Saturday, April 11, 2009

Goldman Sachs guns for a blogger 

Goldman Sachs is gunning for this blogger, hiring a big law firm to shut him down. Bad idea, and a surprisingly clumsy move from a firm that so rarely gets it wrong. As Ann Althouse points out, the fact of taking a shot at the guy has massively expanded his audience. If I'm reading his counter right, the dude's logging more than a thousand visits an hour on the Saturday night before Easter Sunday. It would be interesting to know how much traffic he had before the Telegraph wrote about Goldman's counterattack this morning. I bet it was dozens or hundreds of visits per day, many of which probably came from inside the firm.

You know the cliche, "it's not the crime, it's the cover-up"? Well, there is public relations corollary: "It's not the blog, it's the complaining about the blog."

Great firm, needs a thicker skin.


By Blogger Georg Felis, at Sun Apr 12, 01:20:00 AM:

Heck, if I had known that was the way to drive traffic to my blog, I would have done it first :)
(but then again, I'd probably have to post more often than once a month, so its probably better him than me)  

By Blogger Deuce ☂, at Sun Apr 12, 10:31:00 AM:

Take a look at this morning's Times on Tom Friedman, then look at this Friedman on his way to a Pulitzer prize.  

By Blogger Jim O, at Sun Apr 12, 03:25:00 PM:

Great firm? Whaddya mean by great? If you mean great enough to send amumni to the Office of the Secretary of the Treasury, who oversee the bailout of AIG, so that AIG can use government money to cover its billions of dollars in payments due to Goldman
Sachs on its Credit Default Swaps- well, yeah, that's great. Great for Goldman Sachs; not so great for the the American taxpayer.  

By Anonymous Anonymous, at Sun Apr 12, 03:33:00 PM:

"It's not the blog, it's the complaining about the blog."

It's not so much the complaining, either, it's the heavy-handed attempt to smother a blog that gets an organization in trouble. That's where they cross the line from disagreeing with speech (which is entirely American) to trying to squelch it (which is entirely not, at least in the popular imagination).  

By Anonymous notherbob2, at Sun Apr 12, 04:05:00 PM:

We all know that the next step is the hiring of private investigators to sift through the blogger's private life in order to discover anything that can be made embarrassing for him so as to shut him up or discredit him. Perfectly legal and Constitutionally protected.

What their legal action tells me about their desperation in order to cover up something "very stinky"?

Let's face it, they wouldn't take the PR hit they are going to get from taking this action if there wasn't something pretty damning to hide.  

By Anonymous Quilly Mammoth, at Sun Apr 12, 05:07:00 PM:

Yeah, I'm with Jim O on some of verbiage, Tigerhawk. My jaw dropped when I read that bit about "a firm that rarely get's it wrong". Hunh? They cost AIG...correction...us taxpayers $20B on bad investments in derivatives.  

By Blogger TigerHawk, at Sun Apr 12, 05:23:00 PM:

That's not how I see it, actually.  

By Blogger JorgXMcKie, at Sun Apr 12, 05:25:00 PM:

Dino firms are as bad as dino MSM. They refuse to face the fact that the world has changed (again).

Outfits like Goldman Sachs still think it's the 80s or 90s, when deep pocket companies could manhandle individuals who irritated them. Heck, even Ralph Nader proved the problem there back in the 60s.

The web has given 'little guys' a place of leverage. The dinos better figure this out.  

By Blogger Oremus, at Sun Apr 12, 07:33:00 PM:

"Great firm" !
Good grief, what the hell have you been smoking?
I suppose they're great if you think that manipulating the price of crude oil and thereby costing the American public (not to mention the rest of the world) about a half trillion dollars in inflated oil
prices is "great." Or if you mean driving AIG into bankruptcy by naked short selling of their stock
and then getting your ex-CEO Paulson to arrange
for $12.9 Billion in taxpayer dollars is "great."  

By Anonymous Anonymous, at Mon Apr 13, 06:48:00 AM:

From Link:

SEC Commissioner testimony from last month is below. There are some very interesting investigations going on. The US Attorney's Office is involved -- they can put people in jail -- unlike the toothless SEC ... so white collar types may flip, and this could actually go somewhere. Goldman has exposure here.

Whatever you may think of short selling in the abstract, financials are a special case. Rumor mongering can lead to runs, even when not deserved. In 2008, there were allegations of this around Bear Stearns. This was later repeated with Lehman and others.

In 2008, it was relatively easy to manipulate prices for CDSs -- to make it look like a particular company had increasing credit default risk. If you had shorted the stock, you made money as everyone fled for the exits.

This went on a lot in 2008. Only question is how intentional it was. Did the market do it, or were particular firms spreading rumors with a plan. Many fingers pointed to Goldman while this was happening -- Goldman may just have been executing orders -- but Schwartz and Fuld were blaming Goldman while it was happening.

If it was intentionally done by the likes of Goldman, what should be their punishment?

In any event, the big firm i-bank model got broken. Goldman shouldn't be a pirate ship hedge fund and a bank holding company at the same time. Paulson spent a ton of US money to save the likes of Goldman -- he may have thought he had to -- but his motives can be questioned and should. Between Goldman alumni and the Chicago Democratic mob, God save us.

Commissioner Elisse B. Walter testimony follows. Note that the SEC didn't want to go public at all, but had to tell Congress something. When these investigations ed, they'll either be a fizzle or a bombshell.

"Among other rumors investigations, SEC also opened a group of related investigations into the possible manipulation of the securities of six large financial issuers involved in the recent market turbulence (collectively, the "21(a) investigation"). On September 19, 2008, the Commission approved a relatively uncommon order under Section 21(a) of the Exchange Act that required numerous hedge funds, broker-dealers and institutional investors to file statements under oath regarding trading and market activity in the securities of financial firms. The order covers not only equities but also CDSs and other derivative instruments.

In October 2008, the Enforcement Division formed a nationwide Rumors and Market Manipulation Working Group to analyze data obtained through the 21(a) Order, with particular focus on claims that CDSs were being used to manipulate equities prices. The SEC's 21(a) investigation has been split into six separate investigations, which are proceeding as expeditiously as possible. The SEC's Rumors and Market Manipulation Working Group is also coordinating its investigation with parallel investigations being conducted by FINRA and the NYSE regarding the conduct of their member firms and marketplaces, as well as with another parallel investigation being conducted jointly by the New York Attorney General's Office and the U.S. Attorney's Office for the Southern District of New York."  

By Blogger Cardinalpark, at Mon Apr 13, 10:00:00 AM:

TH - the blog is hilarious but a bit flakey. Goldman in incredibly good at making money and managing risk. That's exactly what they did viz. AIG. They hedged their exposur to AIG CDS (and I'm sur eweren't the only ones) specificially bc they didn't know AIG would get bailed out; then when AIG did get a bailout, Goldman (and other counterparties) won the lottery. But they're not alone in this benefit. And since they're a public company, they have a fiducciary duty to collect every penny owed to them. They aren't a charity.

What I find ironic and hilarious is that the blogger is admittedly short Goldman. Yes, he's blogging his book. So what makes him any different or "better" than Goldman? This isn't some moralist. This is a broker trying to make money and eventually get to a financial settlement, as he did with Lennar (a homebuilder) in years past.

He's a pot stirrer. Big deal. If he's violating securities laws, which he may be, who knows, he's invited a great deal of attention to himself. He seems concerned about IP laws, but I hope he's exercised caution around the securities laws.  

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