Monday, January 03, 2011

Goldman, Sachs' Next Bubble: Facebook et al.

Via John Gruber, I came across this darkly hilarious article from NY Times, "Goldman Offering Clients a Chance to Invest in Facebook:"
In a rare move, Goldman is planning to create a “special purpose vehicle” to allow its high-net-worth clients to invest in Facebook, these people said. While the S.E.C. requires companies with more than 499 investors to disclose their financial results to the public, Goldman’s proposed special purpose vehicle may be able get around such a rule because it would be managed by Goldman and considered just one investor, even though it could conceivably be pooling investments from thousands of clients.
It is unclear whether the S.E.C. will look favorably upon the arrangement.

Gruber responds to this, "Unclear, eh?" But being the loud-mouth and cynic that I am, I responded thusly via email:

Seems pretty clear to me, they're working on inflating their next bubble. Obviously, I'm a cynic, and maybe FB is worth as much as everybody says but this is a classic GS move, complete with the bending of "minor" rules that are designed to keep them honest.

It sure would be interesting if NYTimes and Co. could get GS or anonymous people inside on record as to whether they already have short positions against this special purpose vehicle. Should the biggest assholes in the world really be allowed to escape such skepticism in articles like this? Are there no investors out there willing to go on the record as simply not trusting the seller?

The part that's unclear to me: Are people really going to buy this shit? I'm sure they are, but I'm awfully curious who will admit on record that they think it's a good bargain.

Maybe someone should ask Jim Cramer.

Or, Matt Taibbi, now that I think of it.