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Its NOT conflict of interest to sell crap you bet against

posted 9 years ago by edahlmano
6 replies | jump to latest

During a deposition or whatever with some white old dude (I'm guessing congress, I'm not American so I don't know), Lloyd Blankfein is asked:

"Is it not a conflict, when you SELL something, and then are determined to bet against that very same thing"

And Lloyd replies "In the context of marketmaking, that is not a conflict"

And I believe he's right. Lets say you own a stock exchange, and have a special department of the company that trades stock. You have a company called "Boiled Coke" listed on the exchange, and your employee says "omg no one would buy boiled coke it tastes horrible, lets short it (bet against the stock). When you do this, you keep the company listed on the exchange in case other people wants to bet against it or invest in it.

Now, would you say this is immoral? I'd say no!

Goldman Sachs was marketmakers, like a Dow Jones or NASDAQ.

[–] Number_One_Birdlawyer 9 years ago

The issue was that they didn't disclose the information. That's like selling boiled coke, knowing it's about to expire and be in drinkable, and not telling the person that you just sold it to. It's theft. Fraud. Nice try though.

[–] paulfitzpa 9 years ago

As the poster mentioned, the problem is they are selling boiled coke as if it were good quality great tasting coke. They sold it and bet against it, they are immoral and corrupt scoundrels.

[–] 9 years ago

[deleted]

[–] LnineB 8 years ago

They Basically did what sport teams do every year. Team owners sale the team as the next super bowl champions when most teams know they aren't even close to being that good after spring training. The owners can't say that because they wouldn't sale any tickets. Have you wondered what happened to the term "rebuilding season". It's non existent now, no one says it. Now, honestly there's nothing illegal about that, where it becomes illegal is if the team owner then goes to Vegas and bets against that team every single week while still marketing that team as a potential Super Bowl champion. He keeps doing this until the bubble burst , usually when it's obvious that the team isn't going to even make the playoffs. By then he doesn't care about ticket sales because he's made so much money off of side bets. Now tell me, you don't see anything wrong with that?

They were allowed to market subprime markets when they knew they were going to fail and then bet on them failing and hide the fact that they are failing just so they can continue to market them!

[–] jamotide 8 years ago

In the context of marketmaking on stock exchanges yeah, but what they did had nothing to do with marketmaking. Marketmaking means you frequently sell AND buy the same crap so other parties have someone to trade with. It has nothing to do with making bets or selling financial products.

[–] brux (14666) 4 years ago

But that is not what happened. What happened was GS and other companies knew they were unloading crap and told their clients that they should have had a fiduciary relationship with that it was healthy and profitable. This was not Wall St. trades, this was consumer level fraud.