It's called insurance.
This from Yves Smith's extended post on the SEC/Goldman headline-maker today. No better place than Yves' blog to get the inside track on this story:
Not to mention Nadagold (NG).
UPDATE: Also recommended is Felix Salmon's take on the SEC charges, that gets to the heart of things and explains well.
UPDATE 2: The SEC complaint is here and it's explosive stuff. I'm on my second read-through and after a while it starts sinking in just how heavy this will be for GS. However I'm interested to know why Paulson is not a named defendant.
This from Yves Smith's extended post on the SEC/Goldman headline-maker today. No better place than Yves' blog to get the inside track on this story:
"The SEC is now mounting a civil suit against Goldman against one of its Abacus trades, which was a series of synthetic CDOs used to take short positions in real estate. Interestingly, the deal in question was on behalf of John Paulson. Greg Zuckerman’s book on subprime shorts, The Greatest Trade Ever, indicated that Paulson wanted to take down the all the credit default swaps created through the CDO issuance process (which would typically leave him 95% short the par value of the CDO, since Paulson would put up the equity tranche, usually 4-5%). The SEC may have started with this transaction because the communications between Paulson and the SEC would make it easy to show the intent, that of putting crappy CDS in the CDO."And by the way, if Paulson eventually has to liquidate holdings, today's $30/oz drop in gold is likely to be a mere hors d'oeuvre.
Not to mention Nadagold (NG).UPDATE: Also recommended is Felix Salmon's take on the SEC charges, that gets to the heart of things and explains well.
UPDATE 2: The SEC complaint is here and it's explosive stuff. I'm on my second read-through and after a while it starts sinking in just how heavy this will be for GS. However I'm interested to know why Paulson is not a named defendant.