Saw parts of congress interrogating Goldman Sachs yesterday. Apparently the feds retrieved an email that referred to the sale or attempted sale of bad mortgages as a "shitty" deal.
"So you try to sell people shitty deals?" asked congresscritter Carl Levin, trifocals balanced on the end of his nose.
Politicians subscribe to the theory that no matter how stupid or ignorant you are, if you get those weird glasses, and better yet, get them to perch on the tip of your nose, others will mistake you for an intelligent person. Clinton and Schumann (or whatever, the loud mouth from New York) do it too.
Anyway, my question to congresscritter Levin: "So YOU try to sell people shitty deals?"
Those mortgages are the ones congress and the feds compelled banks to make, with no down payment, to the unemployed and unemployable, etc. etc. Let's face it, those are shitty mortgages. If they weren't shitty deals -- almost guaranteed money-losing deals -- the banks wouldn't need the feds prodding and threatening them to extend credit to people who can't pay it back. Why wouldn't Goldman Sachs try to unload those mortgages? After all, isn't it the federally-chartered purpose of Fannie Mae and Freddie Mac to try to unload them? You can put ribbons and bows on those contracts, they're still shitty deals.
Seems Goldman Sachs -- or someone -- even used bundles of these mortgages in some kind of hedge fund deal. In a hedge deal, you borrow a stock (or something tradable) that you know is going to lose value. You BORROW it from a broker, you don't buy it -- and you have to pay something to borrow it.
Then you sell that stock to someone else. Who knows why anyone would buy it. Maybe looking for a loss to offset taxes or something? Maybe just ignorant? Anyway, you sell that stock to someone else for, let's say, $50.00 per share.
Then you wait for the stock value to drop. This is what you expected to happen; you've actually got fingers crossed that the value will fall. Bad quarter annoucement? Shitty mortgage deal? Something like that... and the value goes down.
Then you buy the stock back -- not necessarily from the guy you sold it to -- only you buy it back for maybe $40.00 per share. The seller is probably glad to get anything for it, because the value is going down.
So then you keep the $10.00 per share you made on your sale and buy-back, and give the BORROWED stock back to the broker. You've got to pay the broker something for use of the stock, and if the stock doesn't go down in value, then you lose money. Usually there is also a pretty tight time-frame involved in all of this -- you've got to do all these deals in a matter of days or weeks or so. You don't usually make a lot per share, either, which is why only people who can invest $50,000.00 or more even get involved in hedge funds. You've got to do volume trades or the deal probably isn't worth it (in other words, it becomes a shitty deal....)
That's hedge trading. That's how George Soros made his millions. Or trillions. That's what funded the Comrade's presidential campaign and is supporting his regime. So why don't they have George Soros -- king of the hedge fund traders -- in front of congresscritter Levin?
Anyway, so apparently Goldman Sachs was playing with Freddie and Fannie mortgages in the hedge market. Well, that's one way to make some money off the shitty mortgages. Otherwise, the mortgages are just a total loss, right?
So congress made this mess, then when their house of credit cards started falling apart in 2008, they set up Goldman Sachs to try to recover ANYTHING from the shitty deals. So Goldman Sachs did their best, and now congress is nailing them to the cross for it.
On Fox last night, Charles Krauthammer commented on this by pointing out how if the Incas had a crop failure, they'd pick a citizen and do a blood sacrifice to the gods.
He got that right. Thanks to TARP, Goldman Sachs is still "too big to fail," so they become the fall-guy. Apparently CitiBank, about the only other "too big to fail" that survives, instead of using hedge funds to recover their losses, has chosen to gouge their consumer credit customers. I suppose they'll be next in the Hot Seat.
Nice going, congressional buttheads. But you're not fooling anyone.
I love it when idiot do-gooders in congress jerk business around with price limits, stupid regulations, etc., that cost money. Congress seems to think the money will come out of the profits of business. ROFL. (Rolling on the floor laughing.) No. they just pass those costs on to consumers -- or they do things like hedge funds to try to make some money.
Businesses are not charities. They don't have a lot of money laying around to funds congressional castles-in-air. If business doesn't make money, it folds it tent and steals away -- unless they can get a TARP bailout. And who pays for that?
And God, does reality ever piss off congresscritter Carl Levin, among others. No free lunch? What a frickin' nightmare!
Save the republic -- vote the bums out.
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