Monday, 29 September 2008 02:00

Monkey business on Goldman Superheroes

I received a few emails about this monkeybusiness.com blog, and as it turns out - I like them.

Hears an excerpt:

"It appears that AIG needed to post $20 billion of collateral on credit default swaps with Goldman and they didn't have the cash!

Remember when Hank Paulson did an immediate about face on lending
AIG somewhere between $70 and $85 billion? Turns out he had a meeting
September 15 with Lloyd Blankfein, CEO of Goldman Sachs. Mr. Blankfein
was the only bank CEO in attendance. Imagine that. I'm sure he was
there because as the head of Goldman, he was obviously smarter than
everyone else. Couldn't have had anything to do with Goldman going
down the toilet if AIG went down right? Of course Treasury and Goldman
are completely denying it. Richie and I have been scratching our heads
for over a year now because we KNEW that Goldman was a huge player in
AAA rated CDO's and they did TONS of negative basis trades (buying
monoline wrapped AAA CDOs paying L+50 and then buying credit default
insurance from SOMEONE and paying then L+10). We assumed it was Ambac
and MBIA, but when those guys got downgraded, nothing really happened
to Goldman. Who the hell did they lay the risk off with? Now we
know. It was AIG!

When AIG was taken into conservatorship the Fed appointed Edward
Liddy, a member of Goldman's board (he resigned upon his AIG
appointment), to run AIG!! AIG immediately drew $37 billion to meet
collateral calls. We are told $20 billion was due to Goldman Sachs. I
honestly don't think I can do another Goldman Superheroes! What a
joke. All the talk and all the articles about how superior Goldman is
and how their risk management is so fantastic. All a bunch of
bullsh*t. They get the jump on everyone because they know the plays
ahead of time."

See also "The Goldman Superheroes, parts 1 and 2", funny enough.

I have had a few readers caution me on shorting Goldman, because Goldman has effectively convinced the world that their Sh1t doesn't stink. Well, guess what my loyal readers. It smells the same as just about everybody elses. The Goldman trades are approaching one of the most profitable for this year. There is still 20 or 30 points of potential profit.

For those who don't know my position on Goldman, see:

  1. Goldman Sachs Snapshot: Risk vs. Reward vs. Reputations on the Street
  2. Reggie Middleton on Risk, Reward and Reputations on the Street: the Goldman Sachs Forensic Analysis

  3. Reggie Middleton on Goldman Sachs Q3 2008
  4. Goldman Sachs valuation update: Buffet's strategic investment and public offering
Last modified on Monday, 29 September 2008 02:00

1 comment

  • Comment Link Chris Marshall Tuesday, 30 September 2008 05:35 posted by Chris Marshall

    Reggie,

    Watch GS over the next couple of days, I believe that they will try to hive off their crap into the Utah based subsidiary. This is another version of good bank/bad bank, but I believe that ultimately GS will allow the subsidiary to fold with all the crap, cleaning up GS in the process. I think that they are in the process of applying for approval from the FED, if the FED was sensible this would be declined immediately.

    Report
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