How Sleazy Used-Car Salesmen at Goldman Sachs Tricked Investors into Buying Their Busted Clunkers

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AlterNet / By Brad Reed

How the Sleazy Used-Car Salesmen at Goldman Sachs Tricked Investors into Buying Their Busted Clunkers
Goldman Sachs is being sued by the government for allegedly defrauding its investors. Confused? Here's some plain talk about a mega rip-off.

April 20, 2010 |


As the resident finance geek in my circle of friends, I had to field several questions about Wall Street megafirm Goldman Sachs, which was sued by the Securities and Exchange Commission last week for allegedly defrauding its investors.

Of course, the danger I encountered while trying to explain what Goldman did was in getting bogged down in financial terminology. After all, a person can only hear so much about synthetic CDOs, equity tranches and credit default swaps before going insane.

I think the best way to explain these matters is to remove them from the arcane language of finance and put them into more familiar territory. For our purposes, let’s pretend that Goldman Sachs isn’t a major investment firm and is instead a small business based in rural Georgia called Honest Lloyd Blankfein’s Used Auto Emporium. And instead of selling mortgage-backed securities, let’s say that Honest Lloyd sells (you guessed it) used cars.

Our story begins with Honest Lloyd walking through his dealership lot and coming away appalled by the low quality of cars he has for sale. One truck has a nest of possums living in its engine; another has triangular wheels; yet another has sparks shooting out of its gas tank; and so on. Honest Lloyd barges into one of his salesman’s offices – let’s call him Fabrice Tourre – and pops off about the crappy stock on his lot.

“Goldurnnit, Fab, how in all tarnation are we gonna git ridda these things?” fumes Honest Lloyd. “We done got the sorriest damn cars in alla Georgia!” .........(more)

The complete piece is at: http://www.alternet.org/economy/146512/how_the_sleazy_used-car_salesmen_at_goldman_sachs_tricked_investors_into_buying_their_busted_clunkers

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1. Brad is almost right

As a former bondo slinger for "Fast Eddie" - what really happens with these bones is that they get gussied up with a quick paint job, and get sent to the wholesale auction. There are guys there, who have been sent to the auction to buy 20 cars this week, and y0u hope one of them will bite on it. But the part where you hedge that bet with insurance - "Fast Eddie" would have LOVED that. Maybe that's why we had rentals....

Really, though - Goldman, Sachs and Morgan-Chase are shadier than any used car dealer could ever get away with. Like this one, recently reported in Rolling Stone:
"The county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human shit into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack."
far more at http://www.rollingstone.com/politics/news/;kw=<3351,53763>