Goldman Sachs Shorted Toxic Waste Paper it Was Selling
December 5th, 2007This isn’t news, but it drives home the point: Hedging is key to juggling chainsaws and hand grenades.
Via: New York Times:
The point to bear in mind, as Mr. Sloan brilliantly makes clear, is that as Goldman was peddling C.M.O.’s, it was also shorting the junk on a titanic scale through index sales — showing, at least to me, how horrible a product it believed it was selling.
The Goldman Sachs spokesman said that the company routinely shorts the securities it underwrites and said that this is disclosed. He noted candidly that Goldman is much more short in this sector than usual.
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