Crooks and Liars Tells a Fable

Crooks and Liars Tells a Fable

Bob The Businessman: An American Success Story | Crooks and Liars

This is the story of Bob the businessman.

Suppose a local businessman, let’s call him Bob, went around town raising money from the townspeople to open a car dealership. Dozens and dozens of people in town invested, putting in $1,000, $5,000, and a few putting in as much as $50,000 and $100,000. Bob raised a lot of money for his business.

After a while the investors found out Bob the Businessman was using some of their money to help his brother run for Mayor and several cousins to run for city council, and …

Bob The Businessman: An American Success Story | Crooks and Liars#sthash.S2qUc6Sm.dpbs

 

An American Fable
An American Fable

This is a fairy tale from the web site, Crooks and Liars. It is, of course, a parable about American business. It’s pretty funny although if you think about it, it’s very sad. Please go to the web site, and read the whole thing.

James Pilant

 

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Heads I Win, Tails You Lose

Heads I Win, Tails You Lose

According to a McClatchy investigation, Goldman Sachs begin creating a new form of security in 2006. These “investments” were placed off shore in the Cayman Islands. The investments were high grade securities based on home mortgages but there was a catch. They insured these collateralized debt obligations so that the investors were on hook to cover their losses. The investors thought they were getting good investments but instead they were investing in the real estate bubble. If they lost as Goldman Sachs might have concluded was highly likely, the investors were required by contract to cover the losses. The contracts literally converted the investors into insurers. They insured that Goldman Sach would make money whether the investments did well or collapsed.

I recommend you give it a read.

Collateralized debt obligations are the chief weapon that destroyed the financial security of millions of Americans as well as countless others around the world. The McClatchy articles are an excellent way to begin to understand these strange forms of investments.

James Pilant