6 ms·

I think you raising "hackers" with this is the perfect way to describe the situation. Goldman are hackers in the same sense the main stream media refers to crac

by drats 15y ago

I think you raising "hackers" with this is the perfect way to describe the situation. Goldman are hackers in the same sense the main stream media refers to crackers as hackers, not hackers in the creative sense used by this community. Futures markets have a purpose, in food and energy for example, but GS along with others has been manipulating them in dodgy ways. Ditto for this article and aluminum. They helped Greece cook the books to enter the eurozone, and then insured against Greek default knowing there would be bailouts. They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. There is absolutely no doubt in my mind that there should be numerous prosecutions in relation to GS but incompetence in public officials with a generous sprinkling of corruption makes this unlikely. I'm a big fan of America but I've never understood the romanticism around the mafia (the Godfather films and the Sopranos TV series for example). If I had friends in the mafia I would disown them, and I'd seriously rather die than join it. While GS is perhaps not as bad directly, indirectly the consequences of their actions have been and are enormously immoral. I recommend you challenge your friends on these issues firmly, send them a link to Salman Khan's story[1] and tell them to put their (no doubt considerable) talents to better use: doesn't have to be a non-profit either. Even if they decide not to leave they should be made aware that there is social sanction associated with being linked to, if not directly involved in, the vortex of corruption surrounding that company. [1]http://en.wikipedia.org/wiki/Salman_Khan_(educator) http://en.wikipedia.org/wiki/Salman_Khan_(educator)

wanorris 15y ago
No, I think it's still in the creative sense. Consider this question from the Y Combinator application: > Please tell us about the time you, {name}, most successfully hacked some (non-computer) system to your advantage. Other than the allegations of misleading clients regarding CDOs -- which, if true, are criminal and utterly reprehensible -- pretty much everything else on that list fits this criterion. Amoral and mercenary, but about hacking the system to their advantage. It's regulators' jobs to close loopholes, but we should hardly be surprised when capitalist enterprises exploit them until they're closed.
fleitz 15y ago
If you knew the gov't would bail you out for any bad market moves made, why WOULDN'T you do exactly what Goldman is doing? Regulators set stupid rules, Goldman makes money. The US gov't offers insurance via the Federal Reserve, there's nothing immoral about taking advantage of someone else's stupid offer. If the government opened an Apple store selling 17" MacBook Pros for $200 why would you not buy as many as you could, and resell them for $1500? I don't give a shit if it eventually put every Apple store employee out of business. Oh you have a one laptop per person rule? Ok, I'll pay people to stand in line. Problem sovled. As for market manipulation of wheat prices, Goldman is only following suit in the official policy of the United States gov't. Exactly why do you think FDR ordered wheat to be burned while people were starving? As for metal price manipulation you may also want to look at FDR and devaluing the dollar and making holding gold illegal to force the sale.
potatolicious 15y ago
The type of people that Goldman employs aren't stupid, or ignorant. I've known a few - they are perfectly aware of what the company does, and the moral minefield they are in. To accept employment there requires a conscious relinquishing of moral culpability - i.e., these people have decided that, yes, what the company does is fundamentally wrong, but for whatever reason (money, fame, power, the thrill of the hack, satisfaction of working on the winning team, etc) they don't care. I'm not sure what use it would be to preach to people like this.
- fleitz 15y ago
  I'm going to take massive downvotes on this but... You can't preach to people like that, they're fully rational and immune to patriotic emotional dulce et decorum est bullshit. They don't care that their going to hell for their actions because they know hell doesn't exist. The world isn't some retarded star wars black and white fantasy, it's black and black pretending to be white. Stop naming shadows in platos cave and get out into the sunshine. Google didn't succeed because open source is some miracle of business, they succeeded because they created a platform for clicking ads and open source software makes that platform cheaper. Gmail isn't a gift to the internet community, it's more ads. If they didn't make money from it, they'd shut it down.
  - potatolicious 15y ago
    I don't care that I'm going to hell, because I know hell doesn't exist. Indeed, no matter how pious I act, by some religion's definition I'm damned anyways. But yet I'm not out there destroying livelihoods for personal profit. Way to pander to the stereotype that fear of the hereafter/almighty is the only way to get people to act morally/curb antisocial behavior. I police my own behavior because, by some lucky stroke of evolutionary development, I have been granted the ability for high-level thought. Many people have been able to use this tremendously powerful ability to better us all collectively. Some seem only interested in using theirs for self-interest, even at the (grave) expense of everyone else. This really is the core of it though: many people I've met in finance do believe wholeheartedly in "might makes right" - that morality and what the system allows them to do are one and the same. I fear these people greatly.
stfu 15y ago
I think that most people love the idea of finding opportunities which others haven't discovered. Some take it in their own hands to leverage this advantage by products (e.g. app developers) others take a more collective approach (e.g. open source developers). From how I understand the article Goldman has rediscovered a valid business opportunity that has been around for centuries. People always stockpiled supplies for later times and Goldman is doing it on a large scale. Even if they would be able to dominate the world market by this strategy, this situation would only sustain to the point when other material can be used as a substitute. So I personally don't see there a problem with this as long as they do not influence the market on the legislative side. If there is a consensus among society that this is wrong, than it will be regulated. I personally condemn this increasingly popular idea that business should conduct self-infliction by neglecting opportunities just because certain parts of society disagree with perfectly legal practices.
yummyfajitas 15y ago
They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. This is caused by legally mandated chinese walls, designed to give banking customers confidence that the bank is behaving in their best interest. The sales/structuring desk is legally obligated to structure/sell CDO's after agreeing to do so. They are also obligated to maintain a fair bit of internal secrecy. They structure the CDO, write the contracts, package and sell it. That's all they do, and they do this because the loan originators paid them to do so. Meanwhile, probably in a different building, the prop desk is shorting the CDO because they think it's a bad bet. The prop desk knows nothing about the CDO except what is contained in the sales prospectus sent out by the sales desk (which is usually quite a lot). It's highly illegal for either of these groups of people to talk to one another. Their computer systems don't talk to each other and compliance will fire people if they send each other email. By law, the left hand can't know what the right hand is doing.
- dhume 15y ago
  So sales produces a prospectus that suggests this is a bad investment. Then they continue agreeing to package and promote these securities. Were there some information excluded from the prospectus which suggested to the sales force that they were actually a good investment, I might still be able to see them as honest. Otherwise, this sounds like an attempt to apply the Nuremberg defense where remaining in the situation of having immoral rules to follow was voluntary.
  - yummyfajitas 15y ago
    So sales produces a prospectus that suggests this is a bad investment. The prospectus presumably described the security being sold as long on housing. If housing went up, it would have increased in value. Since housing went down, it decreased. The security did what it was supposed to do. The fact that the people who bought it made an incorrect bet doesn't make the people selling it evil.
- makthrow 15y ago
  Right, but they do talk to each other.
Tycho 15y ago
I remember a clip on the news with a GS employee saying to the tribunal (or inquest or whatever) that selling CDOs to some customers while betting against them at the same time was 'not a problem in the context of market-making.' I'm not really sure what he means by this, although some stuff I read recently suggested that traders will often sell and buy a security at the same time in order to make the stock look more active/liquid and encourage other investors to join in. Anyone care to elaborate on this? The chinese wall explanation offered elsewhere makes more sense though.
- ArchD 15y ago
  Perhaps it means that you can't dictate the value of an instrument to somebody else. Everyone makes his own assessment of an item, so if someone wants to buy it from you above what you think it's worth, or conversely, sell it to you below what you think it's worth, it's your freedom to trade and not your business to try to change his mind. However, persuading a potential buyer that something is worth a high value while secretly you believe the value is low is another matter. That's what people do all the time, though, not just bankers. For example, a lot of sales people do that. However, there is a difference. Most people know to take what a sales person says with a grain of salt. Besides, if you don't like the sales person or his product, you can always walk away. In the case of banks, there is a lack of integrity somewhere. People were expecting the government to protected their interest by making and enforcing the right regulations. The government didn't do that and banks made off with public money. The government involved the public in its complicated legal and financial system that is hard to understand for common people, and failed to make it work for them.

by drats 15y ago

wanorris 15y ago

No, I think it's still in the creative sense. Consider this question from the Y Combinator application: > Please tell us about the time you, {name}, most successfully hacked some (non-computer) system to your advantage. Other than the allegations of misleading clients regarding CDOs -- which, if true, are criminal and utterly reprehensible -- pretty much everything else on that list fits this criterion. Amoral and mercenary, but about hacking the system to their advantage. It's regulators' jobs to close loopholes, but we should hardly be surprised when capitalist enterprises exploit them until they're closed.

fleitz 15y ago

If you knew the gov't would bail you out for any bad market moves made, why WOULDN'T you do exactly what Goldman is doing? Regulators set stupid rules, Goldman makes money. The US gov't offers insurance via the Federal Reserve, there's nothing immoral about taking advantage of someone else's stupid offer. If the government opened an Apple store selling 17" MacBook Pros for $200 why would you not buy as many as you could, and resell them for $1500? I don't give a shit if it eventually put every Apple store employee out of business. Oh you have a one laptop per person rule? Ok, I'll pay people to stand in line. Problem sovled. As for market manipulation of wheat prices, Goldman is only following suit in the official policy of the United States gov't. Exactly why do you think FDR ordered wheat to be burned while people were starving? As for metal price manipulation you may also want to look at FDR and devaluing the dollar and making holding gold illegal to force the sale.

potatolicious 15y ago

The type of people that Goldman employs aren't stupid, or ignorant. I've known a few - they are perfectly aware of what the company does, and the moral minefield they are in. To accept employment there requires a conscious relinquishing of moral culpability - i.e., these people have decided that, yes, what the company does is fundamentally wrong, but for whatever reason (money, fame, power, the thrill of the hack, satisfaction of working on the winning team, etc) they don't care. I'm not sure what use it would be to preach to people like this.

fleitz 15y ago
I'm going to take massive downvotes on this but... You can't preach to people like that, they're fully rational and immune to patriotic emotional dulce et decorum est bullshit. They don't care that their going to hell for their actions because they know hell doesn't exist. The world isn't some retarded star wars black and white fantasy, it's black and black pretending to be white. Stop naming shadows in platos cave and get out into the sunshine. Google didn't succeed because open source is some miracle of business, they succeeded because they created a platform for clicking ads and open source software makes that platform cheaper. Gmail isn't a gift to the internet community, it's more ads. If they didn't make money from it, they'd shut it down.
- potatolicious 15y ago
  I don't care that I'm going to hell, because I know hell doesn't exist. Indeed, no matter how pious I act, by some religion's definition I'm damned anyways. But yet I'm not out there destroying livelihoods for personal profit. Way to pander to the stereotype that fear of the hereafter/almighty is the only way to get people to act morally/curb antisocial behavior. I police my own behavior because, by some lucky stroke of evolutionary development, I have been granted the ability for high-level thought. Many people have been able to use this tremendously powerful ability to better us all collectively. Some seem only interested in using theirs for self-interest, even at the (grave) expense of everyone else. This really is the core of it though: many people I've met in finance do believe wholeheartedly in "might makes right" - that morality and what the system allows them to do are one and the same. I fear these people greatly.

stfu 15y ago

I think that most people love the idea of finding opportunities which others haven't discovered. Some take it in their own hands to leverage this advantage by products (e.g. app developers) others take a more collective approach (e.g. open source developers). From how I understand the article Goldman has rediscovered a valid business opportunity that has been around for centuries. People always stockpiled supplies for later times and Goldman is doing it on a large scale. Even if they would be able to dominate the world market by this strategy, this situation would only sustain to the point when other material can be used as a substitute. So I personally don't see there a problem with this as long as they do not influence the market on the legislative side. If there is a consensus among society that this is wrong, than it will be regulated. I personally condemn this increasingly popular idea that business should conduct self-infliction by neglecting opportunities just because certain parts of society disagree with perfectly legal practices.

yummyfajitas 15y ago

They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. This is caused by legally mandated chinese walls, designed to give banking customers confidence that the bank is behaving in their best interest. The sales/structuring desk is legally obligated to structure/sell CDO's after agreeing to do so. They are also obligated to maintain a fair bit of internal secrecy. They structure the CDO, write the contracts, package and sell it. That's all they do, and they do this because the loan originators paid them to do so. Meanwhile, probably in a different building, the prop desk is shorting the CDO because they think it's a bad bet. The prop desk knows nothing about the CDO except what is contained in the sales prospectus sent out by the sales desk (which is usually quite a lot). It's highly illegal for either of these groups of people to talk to one another. Their computer systems don't talk to each other and compliance will fire people if they send each other email. By law, the left hand can't know what the right hand is doing.

dhume 15y ago
So sales produces a prospectus that suggests this is a bad investment. Then they continue agreeing to package and promote these securities. Were there some information excluded from the prospectus which suggested to the sales force that they were actually a good investment, I might still be able to see them as honest. Otherwise, this sounds like an attempt to apply the Nuremberg defense where remaining in the situation of having immoral rules to follow was voluntary.
- yummyfajitas 15y ago
  So sales produces a prospectus that suggests this is a bad investment. The prospectus presumably described the security being sold as long on housing. If housing went up, it would have increased in value. Since housing went down, it decreased. The security did what it was supposed to do. The fact that the people who bought it made an incorrect bet doesn't make the people selling it evil.
makthrow 15y ago
Right, but they do talk to each other.

Tycho 15y ago

I remember a clip on the news with a GS employee saying to the tribunal (or inquest or whatever) that selling CDOs to some customers while betting against them at the same time was 'not a problem in the context of market-making.' I'm not really sure what he means by this, although some stuff I read recently suggested that traders will often sell and buy a security at the same time in order to make the stock look more active/liquid and encourage other investors to join in. Anyone care to elaborate on this? The chinese wall explanation offered elsewhere makes more sense though.

ArchD 15y ago
Perhaps it means that you can't dictate the value of an instrument to somebody else. Everyone makes his own assessment of an item, so if someone wants to buy it from you above what you think it's worth, or conversely, sell it to you below what you think it's worth, it's your freedom to trade and not your business to try to change his mind. However, persuading a potential buyer that something is worth a high value while secretly you believe the value is low is another matter. That's what people do all the time, though, not just bankers. For example, a lot of sales people do that. However, there is a difference. Most people know to take what a sales person says with a grain of salt. Besides, if you don't like the sales person or his product, you can always walk away. In the case of banks, there is a lack of integrity somewhere. People were expecting the government to protected their interest by making and enforcing the right regulations. The government didn't do that and banks made off with public money. The government involved the public in its complicated legal and financial system that is hard to understand for common people, and failed to make it work for them.