Not sure how I missed this yesterday in the Goldman Sachs news, but this kind of gives you an idea of the kind of arrogance of these pricks:
Fabrice Tourre, the Goldman executive who helped set up Abacus, emailed a friend in January 2007:
“More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”
Seriously- who calls himself the “Fabulous Fab?” And these guys knew EXACTLY what they were doing, so spare me the “hoocoodanode” nonsense.
And while we are at it, let’s revisit McMegan’s bizarre attack on Matt Taibbi’s Goldman Sachs piece, in which she agreed with all of his facts, coined the phrase “technically true but collectively nonsense,” and then had this gem of a paragraph defending Goldman, in which she impressively combined a “hoocoodanode” with an “everyone is doing it!” (and, as commenter Downpuppy observed, was wrong both ways):
Even as an indictment of the system this thing is lacking, and showcases Taibbi’s lack of fundamental conceptual understanding. He complains about CDO’s on the grounds that Goldman hid the atrocious risks inside a fancy dan derivative package that no one could understand. But in fact, everyone was aware that CDO’s were repackaging crap mortgages–that was the point. The idea was pure portfolio theory, broadly agreed upon by everyone involved. Everyone knew a lot of the mortgages might go bad, either by defaulting or prepaying. (This is a risk for bankers, who don’t like the idea that if interest rates drop, their 7% mortgage might suddenly turn into a pile of non-interest-bearing cash which can only be invested at 5%.) But if you pool the risk, only some of the bonds will go bad, while others pay off. The result is a less risky, less volatile investment than any individual junk mortgage bond. And it would have worked, too, if it hadn’t been for those crazy kids a collapse in the housing market of a scale not seen since the Great Depression.
Someone looks stupid in the aftermath of the SEC charging Goldman Sachs.
It isn’t Matt Taibbi. And what exactly did Taibbi allege was going on:
Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance – known as credit-default swaps – on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won’t.