It is a world of buy and selling securities. There is always someone else on the other end. GS was one of the first to realize that the subprime mortgage market was about to blow up. To cover their asses they began selling everything they owned and at the same time bought CDS's.
So if a German bank that GS does business with still thinks its a good idea to buy some CDO packaged with "AAA" bonds without doing their diligence then GS should have every right to sell them some CDO's, and also short those same securities. They realized there was a problem before everyone else, and they exploited those people to profit from them.
Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value.
Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value.
I don't know about other startups, but speaking for myself, I don't consider the hoarding of information a virtue. I use capabilities that others don't have to create value. Taking advantage of information asymmetry is, IMO, exploitative rather than creative.
So if a German bank that GS does business with still thinks its a good idea to buy some CDO packaged with "AAA" bonds without doing their diligence then GS should have every right to sell them some CDO's, and also short those same securities. They realized there was a problem before everyone else, and they exploited those people to profit from them.
Isn't that how the business world works? Especially with start-ups? You look for inefficiencies and try to capitlaize on them. You use the information that others dont have to create value.