Markets still reeling from Goldman news

Posted by David Rosenberg with comment by Mark Leibovit

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Friday’s bombshell that the SEC (Securities and Exchange Commission) leveled a securities fraud charge against Goldman Sachs, alleging that the investment bank knowingly misled investors over the sale of risky sub-prime mortgage derivatives, known as CDOs (Collateralized Debt Obligations) triggered a mini market crash. The allegation implied that Goldman Sachs hired a hedge fund manager to put together these CDO’s, consisting of securities it knew would fail, And then the very hedge fund who designed the derivatives shorted it – those very securities that it sold to the public via Goldman – raking in over a $2B in profits with corresponding losses to the retail investors they solicited to buy them.

Now, Wall Street itself is being attacked, though deservedly so, and traders, especially those on Wall Street, have become nervous. Someone is going to be taken out to the woodshed. But, my sense is that this a show staged to win lost votes for Obama and his socialist (neo-Marxist) cohorts and nothing more. Thinking that Goldman Sachs is going to be brought down is akin, in my opinion, in abolishing the Federal Reserve. Both are deserved, but neither will happen, unless we see a true revolution in this country – an event I hope never comes to fruition for all the obvious reasons – Mark Leobovit – VRTrader


Market Musings & Data Deciphering

Breakfast with Dave….go directly and read the full commentary HERE.

In this Issue:

•    While you were sleeping – markets still reeling from Goldman news.

•    Q1 earnings appear to be off to a good start but we wonder about the quality of earnings being reported.

•    A nascent recovery and V-shaped bull market completely premised on rampant government stimulus is going to have a payback.

•    The FDIC closed eight banks on Friday, bringing the tally to 44. •    It’s not all about Goldman Sachs.

•    Can there really be any doubt that what we have on our hands is a government policy that is aimed at transferring losses and liabilities from the private sector to the public sector?

•    Economists still refuse to see deflation.


…read full commentary HERE.