The fact that action against Goldman is now visible does NOT mean that other investigations are not proceeding apace. The biggest buyers of CP are mutual funds, so there is nothing perverse or unusual about retail buyers ending up with CP that came out of SIVs. In these waters a kapok vest is of little use as after fifteen minutes or so you will succumb to hypothermia. And I agree with you in general but I feel this atack to the euro is concerted by anglo-saxon world. Since 1997, he has been a law professor, and writing and speaking about markets to Congress, regulators, academics, and investors. The easiest and safest scapegoat is the one with the highest salaries and profits. I think the bigger picture regarding Goldman and the other large financials is that they’ve become parasites on the U.S. and global economies. None the less, the “converted critic” technique is a nice way to take the well deserved authority of the Wall Street critics and to transfer it towards actually protecting Wall Street itself. It needs simplifying, but that’s not what we’ll be getting. You profess to have expertise in securities matters, yet appear ignorant of, or worse are consciously misrepresenting, product economics. 2010 (with Lynn E. Turner), Historical Perspectives on the Financial Crisis: Ivar Kreuger, the Credit Rating Agencies, and Two Theories about the Function, and Dysfunction, of Markets, 26 YALE JOURNAL ON REGULATION 431 (2009), Shapeshifting Corporations, 76 UNIVERSITY OF CHICAGO LAW REVIEW 261 (2009), Rethinking Regulation of Credit Rating Agencies: An Institutional Investor Perspective, Council of Institutional Investors White Paper, Apr. Im proud of my people. Please refresh the page and try again. Now that Munger and Buffett have damaged their reputations via their ownership stake in Moody’s and by becoming apologists for and investors in Goldman after decades of Wall Street bashing, perhaps Partnoy is returning the favor to Munger by backing Goldman and the financial establishment. They read the misrepresentation as a slam dunk; the question that would be the battleground is materiality. I read recently that Obama invited Paul Krugman to dinner, presumably not to talk about Princeton basketball. ‘Legal’ and ‘illegal’ are becoming arbitrary labels that swing this way and that, now favouring this part of society, now that (though those that can afford good lawyers seem to do best overall). You have now twice slurred me in this thread, first with implying my attacks on Goldman were racist. If IKB did not look under the hood of the car they intended to cut up in their own chop shop and sell off to unsophisticated investors, that is their problem. My guess is that IKB got SEC to go after GS rather than suing them directly precisely for this reason – discovery would be a bitch. If Portugal is so great, what’s your best 5-bagger? Acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Dear Kevin, I agree with you a lot. Details of the Terms and Conditions are available from www.ft.com/bookaward. (Brookings Institution Press 2006, Yasuyuki Fuchita and Robert E. Litan, eds. And you clearly can’t take it. We want to have a strong economic growth and at same time, cuting our fiscal deficit trade imblalances. Maybe its time to be more lowli and talk about others with more respect and more real concern with others efforts. “Professor Partnoy only states the view that I think is widespread among those of us with some expertise in securities law…Can anyone explain to me why knowing – if indeed they did not know – about Paulson’s role would have made any difference to them?.”. Similarly, the issue is not “other CDOs” at this juncture (although we have raised issues about other types of market manipulation that we feel merit attention” but the role of synthetic or heavily synthetic CDOs. So if Frank Partnoy’s misconceived defence has one potential benefit, it might shift attention to the behaviour of the other banks which were doing the same thing. The idea that the insulting reference at stake is based on a real creature is irrelevant – many racial and ethnic slurs are based on actual animals or other living creatures. Sadly, it seems that the only way into the lifeboat is a diploma from Harvard or Yale, with a bit of time at Oxford (for cultural assimilation,don’cha know) Like, we all want justice, but not so much that we are no longer invited to the dinner parties. What we need inside that industry are good bankers. The SEC will find difficulty convicting Goldman under the standard that has hitherto existed. They do ideological propaganda against the famous PIGS. Opinions about Kreuger were deeply divided: hero or villain, innovator or fraudster, suicide or murder victim. There is no evidence I have seen in the public domain that IKB influenced collateral selection, while Paulson clearly did (I’ve read most of the 900 pages of Senate material from the Goldman hearing, plus the famous flip book and the germane section of the prospectus). They only use words pretending to do economic analisys. (Remembering Enron again.) Btw, the Abacus deal was done through Rule 144A not Rule 144a – the latter is a resale exemption for all holders of restricted securities, the former a safe harbor for resales to and by institutional buyers. But I hope to be wrong and to say: look, I was wrong and that crisis in Europe was the normal behaviour of the markets. ‘Since its inception, the Business Book of the Year Award has attracted a wide range of submissions and has become a high watermark in the annual publishing calendar.’ The judging panel for the 2009 Award is: • Lionel Barber, Editor, Financial Times • Lloyd C. Blankfein, Chairman and Chief Executive Officer, The Goldman Sachs Group, Inc. • Mario Monti, President of the Bocconi University of Milan and the first Chairman of Bruegel • Helen Alexander, President, CBI • Lynda Gratton, Professor, London Business School • Alexander S. Friedman, Chief Financial Officer, The Bill & Melinda Gates Foundation The Award is designed to highlight the book that provides the most compelling and enjoyable insight into modern business issues, including management, finance and economics. You further assert that IKB influenced the deal via ACA, which is simply counterfactual. His argument about Magnetar v. Goldman is similarly questionable: According to a recent report from ProPublica, there were 26 deals in which Magnetar, a hedge fund, both sponsored CDOs and bet against them. I read a piece from him in FT a few weeks ago that was equally baffling. If you had bothered to read ECONNED or the blog on CDOs, it has been well ahead of where lawyers, regulators, and the press are on this issue. Standard & Poors downgraded our rating, not because our figures are so bad but becuase they think Portugals grwth will be low. CP profits are in basis points, not hundreds of millions. There is not a Wall Street derivatives trader on the planet that would have done the US Government deal on an arms-length basis. And your assertion re IKB making a “killing” in the commercial paper market is patently ridiculous. Third and most important, it would NOT occur to investors that the equity investor (who was in theory taking the most risk and hence was given some say over the deal) was a Trojan horse for a bigger short position. Can Hunter Biden Be Both Right and Wrong, Both Innocent and Guilty? They’re the smartest guys n gals in the room,remember and they can recognize an unguarded pile of cash and they know what to do with it when they see it, we should thank them for revealing to us our folly (you left your bike outside and unlocked, I stole it from you to teach you a lesson about trust,i.e. Merrill (now BofA), Deutsche, Calyon, SocGen. About the Financial Times:The Financial Times, one of the world’s leading business news organisations, is recognised internationally for its authority, integrity and accuracy. Im proud to be portuguese. My word racist should be readed as xenophobic. As a young derivatives salesman at Morgan Stanley, Frank Partnoy learned to buy and sell billions of dollars worth of securities that were so complex many traders themselves didn't understand them. It would not have “altered the total mix” (the relevant legal standard) and thus fails to meet the materiality standard needed by the SEC here. I cannot think of another individual I believe Obama would gain more from than yourself. That’s right, the geniuses from Harvard and Yale spent it all. Mr. Simon Johnson is a symbol of arrogant american who dont do his homework and thinks he is the best analist. No new facts relevant to the point on which you flip-flopped have emerged. That’s J.M. We need to somehow get back to the idea of finance as a support function that allocates capital in the real economy, not as an economic engine in itself. Pretty much everyone I know who knows Enron reasonably well disagrees vehemently with Partnoy’s thesis. Charlie Munger praised Partnoy’s book Fiasco several years ago and it probably sold a lot of books because of the huge following Munger and Buffett have. Portugal is not a race, it is a Nation. Goldman behaved during the housing bubble as everyone knew and expected them to behave – bringing buyers and sellers of positions together in the derivatives market.