At This Year’s Thanksgiving Table, the Knives Are Out for Goldman Sachs

By: Money_Morning

kdowdle writes: A happy belated Thanksgiving to you all.

If yours wasn’t happy, just think – it could have been a lot worse. You could have been the turkey and gotten slaughtered, like the turkey in this tale I’m about to tell you.

It’s a tale of two birds of a feather, one a greedy, fat butterball stuffed with gibberish and ripped-off profits.

And then there’s the other bird. It’s not just easy pickins for the butterball investment banker that stuffed it royally, but itself a turkey of international renown.

Keep reading, and find out why we may soon get to see the insides of one of the crookedest birds around…

Turkey Shoot

The two turkeys are Goldman Sachs Group Inc. (NYSE: GS) and the Libyan Investment Authority (LIA), the nation of Libya‘s sovereign wealth fund.

Back in Big Mo‘s day, in early 2008, the Libyan Investment Authority (“Big” Muammar Gaddafi‘s piggybank) put on some complex derivatives trades that Goldman Sachs allegedly talked it into.

Not that Goldman is known for its honesty. After all, it helped Greece lie and cheat its way into the European Union by masking that Mediterranean nation’s budget deficit with currency swaps and dubious derivatives dealings.

Nonetheless, Big Mo’s money machine trusted the golden fleecers.

Folks say, “It takes one to know one,” so we should be able to assume these two knew whom they were dealing with.

But apparently not.

Here’s what happened, according to statements, filings, documents and evidence being bandied about in the U.K. High Court of Justice, where the Libyan Investment Authority is suing Goldman Sachs.

Goldman took advantage of the LIA’s “inexperience” and “naiveté” and slam-dunked them like LeBron James taking it to Danny Devito.

Big Mo’s men say that between January and April 2008, Goldman’s boys sold them nine derivatives trades worth $1.2 billion. After the credit crisis crash, the trades were worth all of nothing.

Goldman, on the other hand, for its handiwork, pocketed $350 million.

The LIA’s suit alleges that the trades were unsuitable, that Goldman’s profits were “unusually high for financial derivative transactions involving a substantial international bank,” and that the premiums the LIA paid were “substantially overvalued.”

The trial gets underway in 2015. Right now, the two sides are jockeying in the High Court.

Now we’re going to get to find out what Goldman’s 13-man Libyan banking team and another nine Goldman executives, including Michael Sherwood, co-chief executive of Goldman Sachs International, said in e-mails. We’ll learn what advantages Goldman had over the LIA in talking the authority into trades and how Goldman planned on harvesting flowers from the Libyan desert.

What’s going to be even more interesting is learning to what extent Goldman overcharges and tees-up customers on opaque derivatives trades.

In your post-Thanksgiving hangover, you may grumble as your tummy rumbles, “Who cares?” After all Goldman and Libya are two giant turkeys who deserve to slaughter each other.

I care, and you should, too. If for no other reason, it’s good theater.

One of them got plucked, for sure. I’m hoping the other one – the bigger, fatter, more crooked critter – gets its wings clipped, too.

Source : http://www.wallstreetinsightsandindictments.com/2014/11/years-thanksgiving-table-knives-goldman/

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