[Tams]

Don't you think this is fraud?

Goldman Sachs bet on housing meltdown -- and won

A McClatchy investigation found that investment bank giant Goldman Sachs made secret bets on an imminent housing crash -- while selling off billions in soon-to-be worthless securities.

http://www.miamiherald.com/509/story/1310367.html

[diablo272]

I do think it's fraud, but a it's pretty sweet deal if they get away with it.

[wjrusnak]

Originally Posted by Tams »

Don't you think this is fraud?

Goldman Sachs bet on housing meltdown -- and won

Well I am sure that someone in that company had to foresee some sort of danger or risk in all of this. It could have even been precautionary. Honestly, they simply sold high, while others were still buying. Looks like any other market to me.

Is it fraudulent and wrong? Probably. Does that surprise you, though? It also really seems suspicious that this bank's stock absolutely dominated from March until now. All in all, the company succeeded while the majority of the country failed. In the end it's just plain bad for everyone else.

[JBWTrader]

I hope they did make money off it as the housing rate of change upwards was just really stupid...

just another note; GS were also financial backers to a lot of builders that went bust and are now holding those properties.....so they are in the red there.....

Best
John

[Kiwi]

It's not fraud to short something that is wildly and foolishly overvalued - no matter how big you are. It shows that someone there was thinking.

I would like a way to short the Aussie housing market. It and NZ are about the only two left fully puffed from pre-crisis borrowing binges. Next year when the Govt Buying bounces have run out and the Chinese sit on their mineral stockpiles for the negotiations things are going to be pretty interesting down here. A leveraged short on housing would be a much more interesting bet than one on the Melbourne Cup

[DugDug]

My 2 cents
Good risk management and trading - yes.
Fraud - dont think so, depends on if numbers were fudged, lies told.
Miss selling - definitely - this is where they will get done.
morally or ethically dubious - no, just business and are they in the business of managing other peoples money?

The real questions should be asked of the people who invested in the sub prime mortgages, such as - did they do their own due dilligence or rely on GS? Why did they feel they even needed to be invested in these? did they really understand what they were investing in?

You can always revert back to Warren Buffet (i guess he knows a thing or two) paraphrasing - "if you dont understand it dont invest in it".

Kiwi - agree on the Aust housing mkt, but its kind of been like that since the mid 1990s. (disclosure I own property there) and when it comes to housing you have to look at things such as 2nd home/holiday home ownership levels - as my belief is that if you dont own at least your own home you are short the market. owning at least one property means you are square - now when or what price you pay is a different matter.
If what you believe is true re the Chinese then its commodities and the AUD that is the short.

[robertm]

Originally Posted by Kiwi »

It's not fraud to short something that is wildly and foolishly overvalued - no matter how big you are. It shows that someone there was thinking.

I would like a way to short the Aussie housing market. It and NZ are about the only two left fully puffed from pre-crisis borrowing binges. Next year when the Govt Buying bounces have run out and the Chinese sit on their mineral stockpiles for the negotiations things are going to be pretty interesting down here. A leveraged short on housing would be a much more interesting bet than one on the Melbourne Cup

There are 18M homes in the US sitting empty though, compared to a shortage still in Aus. Also you'd imagine a population of 22M is easier to expand than one that is dealing with over 10M illegals already running around the countryside.

Aus is bloody expensive now though, seems very overpriced of late & everybody seems to be enjoying the "good life" (Thankyou Asia/India )