My favourite story this week

In a sort of divine confluence of the inept and the stupid, Goldman Sachs has lost $1.3 billion dollars of Colonel Gaddafi’s money. It really couldn’t happen to two nicer bunches of people - Goldman Sachs traders and the Gaddafi family.

Apparently, Goldmans lost the money – which it invested between January and June of 2008 - in a range of options to buy currencies and shares at a future date for a stipulated price (in other words futures trading of the like which brought down Barings).

According to the Wall Street Journal the investments, in a basket of currencies and the shares of six energy, utility and banking companies including Citigroup, amounted to a bet on a rise in the underlying value of the assets. Unfortunately for the Colonel, the collapse of Lehman Brothers sent values plummeting leaving his holding virtually worthless. Ah diddums!

I smell a rat, are Goldmans secretly working for the CIA?

It gets better. Goldmans in a rare fit of remorse (very, very rare in my experience) have made three separate offers to the Gaddafi family to compensate for their cock-up by allowing the Gaddafi’s to invest in their firm for a knock-down price.

Unfortunately, the Colonel has turned down all offers which robbed us all of the sight of NATO warplanes bombing the largest single shareholder in America’s leading investment bank.

Oh why couldn’t this have happened? Why, why?

Anyway for seasoned Goldman Sachs watchers this has been an absorbing week. Alongside news of Gaddafi-gate (yes it's not only journalists who get to put 'gate' after things) came reports that the New York District Attorney has issued subpoenas to a whole host of Goldman Sachs’ employees asking them to explain why the firm exited the mortgage CDO market in early 2008 when it was still encouraging clients to pile in.

Expect further bland statements from the Goldmans PR machine to try and explain all this away.

What was it Alexander Pope said? “At ev’ry word a reputation’s lost”!