Diamonds and Dogs
Goldman in the Hot Seat
Stocks continue to show strength, even with Friday's mild set back due to SEC charges that Goldman defrauded investors. For the year, stocks are strongly in the positive column, amidst a very positive April so far. As for Goldman, it should not surprise anyone that the SEC begins to bring charges against the several Wall Street firms that contributed to the largest financial melt-down in history. The well-timed headlines on Friday should do little to slow the pace of the market's advance into the gut of the first quarter earnings reports. Interestingly, the Collateralized debt obligations (CDO) that were instrumental in bringing down the credit markets and that now threaten Goldman et al, were first introduced in 1987 by a firm called Drexel Lambert, led by none other than Michael Milken. Milken was a master at designing and securitizing fixed income products like junk bonds and sub-prime mortgages. By being able to price his own products and control the market, Milken became very rich and also very convicted. 20 some odd years later, Wall Street, led by Bear, Lehman, Citi, Merrill, could once again not stay away from the easy profits to be had in products that you price yourself and, as always, things do not end well when greed is in the driver seat. The more things change, the more they remain the same.
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