Goldman's Defense

Goldman definitely designed products which took the other side of the bull market in real estate, but that is the way markets work. If you are a market maker, whether in the pits of Chicago, or in the offices of Goldman Sachs, you are at risk each time you put on a position. In defense of Goldman, they positioned themselves to profit from a potential break in the real estate market, the fact that they sold CDOs to anyone, including their clients, may be greasy, but well within their right to trade a given market. Their unique position to profit from the transaction as well as the trade grinds on all of us a bit, but they were ultimately at the mercy of the direction of the markets. In trading you are always a hero or a goat. Could the real estate market have continued or even accelerated its rally? Unlikely, but none of us knew the timing of the break and certainly Goldman, despite the hype, is not as smart as they would have all of us believe. Collectively it is a company of transactors, not traders, but their opportunity to profit from macro moves in the economy is a part of the financial factory they have built and our economy promotes. The fact that the market was the final arbiter of their actual trading positions is their defense.