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JPMorgan Chase & Co. Message Board

  • sky_walker618 sky_walker618 Jul 8, 2014 8:24 PM Flag

    People related to Goldman Sachs might have facilitated 2008 financial crisis

    It does not take a genius to see some correlations from the following list of events:

    (1) Early 2007, Goldman Sachs decided to dump hundreds of billions of ABS tied to subprime and Alt-A mortgage. This event is illustrated in Kevin Spacy's movie -- "Margin Call". The sudden sell-at-all-cost caused severe liquidity issue in ABS dealer market and unusual deterioration of the quoted prices. Usually such bonds traded at 90s. But after dump, the prices crashed to 60s.

    (2) Mid 2007, Two of the Bear Stearn high grade hedge fund collapsed due to being forced to mark-to-market to the prices in 60s.

    (3) About the same time, NYSE and NASDAQ decide to repeal the "up-tick shorting" rule, which was established after the Great Depression in the 1930s. There is not good reason given for its repeal. Interestingly. John Thain, an ex Godman Sachs executive, was the head of NYSE at that time.

    (4) Fast forward to Sept 2008, Stock prices of Lehman Brothers, AIG, FRE, FNM, WAMU, etc collapsed toward zero, which forced the Treasury Department to come up a rescue plan. Lehman Brother and WaMu were forced to liquidate, while AIG was bailout so that it can pay 100% to the otherwise worthless CDS contracts to several global banks, including Goldman Sachs. The decision was made largely by then Treasury Secretary Hank Paulson.

    While LEH and WM shareholders were getting nothing, Merrill Lynch, which is likely also insolvent, was sold to Bank of America at $50 billion. Guess who was the Merrill Lynch CEO, John Thain, the ex-NYSE CEO, and ex Goldman Sachs COO. John Thain served together with Hank Paulson in Goldman Sachs.

    Do I need to say more? The big question is what they have in store for us next??? ;-))

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