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A rare peek at Goldman Sach's "Secret" Advice

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posted on Sep, 2 2011 @ 02:56 AM
Goldman Sachs's recent "forecasts" for the general public and lower-tier investors are full of optimistic prattle like most financial world babblings these days. Yet a report specifically prepared for institutional investors and hedge-fund cronies tells a very different story. Although it was not meant for the "general public," the WSJ and some others got a hold of it:

A top Goldman Sachs Group Inc. strategist has provided the firm's hedge-fund clients with a particularly gloomy economic outlook and suggestions for how these traders can take advantage of the financial crisis in Europe.

WSJ's Shira Ovide has details of a report issued by Goldman Sachs that paints a bleak picture of the global economy.

In a 54-page report sent to hundreds of Goldman's institutional clients dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's trading desk—argued that as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China's growth may not be sustainable.

“Here we go again…solving a debt problem with more debt has not solved the underlying problem. ...Can the US continue to depreciate the world's base currency?”
—From a report by Goldman strategist Alan Brazil suggesting how to profit from bad economic news

Among Mr. Brazil's ideas for trading on that downbeat analysis: a fancy option play that offers a way to take a bearish position on the euro, and a bearish bet through an index of insurance contracts on the credit of European financial stocks. The report also includes detailed information about European financial institutions and pointed language about the depth of the problems in Europe, the U.S. and China.

Wall Street Journal

Goldman defends the two different reports by saying: "As a matter of course, financial institutions publish reports suggesting strategies to fit clients' needs." True. But why the vastly different world-views? The reports don't differ in terms of specific advice for different clients -- they present utterly different pictures of the economy, with sunshine and rainbows for the "little guy" and doom-y hedging strategies that speak of a global economy sinking into deepening chaos and decline for the big dogs.

See also:
Even Goldman Sachs Secretely Believes that an Economic Collapse Is Coming.

Some specific advice from the report, for what it's worth: -Clients were advised to buy a six-month put option on the Euro versus the Swiss Franc and a five-year credit default swap on an index of European corporate debt (iTraxx 9). Both are pessimistic bets on Europe, both public and private sectors.

posted on Sep, 2 2011 @ 05:08 AM
Thats pretty messed up! But everybody here at ATS already knows the economy isnt in good shape at all...

posted on Sep, 2 2011 @ 06:11 AM
This is the outfit which ended up in court for pushing a product on customers whilst simultaneously betting money against the product performing ;whilst this assessment may have some truth Id be wanting other independant advice.

posted on Sep, 2 2011 @ 11:37 AM
reply to post by silent thunder

So basically what you're saying is that Goldman is giving their high end investors the same economic advice this former Obama economic advisor did a few weeks ago.

I guess that's why she's not on the team anymore; nobody in the administration wants to hear the real truth about this country's financial situation.

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