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CDO: update 11: playing catchup..

April 28, 2010

Among the funnies this week was — and IMHO mightily deserved — the Borowitz Report. Or rather a spoof it ran for a ‘news item’. To effect that Somali pirates had declared themselves in court as acting in their sudsidiary role.. as and for Goldman Sachs.. 🙂

Hey, that is funny, so don’t think about it too long.. just give in, heave a breath and left it out on a big smile.. if necessary repeat several times… because from where I’m hearing things from the Senate Committee overseeing (and hearing.. and arguing.. and likely debating..) the only serious side has to be those Senators, staff, and all American taxpayers and investors for whom they are acting.

Okay, so why would I say this.? Say GS’s execs underfire and subject to scrutiny cannot be rationally taken as serious.

Answer: because their language is averse risk LANGUAGE; their case as presented so far in a smattering of normative risk management terminology — ie quitting assets to reduce risk — is wrapped in averse risk language. This language seeks only one thing—to avoid/evade admission to actual risk. And in itself is NOT RISK MANAGEMENT.

Talk, for instance, of reducing risk means that these guys were deliberately riding the down curve. Sure, the firm would take price losses on the face of things at a particular time( say 2007+), but having committed much earlier to asset acquisition/s and likely at pre-pump opportune times real and actual losses overall would be small. If any. For the firm. Gains on the up > losses on the down.

One giveaway to this state of affairs was hearing CEO Blankfein spit out the term “net short”. Net of what, I asked myself, and so ought the Senate Committee. For rather than serve to reduce the firm’s commitment to realized and realizable risks it reveals a commitment at least large enough to knowingly avoid a net loss to those assets. Therein ethics, if not legals, of putting the firm ahead of investors. My guess is how regulatory legals could use adequate framing.. say in terms of knowing/known losses to overall trust in GS. Which value should be onrunning at all times, investors duly informed.

“Short” here is a one way of saying in risk averse language that it was not firm money to lose, that investors instead stood in one way of another to lose a shirt or two.

Though if it were a previous century’s galleon laden with loot.. or even an oil tanker.. well you get the drift..

Tks to RNZ for their coverage and vox.. it is always to pleasure to hear the real thing.. even if Lloyd Blankfein’s pitch — nevah a falsetto, not he! — quite accurately hit the mark with the DC journo’s (Kate som body) opener of “tension rising” on the Hill today.

ps: duck caller, Sean Plunket, gee wasn’t he som thing.! nuff to wake any body up.. southern drawl or no.. so what do you say for the cricket.. NZ looks to have broken the duck on Ireland or was that justa try-out.. and this stuff about bears, kimalot, I heard the promo, missed the context.. you weren’t talking to jack nicklaus by any chance.. or yogi.. hell and if you’re thinking som one we know is a bear I’ll tell you he is not… nor is he a bull.. because the one thing democrats do not do is snort, or hoof, or drop the proverbial.. gotta go.. bye for now.

pps: anyone know about the political party funeral parlor..? yep, saying parties first then their people.. the people for 3 degrees… yep, the only growth around.. temperature growth.. some dark murmurs apping enzed I’m told.

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