Follow us:

Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

March 8, 2010 at 9:55 AM

Is Wall Street bullish on America — or is a Greek tragedy opening soon?

Only the paranoid survive, Andy Grove famously counseled. So is it too wild to wonder how long before Goldman Sachs, the Wall Street boyz and the shadow banking crew start shorting the sovereign debt of the United States?

We know this much: Goldman and others helped Greece conceal its debt, and were meanwhile betting against the country with their own trading, turning trouble into a self-reinforcing crisis. Funny, the stringent “austerity” measure that will affect average Greeks won’t break a leaf of grass on the estates of the capital markets gang bangers.

We know another thing: With the “innovative” financial mischief that caused the worst recession since the Great Depression, we’ve come a long way from the era when an ad could proclaim, with credibility, “Merrill Lynch is bullish on America.” Of course, Merrill doesn’t even exist anymore as a free-standing outfit, nor does the old prudent ethic of the Street. With trillions in hot money moving around world markets, what do the boyz need America for — except to save their bacon when the Ponzi scheme collapses?

Now saved, they are back to their old mischief with derivatives and swaps, including in sovereign debt. This may be one reason President Obama keeps Tim Geithner and the “Government Sachs” alums close to him (as in, keep your friends close and your enemies closer) — a reason beyond wanting to convey continuity or even keep Wall Street campaign contributions.

Wall Street has reasons to “maintain,” to use the gang language they would understand. Financial reform is all but dead. U.S. Treasuries are still the world’s most stable. There’s plenty of looting of productive American companies to be done through highly profitable M&A activity. But it may only be a matter of time before the boyz start shorting us. And it will have little to do with real economics (Wall Street didn’t short the U.S. during the Depression or World War II). Will angry Americans, so desperate to place blame somewhere, anywhere, even realize what is happening?

The Back Story: Microsoft makes the list of the 10 stocks most loved by hedge funds, according to a Goldman Sachs survey of 487 hedge funds (talk about the scope of the shadow capital markets). Others: Apple, Pfizer, Bank of America (short?), Google, JPMorgan Chase, DirectTV, Wells Fargo, Mastercard and CVS-Caremark. The research note was first published by Market Folly blog. Amazon comes in at No. 27.

Today’s Econ Haiku:

It makes you wonder

Who profited from building

In a flood plain. Mmmm?

Comments | More in Bailout, Outlook, Politics and the economy


No personal attacks or insults, no hate speech, no profanity. Please keep the conversation civil and help us moderate this thread by reporting any abuse. See our Commenting FAQ.

The opinions expressed in reader comments are those of the author only, and do not reflect the opinions of The Seattle Times.

The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited content access is included with most subscriptions.

Activate Subscriber Account ►