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Well, the "reality quotient" of the source linked to is about equal to the sort of check-out stand newspapers with alien babies on the cover...
The idea that the Sec of the Treasury would decide that the reason to essentially have the markets force a liquidation of Fannie & Freddie would be enrich investors is laughable. The "crisis of liquidity" that was REAL and effected a TREMENDOUS number of normal businesses was a legitimate reason to allow the financial markets to understand that the firms that were speculating about the US Treasury stepping in to "backstop" Fannie and Freddie explains any "meetings".
The fact is the you can use any set of coincidence after the fact to paint actual events in either a sinister or legitimate light. There are OFTEN mistakes made and things done in the fog of a growing crisis that probably would have been handled differently IF things were moving at a different pace, but honestly anyone with a wit of understanding of just how "non-investment grade" the underwriting standards of mortgages backed by Fannie and Freddie had become certainly was out of those stocks LONG BEFORE the fan started blowing doo-doo...
I suspect the author of the article was one of the of the many dodo birds that kept saying as the they bought declining shares "Uncle Sam will save us" and when that did not happen and their speculative positions got wiped out they turned to telling of tale of woe that in their twisted minds would force SOMEONE to undo the losses they suffered.
Investors are not the same as speculators. One group looks at a balance sheet and sees doom and harsh realities while the other looks at some situation that saner people see as hopeless and say to themselves "but things could turn around, a white knight could ride in, the appeals to financiers in far away places will work, the dog ate my homework, there could be a fire, a MIRACLE could happen...".
Is this true or not? I don't short, so did this happen?
We should all be thankful to Paulson, mod.
The man had the most difficult job ever known to human history since the job of the commander of the Normandy invasion force against Hitler.
And it's impossible to even fathom that it was all orchestrated for ulterior GS motivations and such.
It all fell like a pack of cards. Hank and Timmy did all kinds of midnight oil job, patched up Tom, Dick and Harry and prevented financial armageddon that certainly was going to happen.
Stuff like this always floats around from the same people who see UFO's every week. I go out all the time, and I don't see any.
Those were tense days. I remember watching it from the BAC tower
Especially the first vote which was trashed by Congress, and the DOW dropped 1000.
During the second vote, I was tensely watching tv while eating nacho lunch in salsaritas in downtown Charlotte, right underneath BAC group of towers. And I remember at that time, people around me, even many of them employees of BAC, Wachovia, BB&T and GMAC..... they all were out there, and not even one was aware of the gravity of the events happening in wall street and that in 2 or 3 days a ton of them were gonna get canned out of work.
That's how oblivious corporate America was, becoz nobody knew the depth and the consequence of the events, until the axe came down.
The simplest version of the nonsense is the Paulson "telegraphed" to the short sellers that Fannie and Freddie should come tumbling down. Believe me the folks that worked at your average barbershop in Omaha knew that, so I doubt that the guys sitting atop GS or hedge funds needed Paulson to sound some dog whistle to alert people to this fact.
Even if Paulson had the TIME to give the details on what Treasury was and was not prepared to do to shore up Fannie & Freddie the thought the he would be giving trading tips to people that likely had strategies on a whole variety of scenarios is so far fetched as to be a fairy tale...
I don't know that ALL the "big boys" are particularly honorable (Corzine was at GS before the Senate / Govenor of NJ/ MF Global) and lots of other folks have let the power go to their head over the years, but MOST folks that work in financial firms do have a pretty good understanding of who will get hurt if should stake out positions against various firms / institutions. All but the handful of pathological investment mavens FAR prefer an orderly and gradual decline in value / operation for institutions that lots of people depend on. The sort of crises that surrounded the failure around the crash 2008 destroyed much wealth that took decades to amass and brought the scrutiny of regulators upon firms that still are handicapped by too many busy bodies meddling in the bureaucratic mess of underwriting. Those are choices any sane investor would wish to get a " do over" on...
I don't know how the big boys play, but sounds like they are honorable business folk, looking after the American people.
LOL - love your humor. And I have pot of gold at the end of a rainbow, if you're willing to buy the map to get there.
The big players are always out to corner money. That will never change.
To the extent there was short-selling and mark-to-market exacerbated the crises in 2008/09, the article is true. There was lots of railing by many that mark-to-market artificially lowered values and created panic selling at the time.
I don't doubt for one minute the insiders knew the story and profited from it. Short sellers were making a killing in that crash. I also don't think Paulson operated in a vacuum. While, imo, he did not deliberately bring down AIG, Lehman, Fannie/Freddie, he sure didn't keep the problems a secret either.
That underlying crisis was real and very, very scary. If you were in the right place at the right time and had the right information and enough capital/credit to play with, you are exceedingly rich today. More than a few billionaires were created during those heady/horrifying days - for which the most vulnerable among us have paid and are still paying the biggest price.
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