More on Goldman Sachs – Economic Collapse May Have Been Caused by a 20-Something

"The Great Vampire Squid Wrapped Around the Face of Humanity," a. k. a. Goldman Sachs

Unemployed, or at best have seen your pay go down and worrying about the status of your job from day to day? Watching the equity in your home go down, perhaps disappear totally? Seeing your plans to retire someday destroyed by losses in savings, investments or your employer retirement plan? All these economic woes are faced today by most people in the U.S. and indeed many in the industrialized world.

How did this happen? Who is to blame? We have been told this is the result of people living beyond their means – too much debt from home equity lines of credit. Too many mortgages approved with a wink and a nod rather than verifying income. Everyone betting on the come. Also, that the exotic “investment vehicles” generated on Wall Street and sold around the world were another bubble. Bubbles burst, we are told.

Yet there has been this nagging feeling that there has to be more to this story. We really don’t know the cause. Well, now maybe we do.

According to an Associated Press story, a 26 year old with Goldman Sachs has been identified as “selling mortgage investments without telling the buyers that the securities were crafted with input from a client who was betting with its investments that they would fail.” The federal Securities and Exchange Commission (SEC) has filed civil charges against Goldman Sachs and named Fabrice Tourre, a Vice-President in his late 20’s at the time. Today Tourre is 31 and has been promoted in the London office of Goldman Sachs. Goldman says he is presently on a leave of absence – undoubtedly due to press about what he allegedly did.

The client who bet that these investments would go down, not up, is identified as John Paulson of Paulson and Company. The AP story said he made billions on this deal by influencing the way Goldman structured and marketed these securities. Tourre handled one such exotic instrument with Paulson’s input and there is at least one e-mail in which Tourre indicated things were about to collapse all the while marketing these investments – perhaps to your retirement fund or mine.

So, there you have it, the smoking gun that triggered an avalanche that may have changed your life for good. Your retirement plans and those of others including government employees relying on pension funds that have taken a 30-50% hit may have Mr. Tourre and Goldman Sachs to thank for it all.

Naturally, Goldman Sachs denies having misled investors and promises a vigorous defense against these SEC charges. But, for those who have been searching for the real smoking gun that triggered the economic mess we seem to be in this news about Goldman Sachs and Mr. Tourre may just be the Holy Grail.

Oh yes, Goldman Sachs just announced its first quarter profit for 2010 at something over $ 3 billion. Even though this firm was the second biggest contributor to Barack Obama’s presidential campaign, the White House has labeled this profit as obscene.

A recent edition of Business Week had a cover story in which Goldman Sachs defended itself as having done nothing wrong with regard to the economic collapse we have witnessed. This was before the Tourre caper became known to the public. Mea culpa?


About Over But Not Out

A retired Orange County employee, and moderate Republican. The editor seriously does not know OBNO's identity as did not the former editor, but his point of view is obviously interesting and valued.