Wednesday, June 29, 2016

Goldman is not a trader. It's a scammer. If they can't scam, they lose.

Goldman Sachs

Everyone knows about the Abacus trade back in 2007-2008, where Goldman scammed some German banks so that John Paulson could make a fortune shorting the subprime market.

Saying this is not conjecture or libel on my part. Goldman ADMITTED to fraud and paid a fine. One of many.

So now it comes to light in a new court case in the U.K. that Goldman scammed the Libyan sovereign wealth fund by putting it into questionable investments. Goldman of course made a fortune in fees on these deals. Check it out:

In a trial at London's High Court, the Libyan Investment Authority (LIA) is trying to claw back $1.2 billion from Goldman Sachs related to nine disputed trades carried out in 2008.
The LIA argues Goldman took advantage of its financial naivety by first gaining its trust, then encouraging it to make risky and ultimately worthless investments. Read more.

This is how Wall Street operates. Their business model is fraud. They can't trade. They are losers if they are not able to scam clients.


Kaivey said...
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Kaivey said...

If they want a law changed so they can do something dodgy they just go into government for a while so they can get it changed and then they leave and clean up.

The City of London is the financial crime centre of the world, but the media doesn't report on it all that much, but if the trade unions were making a ton for their members doing some dodgy practices, and getting jobs in Labour government to get the laws changed, the press would be in uproar.

But the ordinary guy, the people who who actually pay for it all in the end, have no idea what's going on.

John said...

I've never quite understood how these bozos either are incapable of making money and need government bailouts or make so little money that all their profits are the result of the low borrowing they have access to in what is known as the "implicit government subsidy". Now, you may quibble and say that the money they rake in seems like a phenomenal amount of money. But consider that their profits are, if I remember correctly, something like 1%. This is way below the returns you'd get in an index fund.

Perhaps I'm missing something here (it's possible I misread or misunderstood the article/book that made this point), but the question I'd love to get an answer to is, simply, "Why?"

Are the markets so efficient that the returns are so low. Is it a question of the sheer scale of the money under management so large that makes it difficult to make larger returns? Or are these bozos simply bad at making money?