Dinner For You. (Photo: PetSmart)
William D. Cohan, a commentator on Wall Street for the New York Times' Op-Ed page, observed recently:
...at the height of the financial crisis, many of Goldman Sachs’s top deal-makers — although not [G-S CEO Lloyd C.] Blankfein himself — moved quickly to unload their own stock in their firm. This happened both in March 2008, after Bear Stearns collapsed, and again that September, after the bankruptcy of Lehman Brothers and the near-unwinding of the rest of Wall Street.
...
The whole story is contained in little-noticed public records filed with the Securities and Exchange commission ... which make enjoyable reading after spending the last year listening to the gang at Goldman and other firms whine about the terms of the TARP program and repeatedly insist that they weren’t really in all that much trouble.
Their Dinner.
Because if these savvy Goldman guys were freaking out and selling large chunks of stock in the dark days of 2008, that makes it a safe bet things were plenty bad and getting worse.
Cohan goes on to list a number of major players at G-S who moved fast to sell stock (as in 'liquidate', to make into a more liquid form of asset: Cash). I particularly liked this little scene:
...Jack Levy, the co-chairman of Goldman’s mergers and acquisitions department ... [on] March 19, 2008, two days after Bear[-Stearn]’s collapse, Levy sold 30,000 Goldman shares, at $171.32 each, generating $5.14 million.
Levy also ... sold 60,000 October 2008 calls on Goldman stock in the market to an investor, or investors, who bet Goldman’s stock would reach $230 per share by then. Levy pocketed the premium on the calls...
Family In Milwaukee, WI, Being Evicted From Their Home
(Photo: Sally Ryan, New York Times Online)
Essentially, this BSD was selling his own stock in Goldman to take $5 Mil in quick cash (not an easy decision, since without a plan to reinvest, stock sales are considered capital gains and are more of a tax liability), because he thought the market, including Goldman-Sachs, might Tank. Spectacularly. Run For Your Lives, Man!! Ethel! Start Up The SUV; I'll Meet You At The House In The Hamptons!! Take The Gold And The Guns!!
And at about the same time, he was convincing investors to place a bet (because that's what calls are) that, by October 2008, everything would be just fine. And, taking his cut for having "written the sale", he made money on a sucker's bet, because by October of '08, the wheels were really beginning to come off the little red wagon of the Economy.
Ya gotta love it: On the one hand, In March, 2008, Bear-Stearns had failed. BSD Jack is getting liquid. He's cashing out a chunk of stock. He's also an insider; he knows how bad things are likely to get, as Wall Street is interconnected like a bad, incestuous marriage.
On the other hand, in March of 2008, he's telling clients as he takes their money that everything is roses all the way -- blue skies, furry puppies, champagne, and everyone's gonna get laid -- which is, uh, 'at odds' with what he knows to be true about the state of the Market.
Essentially, Big Jack was lying, and making a buck in the process. But; hey; whatcha gonna do, hah? Bidness is bidness.
"Old Trees", The Waterfront Estate Home Purchased By Goldman-
Sachs' CEO, BSD Lloyd Blankfein, for $41 Million In October, 2008,
As The Economy Imploded (Photo: Radaronline.com)
And, hey; BSD Jack made out okay! Couldn't be a better time to get into the market, boys! Of course things are lookin' up! This is a fookin' bargain sale price!! What are ya; Un-American?
For people like this, when they can play both ends against the middle, I guess The Great Game is just that much more satisfying and interesting, huh?
The Masters Of The Universe, at play in the Fields Of Finance. Enjoy your Alpo, America!
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