Goldman Analogy Fail

April 27th, 2010at 07:22am Posted by Eli

Fareed Zakaria doesn’t see what the big deal is about Goldman’s derivatives deal with John Paulson:

Imagine that you want to make a bet against a sports team, say the New York Yankees. The Yankees have had a strong run, but, poring over the data, you have come to the conclusion that they’re going to start losing. So you go to a bookmaker (in a district where bookmaking is legal, of course) to place a bet. The bookmaker now looks for someone to take the other side of this bet. Once the other party is found, the deal is made. That, in essence, is the transaction that took place in 2007 regarding the future direction of the American residential-housing market, in which Goldman Sachs acted as the bookie, and which the Securities and Exchange Commission now charges was “fraud.”

Sure, absolutely.  It was exactly like two guys placing a bet on Yankees… where the guy betting against them got to hand-pick their roster and fill it with stiffs.  Nothing dodgy about that, nosiree!

Entry Filed under: Corruption/Cronyism,Economy,Media,Wankers


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