Washington Babylon — November 2, 2009, 9:09 am

Goldman Sachs: The casino always wins

From Greg Gordon at McClatchy :

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman’s sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation’s premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman’s failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

Share
Single Page

More from Ken Silverstein:

From the November 2013 issue

Dirty South

The foul legacy of Louisiana oil

Perspective October 23, 2013, 8:00 am

On Brining and Dining

How pro-oil Louisiana politicians have shaped American environmental policy

Postcard October 16, 2013, 8:00 am

The Most Cajun Place on Earth

A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits 

Get access to 164 years of
Harper’s for only $34.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

May 2014

50,000 Life Coaches Can’t Be Wrong

= Subscribers only.
Sign in here.
Subscribe here.

The Quinoa Quarrel

= Subscribers only.
Sign in here.
Subscribe here.

You Had to Be There

= Subscribers only.
Sign in here.
Subscribe here.

A Study in Sherlock

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content

FEATURED ON HARPERS.ORG

Post
“In Thunupa’s footsteps grew a miraculous plant that could withstand drought, cold, and even salt, and still produce a nutritious grain.”
Photograph by Lisa M. Hamilton
Article
A Study in Sherlock·

= Subscribers only.
Sign in here.
Subscribe here.

“It is central to the pleasure of the Sherlock Holmes stories that they invite play, and that they were never meant to be taken seriously.”
Illustration by Frederic Dorr Steele
Post
My Top 5 Metal Albums and Their Poetic Counterparts·

= Subscribers only.
Sign in here.
Subscribe here.

“1. Death, The Sound of Perseverance (Nuclear Blast, 1998)”
Photograph (detail) by Peter Beste
Article
Found Money·

= Subscribers only.
Sign in here.
Subscribe here.

“I have spent my entire adult existence in a recession. Like most people I talk to, I assume the forces that control the market are at best random and at worst rigged. The auction shows only confirm that suspicion.”
Illustration by Steven Dana
Post
The School of Permanent Revolución·

= Subscribers only.
Sign in here.
Subscribe here.

“The University of Venezuela has provided a consistent counterweight to governmental authority, but it has also reliably produced the elite of whatever group replaced the status quo.”
Photograph © Daniel Lansberg-Rodríguez

Amount of trash left in New York City’s Central Park by people attending Earth Day festivities, in tons:

100

High ocean acidity from rising sea temperatures was causing the ears of baby damselfish to develop improperly; without ears, baby damselfish cannot hear (and thus locate) the reefs where they are meant to grow up.

Colombian author and Nobel Laureate Gabriel García Márquez died at age 87. “You’d be at a bordello,” said the journalist Francisco Goldman, “and the woman would have one book by her bed and it would be Gabo’s.”

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!

HARPER’S FINEST