In Goldman Sachs We Trust

This weekend I decided to re-read my Houghton Mifflin copy of The Great Crash 1929 by John Kenneth Galbraith.

(I once rode down an elevator with him and his entourage at Utah State University. Very tall and patrician man.)

Anyway, he titles a chapter "In Goldman Sachs we trust". He tells about the various investment trusts that burst upon the scene. Galbraith also goes into great detail about the Goldman Sachs Trust. When it was issued Goldman put up $10 million for 10 percent and 90 percent of it was sold to the public for $104.

A few years later, when the Goldman Sachs official was called during the Depression to testify before a Senator Couzens.

He confirmed the trust stock was sold for $104 a share. He was asked what is the stock worth now.

$1 - 3/4 was the reply.

Now we learn that even as Goldman Sachs was helping sell toxic waste mortgages to the public a small unit of the same firm was placing a huge bet on the mortgage market meltdown. This netted the firm $4 billion.

Dan

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