Where Is The Outrage?
- Goldman Sachs creates CDOs (collateralized debt obligations), bundling bad debt with good (and linked to mortgage debt by credit-default swaps) during the most manic phase of the housing bubble.
- Pension funds, insurance companies, and others bought them believing Goldman's hype that the housing market couldn't fail. Goldman didn't even let buyers short them.
- All the while realtors, real estate agents, lenders, local papers where all fueling the buzz about how real estate can't fail, "buy now or be priced out forever".
- Goldman Sachs then short their own CDOs well beyond what was justifiable for hedging risk.
- The housing markets then predictably implode. Pension funds, insurance companies, mom and pop all bank huge losses.
- Goldman Sachs pockets huge rewards.
- You and I then bail out the losers.
"The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”
Or a school bus mechanic taking out life insurance on all the kids who ride that bus. Or your doctor taking out life insurance on you before doing your heart surgery. Or airline mechanics taking out insurance on the passengers. Or ferris wheel mechanics...
Where is the outrage?