Wikinvest Wire

"Playing up to the edge of the line"

Sunday, February 21, 2010

Yves Smith of Naked Capitalism was on Fox Business News the other day talking about everybody's favorite investment bank - Goldman Sachs. For some reason, the video is not embeddable, so you'll have to go here to watch it.
IMAGE The best part of the interview is excerpted below and, in my view, it goes a long way in explaining why the company has been so successful at what they do.

Goldman has long had a culture of understanding where the rules were and playing up to the edge of the line and you know Wall Street has made a practice of doing that for years. The difference is that, over the decades - it really started in the 80s and got worse in the 90s - they were slowly chipping down the regulations. So, what was clearly illegal before is now permitted - though it's not kosher - and this is what is very disturbing to the public. This all doesn't look right - it doesn't make sense to them.
It doesn't make sense to me either.

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CrisisMaven said...

Indeed it wouldn't make sense to anyone. The end result is the erosion of belief in states' means to ever repay their debt as they are held hstage to banks mounting the "I couldn't oresee" and "too big to fail show". When states can't refinance on the market investors know their maturing bonds cannot be repaid if only at the expense of monetising the next batch offered which means creating money from thin air. And that is equally a harrowing thought so they'll turn to other asset classes and be it gold.

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