Thursday, December 24, 2009

Goldman Sachs statement about why it sold short against bundled mortgages it was selling.

They miss the fundamental point- these instruments (and the government programs that licensed but did not regulate them) were based on artificial prosperity and a selling of America at prices based on that illusion. We were (and are) in a deflationary period since 2000; housing and its price inflation and mortgage fraud was based on easy Fed money and sales and application fraud from bottom to top in real estate (customers, sales brokers, mortgage companies, IBankers and Traders), not on anything the markets were doing to create real value increases. 

As Goldman says, selling short was smart and the responsible activity (unless the traders had knowledge of the ongoing fraud- what do you think? I have my opinion on that one...:)).  The real fraud is in the development and sale of the prosperity illusion that led to the short selling opportunity.  The real story is in the application of the illusion strategy across all markets, not just "Synthetic" CDOs.  Wall Street cannot escape that reality with a one page explanation.  It is why the Street's anti-competitive license from Washington must go.  

Time to allow open source technology and information in multiple online trading markets with no regulation and no advantages based on licenses.  Let the participants create and manage the regulatory process (like we do so well online).   If there is fraud, let's be democratic about it and let everyone participate, not just the same old robber barons!

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