Tuesday, March 17, 2009

Goldman going for distressed debt

So says the headline.

It's a better read than, "Goldman props up investments with more money"

Goldman has a $15 billion fund that was supposed to engage in buyouts--instead it is buying $6 billion of debt with the remaining $9 billion left in the fund.

$4.5 billion to "stressed" and "distressed" investments (that's like Goldman's "sell" and "conviction sell" ratings except a conviction sell means that Goldman's prop desk needs that position down!)

$1.5 billion will go to firms that Goldman already owns to purchase their debt at a discount in the market.

The remaining $3 billion not invested will go to buyouts.

This weekend, we saw how Goldman was able to shore up their balance sheet with help from AIG.

Now we have Goldman with it's private equity fund, being used to shore up those companies Goldman invested in!

And now Goldman is trying to shore up it's own partners!

But Goldman’s employees are losing money on their personal investments — particularly in Goldman’s own elite investment funds, which have been considered one of the perks of working at the bank.

Now these funds have stumbled, and some Goldman employees who financed their gilded lifestyles by borrowing in good times are suddenly short on cash needed to meet commitments to their personal investments in the funds.

But one former Goldman partner estimated that a quarter of the bank’s roughly 100 partners are now worth $5 million or less because of losses on their company stock and other investments.

So Goldman's partners now get shored up by Goldman loans, financed on the back of the US taxpayer!

It's the taxpayer circle jerk again!

With a new definition of "distressed" debt--Goldman's partners!

And you thought it ended with AIG!

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