Dec. 10 (Bloomberg) -- Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 statesâ debt. http://www.bloomberg.com/apps/news?pid=20601109&sid=ac9AV.yzTCNw&refer=home
I think the whole situation is funny as hell. The Congress people from these states are going to preach finance to GM. But in the end, who is selling the snake oil? GS or the States? GS is offering transparency.
I don't see why you are trying to make GS out to be the good guy in this. What they are doing is borderline illegal. Instead of advising the states that they should not be taking on any more debt, they happily work the offering, make their fee and then turn around to the other side and making more fees from selling CDSes.
CDS are basically insurance products, that have no adequate reserves, no experience, totally unregulated, and sold by a bunch of known scam artists. This is a total joke, and the industry has to be regulated and brought under control before we have another AIG. And when the heck is the Head Scammer Paulsen finally get his pink slip. This guy is murder and needs to be shown to the door as quickly as possible. I suspect Goldman will see its due, once its protector is gone.
richrf CDS are basically insurance products, that have no adequate reserves, no experience, totally unregulated, and sold by a bunch of known scam artists. This is a total joke, and the industry has to be regulated and brought under control before we have another AIG. And when the heck is the Head Scammer Paulsen finally get his pink slip. This guy is murder and needs to be shown to the door as quickly as possible. I suspect Goldman will see its due, once its protector is gone. .................................................................................................. In the recent past ....one of the main "bonus" sources was this asset class.... .................................................................................................. What is particularly telling....is that there seems to be no obvious regulations on insurance amounts versus actual insured items.... If the value of the item is 1X.....and the value of the insurance on the item is 3X.... then is some form of regulation not warranted ? ................................................................................................ OTC Manipulation..... The invisible hand happens pretty fast in incredibly thin, hard to value markets.....particularly when the value of the markets are very significant..... Lots of room for manipulation.....In fact this almost seems like "cake".....