Thursday, January 6, 2011

Feeding Frenzy

Goldman Sachs fresh off of its $550 million slap in the wrist for charges that he defrauded its clients when it sold Abacus in 2007 now is going after Facebook. The House of Goldman is built on a solid foundation of shady investment devices and the gutted corpses of its client's principal.

The takedown of its own investors occurs with such regularity that conflict of interests and Goldman Sachs are synonyms. But the elite at Goldman operate from an old worn play-book that is surprisingly thin. You see the master shafters of this universe are remarkably unimaginative. Their fortunes rise on the backs of an unbeatable advantage, which is that of a very weak competition. In the Abacus deal Goldman failed to inform clients that it had allowed a hedge fund to create and bet against the mortgage-backed investment device. This came hot on the heels of the 2006 news that Goldman had shorted its clients interest in subprime. This in turn came on the heels of a long and sordid history of similar shenanigans. Some people never learn and until they do Goldman Sachs will continue its feeding frenzy.

Blood is still in the water, but it doesn't belong to Facebook. Here is what the scam is most likely to be. Through a third-party Goldman Sachs will bring Facebook public at the same time selling the initial shares to its own clients. With hype hoopla and brute force market manipulation Goldman will push the Facebook IPO to the moon and the ensuing sucking sound will be fools money chasing a train that left the station long ago. Then of course the Golden Gangster will simply cash out and let Facebook crater. How do I know? They said so silly.

In the last sentence of a one-page investment profile sent to private wealth clients, the firm explains: “GS Group may at any time further reduce its exposure to its investment in Facebook (through hedging arrangements, sales or otherwise), without notice to the fund or investors in the fund.”
There it is, it's nothing more than more of the same.

In case you have an inkling of pity for Facebook, don't. You can bet that Mark Zuckerman and Facebook are in deep on the swindle. The man who believes you don't value your privacy probably believes you don't value your money.

Talking at the Crunchie awards in San Francisco this weekend, the 25-year-old chief executive of the world's most popular social network said that privacy was no longer a "social norm".

"People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people," he said. "That social norm is just something that has evolved over time."
In either case it's a certainty he doesn't value your money anymore and Goldman Sachs does.

I can't save the world I can only beg you, don't do it. Don't jump into the Facebook IPO when it comes. Or if you must, then get in and get out fast or the blood in the water will be yours. Remember where sharks swim they swarm and Goldman Sachs is circling.

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