Wednesday, November 7, 2007

Goldman Sachs Meets Marie Antoinette

"Treasury Secretary Hank Paulson [HK] says the U.S. is examining the subprime mortgage crisis to ensure that 'yesterday's excesses' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc. [GS]. Paulson, 61, doesn't mention that [GS] still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average deliquency rate of almost 22 percent. ... Starting in March, Paulson said the damage was 'largely contained' and was no risk to the larger economy. ... 'I can't help but notice that when middle-class homeowners are losing their homes to foreclosure, he was pretty nonchalant about it', [Brad] Miller said of Paulson. 'But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain'," Mark Pittman at, 5 November.

On 29 October I asked can the US afford the continued existence of GS? On 14 October I called for a 25-year moratorium in hiring GS people by Uncle Sam. What are we waiting for? As for Citigroup, if it's in enough trouble, let it file for bankruptcy. Does Paulson think he is Marie Antoinette who said under different circumstances, "Let them eat cake"? We all know what happened to her.

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