PAS DE DEUX

Front page, column 8, above the fold. That's where the Times put the Goldman story. If you get the SEC complaint you might note it reads exactly like a Times news story; it's a real grabber. For any of you who dropped off the turnip truck passing through town, here's a reality check: this is a great co-ordinated operation between the administration, the Sec and their favorite news organization. As we speculated on Friday this is all about the legislation before congress...and if you really want to be cynical, about the greatest created opportunity for the Trial Lawyers Association since the asbestos scam. Just my opinion.

But as we also said, Goldman, as our Brit fiends would put it is too clever by half, too arrogant by a factor of 10, too unloved by a factor of 100%, too scummy by infinity but probably, in the end, innocent as well.

I don't for a minute buy the deal that senior management was unaware of the goings-on until the very end if at all. I would assume that a barrel-full of lawyers went over this structure with a fine tooth comb and the proposed method of distribution as well. Nothing happens at Goldman by accident. Nada. They knew exactly what was going on at all levels of the organization. It's really slimy in my mind, but for the life of me as much as I hate it I can't say that what they did was outright wrong or even outside the practice of the street tho granted, I have been away from it for a while now.

As for the buyers, what in the hell were you doing in your spare time? To invest heavily in an asset such as this which by it's very nature will attract guys on the other side of the trade and then claim you were duped is beyond belief. I have no sympathy for them. And yet, let me let you in on a secret: on the Street, money is the most important thing, but there is two kinds of money. There is smart money and there is dumb money. If you are on the sell side and if you are any good at your job you know exactly where the dumb money hangs out. For structures such as this, you're lookin' for dumb money. It was obviously found. Remember, there's nothing wrong about a client making an honest mistake ON HIS OWN and dumb money will often make an honest mistake.

It would be a shame if this adventure were to be successfully used as a political hatchet to enact legislation that could and should be improved upon through open debate and compromise. But The Leader and his mob are very good at street tactics. The shrill sounds from the political left are rising. Goldman has handed them winning strategy on a sliver platter. Makes you wonder; maybe these guys aren't so smart after all.

Off to see the grandkids. Back week-end.