The Goldwatcher

 

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Gold’s stateless money franchise: 

The key message after yesterday’s Senate enquiry on Goldman Sachs is that global regulatory standards are necessary  to prevent another  financial collapse. The spotlight should be on:

 1: Partisan politics in the US  frustrating legislative progress 

 2: Contagion risks flowing from Greece, Portugal and other vulnerable Sh**ty curencies; and

3: Stalled global agreements on financial market regulation.

These developments will all take time. Gold’s stateless money franchise affords instant protection against  the risks associated with currency contagion  and vulnerable securities.

 The  Sh**ty securities questions:

After the long Senate hearing yesterday do we or don’t we think Goldman put lipstick on the pig? Their lengthy  rebuttal  made the three key points that follow in italics below. My take on what we learned yesterday follows after each point:

1:’Goldman Sachs never created mortgage-related products that were designed to fail.’

At this stage I am not convinced.  Questioned on oath yesterday Goldman Executive Tourre couldn’t even stick to the written response prepared by his lawyers and that’s not persuasive. We need to know what John Paulson and others connected with security selection and rating agencies have to say. 

 2  ‘It is critical to remember that the decline in the value of mortgage-related securities occured as a result of the broader collapse of the housing market.’

This can only be partly true.  The securities would have crashed anyway becuase  they were, as described by Goldman Executives,   Sh**ty.

3:  ..(the decline in the value of mortgage-related securities) was not because there were any deficiencies in the underlying instruments. The instruments performed as would have been expected in those unexpected circumstances.’

There were no unexpected circumstances from the time when,  to save their butts, Goldman Executives changed strategy from supporting long positions with mortgage related securities to agressively shorting  similar securities. Goldman expected, hoped and prayed for the declines.

Another key question to consider is whether any organisation, with even a tiny percentage of the brilliant minds working in Goldman, would not have been very anxious about AAA and other high credit ratings for mortgage securities that  should have been scored S** or below.

Goldman’s day in the Senate: 

Goldman’s worst day with this issue may have been yesterday. They may yet escape any compensation and, even if settling could cost them  $1 billion or so,  Goldman MD Blankfine indicated yesterday big sums are managable everyday issues for them.

For most of us that isn’t the case. We need to protect our assets against contagion. Gold’s stateless money franchise ensures potection. 

Opinions and advice:

Readers, particluarly those who have not yet read The Goldwatcher,  are reminded that this blog is not an advisory service. Opinions expressed are not intended as investment advice and should not be treated or used as investment advice