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William Henderson
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I am a fulltime intraday technical analysis trader, I hold no positions overnight, and I don't really focus on fundementals. I am primarily fixated on price action and patterns. I am also the author of the http://williamtellstradecraft.blogspot.com blog (please visit) focused on tradecraft and... More
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  • Re: GS Death By A Thousand Cuts... Till You Lose An Arm.  0 comments
    Apr 29, 2010 11:26 PM

    As I suspected the filing of criminal charges against Goldman Sachs are more than a foregone conclusion, You can go ahead and add ACA and Paulson to the hit list as well.  Look at the dump GS took in after hours trading on the April 29th...  Just what you want to see before you go to bed two big hairy black candles on the lead financial stock, especially after a nice day when everyone wants to recover from Friday the 16th!  That is if you are long.  In full disclosure, I am short GS.

    I reiterate again as I did on April 18th, the likely focus of the criminality in this big hair ball, is that insurance fraud was committed, and that the "Investors" are the civil case, but AIG will be the criminal case. 

    Essentially, wrapping up the junkiest assets  and crap on your balance sheet, giving it a tongue in cheek name like Timberwolf and Abacus, and selling it to your clients while admitting internally that it was the junkiest stuff and then giving your best buddy the privilege of making big bucks cause you've already made a "killing" is one thing. 

    But, then selling the risk to AIG (Insuring the Risk), and basically stuffing the pipe or channel in the hopes they would choke on it, and insuring against their (NYSE:AIG) defaulting by buying their CDS's, because you know that the amount of crap you stuffed into them is likely to kill them, and you know that no one else knows that and the AIG CDS' are really cheap right now...  That's a whole different ballgame.

    This was supposed to be a clean hit, broad daylight, lots of witnesses, but no one was likely to talk, or in Wall Street parlance, we'll make you poor again.  The wrinkle was the ambulance came scooped up the patient, and courtesy of the Obama financial healthcare resuscitation act and the magic of financial medicine a timely transfusion of $$$ plasma and a brain transplant the patient lived and is out of ICU, and is talking.

    This is like going to the bank and getting a loan to buy a warehouse, filling it with  boxes of "expensive merchandise" that is really empty boxes, having a third party appraise the warehouse with the empty boxes with "expensive merchandise" that doesn't exist and maybe never existed.  Selling the "merchandise" to your customers, making sure to take cash upfront before delivery, and insuring the whole shebang with your insurance company at an inflated price and then burning down the warehouse and collecting a big windfall.  What the heck, your customers are ok cause their insurance will cover their loss, and almost everyone wins.

    This is fraud... insurance fraud to be exact at least $70B of it and it could be the whole AIG bailout amount of $160B.  The question is were these real insurance products.  If it quacks and walks like a duck, it's a duck.  If it isn't fraud then it is unethical and dis-honest. Hence the death by a thousand cuts, but losing an arm is a different story...  To lift a quote from the movie something about Mary... "WE GOT A BLEEDER!!!" 

    My real first lesson in Ethics class, was don't do something you would regret seeing on the front page of the NY Times or the WSJ.  It shouldn't be don't get caught, "just don't do it".  Nike/Tiger can use that one also it's free.

    Disclosure: Short GS
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