Sunday, April 18, 2010

SEC charges Goldman Sachs

Voltron says: I knew years ago about the fraud and deceit in the mortgage and mortgage derivatives market but, I have to admit I was surprised that some CDOs were actually intentionally structured to fail while being marketed as Triple-A good paper. I knew that people were betting against them, but this is even worse than I ever imagined. This has all come to the surface in the last couple of weeks, and already there is an SEC action against Goldman Sachs. Simultaneously financial reform legislation is being drafted, hearings are being held and an avalanche of option arm mortgages made at the peak of the bubble are about to have interest rate resets. I think Wall St is going to start yanking on the leash . . . whenever the status quo is threatened the stock market and house prices will go down and interest rates and oil prices will go up. The government may take Goldman down, but they are not going to go quietly . . . they'll drag the economy down with them . . . and somehow profit from it.

I've adjusted my forecast (right panel of the blog). It may be time to start getting short, while you can.

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