which will be "dealt with" the debts of hospitals. Follow-up showed that the Americans left with empty hands, which may even cost more expensive in Greece ……. http://www.enet.gr/?i=news.el.article&id=132486
The UK Financial Services Authority (FSA), the "policeman" of the British market, said in turn that "opened a formal investigation" to Goldman Sachs after the beginning of persecution against the NY bank Friday by the SEC, the Securities and Exchange Commission USA……..http://news.ert.gr/el/oikonomia/eidiseis/35665-bretania-ereyna-gia-tis-drastiriotites-tis-goldman-sachs
********&&&&&******** SPECIAL PRESENTATION FOR Goldman Sachs
1st «Out of thin air» Synthetic CDOs, at center of Goldman suit, inflated the credit bubble April 26, 2010, By Alistair Barr, MarketWatch SAN FRANCISCO (MarketWatch) -- The securities at the crux of the Securities and Exchange Commission's case against Goldman Sachs Group Inc. inflated the credit bubble, leaving even more losses when it popped, structured-finance experts and investors said in the wake of the recent civil-fraud charge against the investment bank. Shareholders sue Goldman A Goldman Sachs shareholder files a lawsuit Monday against the bank, accusing the firm of failing to disclose a SEC investigation. Plus, Senate Democrats agree to kill a provision from their derivatives bill that would have allowed Berkshire Hathaway to avoid a significant financial hit; and WSJ's Melinda Beck and Laura Landro preview their pieces on the sun and your health. Some called for the synthetic collateralized debt obligations -- which are baskets of derivatives known as credit-default swaps -- to be banned. "Derivatives and synthetic securities have been used to create imaginary value out of thin air," George Soros, chairman of $27 billion hedge-fund firm Soros Fund Management, wrote in a column posted on his Web site last week. "More triple-A CDOs were created than there were underlying triple-A assets. This was done on a large scale in spite of the fact that all of the parties involved were sophisticated investors," he added. "The process went on for years, and culminated in a crash that caused wealth destruction amounting to trillions of dollars. It cannot be allowed to continue." "Synthetic CDOs should be abolished," Janet Tavakoli, a structured-finance specialist who wrote a book about CDOs in 2003, said in a recent interview. "They're too complex and provide no real benefit. They only existed to game the system or hide losses." The SEC alleged that Goldman Sachs (GS 153.04, +1.01, +0.66%) didn't tell investors in a synthetic CDO called Abacus 2007-AC1 that hedge-fund firm Paulson & Co. helped structure the deal, and also was betting against it. Goldman and Paulson have denied wrongdoing. Read about the charges. 'The process went on for years, and culminated in a crash that caused wealth destruction amounting to trillions of dollars. It cannot be allowed to continue.' George Soros Because they weren't based on real assets, such investments were tricky to value. When the housing market collapsed, the existence of such hard-to-value securities in the financial system caused havoc as counterparties struggled to find out who had lost money. Fabrice Tourre, the Goldman banker named in the SEC's case, described such problems in a January 2007 email, just as the subprime-mortgage meltdown was gaining steam. "I'm trading a product which a month ago was worth $100 and which today is worth $93 and which on average is losing 25 cents a day," Tourre wrote, according to recent Goldman disclosures. "When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: 'Well, what if we created a 'thing', which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?') it sickens the heart to see it shot down in mid-flight," Tourre added in the email. Read about other emails from Goldman executive charged by regulators. Packaging Synthetic CDOs sat at the end of a long chain of boom-time transactions that began with the origination of mortgages and other loans. These assets were packaged up by investment banks and sold as asset-based securities, including residential mortgage-backed securities, or RMBS. CDOs were created by taking pieces of RMBS and other securities, packaging them up again and reselling them. Demand for such investments was so strong during the credit boom that there weren't enough underlying assets to build new ones. So Wall Street came up with a way of creating CDOs that didn't need actual assets. The result was synthetic CDOs. These are formed by writing credit-default swaps on bits of RMBS and other asset-backed securities. (These swaps pay out in the event of default.) Once enough of these derivatives contracts were written, investment banks bundled them up into new CDOs and sold them. http://www.marketwatch.com/story/out-of-thin-air-synthetic-cdos-pumped-bubble-2010-04-26 Page 1Page 2 By Alistair Barr, MarketWatch More than $110 billion worth of synthetic CDOs were sold in 2006 and 2007, according to Thomson Reuters data. Royal Bank of Scotland (UK:RBS 53.75, -2.30, -4.11%), Morgan Stanley (MS 29.93, -1.01, -3.26%) and BNP Paribas (FR:BNP 49.49, -1.28, -2.52%) were the leading underwriters of synthetic CDOs in 2006. The year after, Barclays Capital(BCS 21.58, -1.18, -5.18%), Goldman and Merrill Lynch, now part of Bank of America Corp. (BAC 17.47, -0.58, -3.21%), were the top underwriters, Thomson Reuters data show. The beauty of these products was that they could be churned out without creating underlying assets. “You don’t have to wait for bonds to come to market; you can create your own exposure – and that flexibility is in both the long and the short side,” said Joseph Mason, an expert on financial crises at Louisiana State University. “Synthetic CDOs added information to the markets and the information they added was that there was a bubble.” Broader problem The SEC’s suit against Goldman highlights a broader problem with structured finance – the business of packaging assets and selling or securitizing them, according to Sylvain Raynes, an expert in the field and co-founder of R&R Consulting. “Structured finance is nothing,” he said in an interview. “It’s always been nothing. We were always on the edge of the abyss and what kept us from going over the edge was Moody’s.” Raynes, who used to work at Moody’s Investors Service (MCO 24.85, -1.21, -4.64%)and co-authored a book on structured finance, said the rating agency put AAA ratings on many parts of CDOs, giving investors the confidence they needed to buy the products. “You needed a third party to analyze the structures,” he added. “That’s what provided the value for these deals.” In the case of Goldman’s Abacus 2007-AC1 CDO, the firm got a third party called ACA Management to have the final say on what assets went into the deal. Without ACA’s involvement the deal would have been difficult to sell because investors were getting worried about the mortgage market, the SEC alleged in its complaint against Goldman. The SEC claims Goldman misled ACA into thinking that Paulson & Co. was going to be a long investor in the deal, when in fact the hedge fund firm was betting against the deal. Goldman denies it misled ACA. ACA has declined to comment about this. In court Other CDO deals have also ended up in court. HSH Nordbank, a German lender, sued UBS AG (UBS 15.32, -0.97, -5.95%) in February 2008 after losing roughly $500 million on a CDO called North Street 2002-4 that was arranged, underwritten and managed by the Swiss banking giant. HSH alleged in its original complaint that UBS made $120 million the day the CDO deal closed. The Swiss bank pulled this off by deliberately picking securities that had already lost value but hadn’t been downgraded by rating agencies yet – a strategy known as ratings arbitrage, the suit claims. Later on, UBS replaced relatively stable assets with riskier collateral then bet against those credits. That effectively transferred default risk from its own balance sheet to the North Street CDO, HSH claimed. UBS has said that it stuck closely to all its contractual obligations in the deal and that HSH was sophisticated enough to understand potential risks. Rabobank sued Merrill Lynch in 2009 after suffering $45 million in losses from an investment in a hybrid CDO called Norma. A hybrid CDO includes some real assets and some synthetic parts. “Norma was never intended by Merrill Lynch to be a secure investment vehicle for Rabobank or anyone else,” the suit alleged. “Rather, Merrill Lynch created Norma as a dumping ground for many millions of dollars of subprime securities (including tens of millions of dollars of other Merrill Lynch-structured CDOs backed by subprime mortgage securities) that Merrill Lynch knew were already impaired and wanted to get off its own books.” Merrill has said that Rabobank was aware of the risks and should have done its own homework on the assets in the CDO, rather than relying on the investment bank. ******** 2nd
Bailout success is the problem
April 13, 2010, By David Weidner, MarketWatch Commentary: The cost of propping up Wall Street will be more than $89 billion NEW YORK (MarketWatch) -- The good news is that the bailouts worked. The bad news is the bailouts worked. The Treasury Department now estimates the taxpayers' loss on federal bailout programs will be $89 billion, or about a third of the more than $250 billion projected in previous estimates. The new estimate by the Congressional Budget Office puts the loss at less than 1% of gross domestic product and less than 3.2% of GDP the savings and loan crisis cost U.S. taxpayers 20 years ago. See WSJ story on CBO report.
Former U.S. Treasury Secretary Henry Paulson American International Group Inc.(AIG 37.37, -7.14, -16.04%) and Citigroup Inc.(C 4.34, -0.27, -5.86%) have stabilized to the point the government may try to cash out on its investments in the next year, and General Motors is cruising down a similar path toward an initial public offering that could make the government whole. Though it's not included in the estimate, Fannie Mae(FNM 1.21, -0.04, -3.20%) and Freddie Mac(FRE 1.47, -0.05, -3.29%) continue to pump money into the mortgage market, but the outlays have been less than expected and the government is considering plans to unwind their portfolios. Read story on government's plans for Fannie, Freddie. But before either the Bush administration, which began the bailout policy, or the Obama administration, which made it bigger, claims credit, they may want to consider the legacy that these bailouts have created. In the auto industry, the $79.7 billion given to prop up General Motors, GMAC, Chrysler and Chrysler Financial Services has extended an industry favoritism that began with the government loan guarantees extended to Chrysler in 1979. For Detroit, there is no too-big-to-fail legislation being considered, just reassurance that the government will come to the rescue should the automakers stumble again. On Wall Street, financial reform is the topic du jour and yes, creating a provision for banks too big to fail is part of the legislation. But a closer look suggests the powerful bank lobby will spend and threaten lawmakers into submission. Wall Street More Powerful Than Before the Crisis? A handful of Wall Street banks have become more powerful and influential during in the financial crisis. Simon Johnson, author of the new book "13 Bankers," argues that minding banks too big to fail isn't enough. He tells columnist David Weidner that big banks need to be broken up into pieces "small enough to fail." Bailed-out Wall Street banks have become more powerful through concentration. Just a few banks, Bank of America Corp. (BAC 17.47, -0.58, -3.21%), Citigroup, J.P. Morgan Chase & Co.(JPM 42.41, -1.48, -3.37%) and Wells Fargo & Co. (WFC 31.72, -1.00, -3.06%) now control a combined $7.34 trillion in assets and $3.57 trillion in deposits -- 56% and 39% of all U.S. assets and deposits respectively, according to SNL Financial. Mortgaging the bailout These banks have made great strides toward a return to profitability, but much of the profits have come on the backs of customers who are being charged higher interest rates for credit cards and loans. Nowhere are the numbers so striking as in the mortgage market which is supposed to be getting a boost from government-backed loan-modification programs. The main program, Hope Now, reported 148,000 modifications in February. Turns out that was just a tiny part of the problem. Hope Now estimates there are 4 million loans in default. Moreover, the problem may be worsening. The total U.S. loan delinquency rate stood at 10.2% at the end of February and non current loans, which include foreclosures, were at 13.5%, up 21% from the same period last year, according to Lender Processing Services Inc. More than 1.1 million loans that were current at the start of January were at least 30-days past due by the end of February, LPS said. Who stands to gain? Well, banks that have already written down the value of many loans are now pressing ahead with foreclosures to recover assets. The mortgage markets aren't the only place where the squeeze is on. Rates for depositors have sunk to 1% or lower. Credit is still hard to get. Many credit card issuers raised rates in anticipation of the Credit Card Reform Act which went into effect in February. The national average APR is 14.7%, up from 12.55% six months ago. The average APR for consumers with poor credit is now 20.17%, up from 14.29% six months ago, according to CreditCards.com. Who benefited? In the end, it all fits nicely. A banking system we were told by the likes of former Treasury Secretary Henry Paulson that was too important to Main Street to fail, has not only survived, but become more powerful. It's making its recovery not just through a bailout that's a burden to taxpayers but by squeezing its customers who have fewer choices than ever before. And Detroit? The jury is still out on that one, but time will tell if the bailout was just a one-time phenomenon or the start of a cycle we go through every few years. So yes, the bailouts have worked. They've worked for the beneficiaries: the bankers, the traders, the assembly-line workers and management teams that seem incapable of learning from their mistakes. They've worked for two administrations by keeping money and influence flowing to Washington. And they've worked for those of us who were able to hang on to our homes and our jobs directly or indirectly through the spending. But chances are either you or someone you know isn't getting the benefits. Maybe they're in foreclosure or struggling with credit card debt. For them, there could have been some small comfort in knowing the system was held accountable instead of preserved and made more menacing. You should get more for $89 billion. http://www.marketwatch.com/story/the-bailouts-worked-and-thats-the-problem-2010-04-13 ******** 3rd
Goldman's 'faulty brakes' can't stop SEC
April 16, 2010, By David Weidner, MarketWatch Commentary: What does it mean to make a market? NEW YORK (MarketWatch) -- The smoke around Goldman Sachs Group Inc. is now a four-alarm blaze, but at the heart of the inferno is an ill-defined issue crucial to Wall Street: What does it mean to make a market? The Securities and Exchange Commission on Friday shocked Wall Street by charging Goldman (GS 153.04, +1.01, +0.66%) with securities fraud over the sale of mortgage-backed securities. Goldman shares tumbled 10% on the news. Read more about SEC's charges against Goldman.
Goldman Sachs chief executive Lloyd Blankfein The SEC charged that "one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson could take short positions against mortgage securities chosen by Paulson based on a belief that the securities would experience credit events."See SEC complaint against Goldman. Goldman has been under fire for a multitude of alleged sins: for fleecing taxpayers through the bailout of American International Group Inc.(AIG 37.37, -7.14, -16.04%), to buying tax credits to the recent disclosure one of its directors may have tipped off a hedge fund with inside information. Of all of the accusations, none has hurt the firm in more than poor public relations -- until now. It isn't the first time Goldman's moves surrounding mortgage-backed securities have come under fire. Phil Angelides, chairman of the government's Financial Inquiry Commission, famously said about Goldman's bets against securities it underwrote "It sounds to me a little bit like selling a car with faulty brakes, then buying an insurance policy on the buyer of those cars." The comment made in January was directed at Goldman Chief Executive Lloyd Blankfein, who responded -- to a question about whether he thought the practice of shorting securities as they come to market was unethical, legal or proper -- in a way that might hint at how Goldman plans to defend itself. "Well, the way it's -- the short answer is this is the practice of a market maker, and I would like to explain this. But the answer is I do think that the behavior is improper," Blankfein said, according to a transcript. "When we sell something as a principal, which is what we are as a market maker, the next minute that item will have gone up, in which case we'll wish we hadn't sold it that minute, or it will go down, in which case we'll actually be glad we did for our own P&L, and sorry for the person who bought it.," Blankfein said, according to the transcript. "But we are market makers in that. In most of these cases, the person who came to us came to us for the exposure that they wanted to have." In this case that person would apparently be John Paulson, who has won acclaim as the investors whose bets against the mortgage market made Paulson & Co. and its investors fabulously wealthy. Blankfein's point is the prevailing ideology at every investment bank: customers such as Paulson and the sellers of mortgage securities are counterparties not clients. Goldman, Blankfein seems to argue, is an intermediary, albeit one that makes a fortune in fees from those counterparties. See related commentary on Blankfein's remarks. For that reason, the case against Goldman may be tough to prove. Brokerages package securities and then provide all of their customers ways to buy them or hedge them. But if prosecutors can prove there was intentional fraud, the case would not only be a damaging blow to Goldman, it would change Wall Street and what it means to make a market. http://www.marketwatch.com/story/goldman-and-the-faulty-brakes-argument-2010-04-16 Sources: Apodimos.com and information from enet.gr – NET – APE/MPE – news.ert.gr – skai.gr – gr.hadnews.com – marketwatch.com
Óôåßëôå ôÞí óåëßäá áýôÞ ìÝ e-mail
Copyright © 1999-to date by Apodimos. All rights reserved.
|
Reuters
Reuters
