Just a quick point of order: If Goldman Sachs (NYSE:GS) is short the mortgage market, isn’t that another way of saying that it is short the same kind of securitized mortgages it underwrote? Could they actually have shorted the same stuff they had sold?
No idea because Goldman didn’t return my call for clarification, but given its specialty in underwriting CDOs and then confidently shorting CDOs certainly raises some compelling questions. If they did, by the way, it would likely be entirely legal. Those with more knowledge on the subject, feel free to share it with the rest of us.