Goldman Sachs (GS), in a year-end client note, advised buying credit default swaps on Spanish government debt as one of the firm's top macroeconomic trades for 2010. Credit default swap buyers, in exchange for periodic payments similar to insurance premiums, receive a payout if the debt they are related to defaults. Goldman says that Spain has high levels of debt in both the public and private spheres, a lack of political resolve to bring spending in-line with revenues, and a financial system that seems to be hiding its problems (as previously noted by DailyFinance). Spain is a part of the "PIIGS" acronym, a kind of recession-counterpart to the "BRIC" emerging markets that also encompasses Portugal, Italy, Ireland, and Greece, a collection of countries that investors worry may not be able to repay all of their debts.
Jon Najarian was just on CNBC saying there was unusual buying in GS puts this morning. Wonder whether lawyers could take exception to this kind of thing at some time in the future.
Whoa - how true is this - that they front-run clients using their services? If that were true, the question wouldn't be how could they have so few losing quarters over the years, but how did they have ANY losing quarters?
I just read that drivel ZH posted - every broker on the planet has similar statements in the disclosures that you agree to when you sign up. Is this what makes for news these days?
It is strange we are still questioning how GS operates. Something's gone wrong in their communication plan.