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Goldman Sachs Says No Facebook Shares For US Investors
theodp writes "In 2009, Robert Cringely speculated that the day might be coming when Goldman Sachs decides the United States isn't worth dealing with anymore. Crazy, eh? Maybe not. Blaming 'intense media attention,' Goldman Sachs has decided to exclude US investors from a $1.5 billion Facebook offering. In a nicely-timed all-investors-are-not-created-equal MLK Day statement, the US taxpayer bailout beneficiary said, 'Goldman Sachs decided to proceed only with the offer to investors outside the US....We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take.'"
It seems to me from stories of colleagues and family (all outside the US), that dealing with entities in the US can be a great PITA as they tend to try to screw you in all kinds of unwanted positions. Could this have something to do with it?
Every experiment which ends in a big bang is a good experiment.
We should remember this next time these assholes want a bailout.
Should have let them fail. Then they wouldn't be lending to any investors. If you want our money be ready to play by our rules.
We bail you out of from your greedy stupidity and this is your thank you? Looks like someone needs their corporate charter revoked.
G-S are running the government. How long before someone puts out a list of their executives names and addresses with a "surveyor's mark"?
...are now too good for them?
Man if that doesn't spell out the textbook definition of pretentious cocksucker, I don't know what does...
Basically they think that offering it to us based investors may break a securities law. While they might be lying, it should have at least been in the summary.
Well.. maybe. Or Maybe not. But Definitely not sort of.
Is anyone else noticing that all of those subhuman corporate entities and economists have been freaking out a lot lately? Making weird decisions, hiding under the table, chasing their tail, moving investments out of the US? I think they sense some incoming disaster that we humans wont see until its too late.
What Goldman was doing was essentially illegal in the US. Facebook is a private company and without opening it's books such a company can't take on more than 499 investors. To skirt this requirement Goldman was acting as a single "investor" but actually just planned to sell shares of it's stake on to it's clients (with hefty commissions). This is a violation of the spirit and possibly the letter of the law, and the SEC stepped in. To take the heat off Goldman is now going to run their scam outside of the US where presumably it's legal.
And yes, this probably is a scam. There are good reasons not to allow public investment in opaque ventures whose value can't be determined, and Goldman is clearly banking on charging oversized commissions because it's selling a product you can't get anywhere else (cause it's illegal, hmm). The first investors will make loads of cash just like in any pump and dump scheme, the suckers will get rolled. The Facebook guys get to cash out, turning some of those pretend billions into real dough before the company goes Myspace. Worthwhile tech ventures will go underfunded and even larger numbers of (dumb) investors will lose confidence in the markets.
No, they are saying that the US has too many laws that bar advanced scams with securities, hence it is not very profitable to run such scams in the US.
But don't worry - it is very likely that whatever offer was going to be made would have excluded small investors outright; and that those US investors that would have been asked to consider buying into the fund have the offshore units that will allow them to do so now.
Before everybody goes all gung-ho against G-S for this move, think of how many of you would also comment along the lines of "Who would invest in Facebook? It is just another bubble waiting to burst." I'm not qualifying anything there doing, I'm just sayin...
'We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.' RPF
No. G-S are not "trying to be good guys." They are trying to make money in a scam investment in a way that is illegal in the U.S. They are obeying U.S. law to avoid being sued or whatever. This is purely a cover-your-ass move.
Just be sure to wear the gold uniform when you beam down -- you know what happens when you wear the red one.
And of course the post is immediately accompanied by the normal GS-bashing. Hate GS all you want, but this is a tangible example of the US losing its competitiveness to other jurisdictions due to its complex and outdated regulatory regime. Investment opportunities that could have been had by US investors will now go to foreigners. And yes many people think FB is overvalued, but that should be a personal investment decision, not something the government decides for you. This trend will make it increasingly difficult for companies to raise capital in the US. Not a problem for FB as they can source from anywhere, but smaller shops should definitely be concerned by this. And now back to the GS Is Evil channel...
Goldman-Sachs is just trying to CIRCUMVENT them.
There. Fixed that for you.
The SEC regulations for offering shares to US investors are a lot stricter than for non-US. My guess is that they cannot meet the requirements, which I would take as a big red flag that Facebook is severely overvalued right now.
This is what I find really worrisome. As a regulatory body, the SEC is kind of a joke. The bankers can and do get away with almost anything. For GS to exclude the US from the Facebook offering, this has to be a screwjob of such magnitude that even the SEC would have to act.
I know Facebook hating is en vogue around here, but c'mon.
Click "Account" -> "Help Center". The top question is "How do I permanently delete my account?" The description clearly states the difference between deactivating vs deleting your account. (Deactivating makes your profile disappear from Facebook, but all of your data is held on to in case you want to reactivate.)
So... don't log in?
You can disable all of those, and you can also unfriend annoying people, just as you can in real life.
Step 1. Send all Facebook notification to spam folder
Step 2. Complain about not receiving Facebook notifications
Huh?
If that actually happened, Facebook isn't the biggest problem in your relationship.
I contend that for any of G-S' target US customers, moving the sale outside of the US is meaningless. The sale was aimed at high net-worth individuals, and just about any of these people (or their portfolio manager) will be able to participate via their off-shore accounts. The action in the usual off-shore banking establishments, or even through US citizens' above board overseas accounts, will probably prove heavy.
This action is strictly to put off the day of reckoning with the SEC.
Luke, help me take this mask off
How long before someone puts out a list of their executives names and addresses along with their offshore bank accounts that they use to hide money from the IRS?
Oh wait...
You might want to mention this story the next time someone tries to blow some "supply-side economics" smoke up your ass. "Trickle-down" indeed.
You are welcome on my lawn.
It's the difference between a fiat currency and a representative currency. The worth of the representative currency is determined by the amount of a real physical asset that is available.
I understand perfectly well the difference between fiat currency and representative currency. That doesn't change the fact that all currencies derive their value primarily from their exchangeability rather than their intrinsic worth.
The real difference is that there is a way fiat currency is commonly abused that doesn't happen with representative currency. There is a built-in unsustainability caused by the private companies that issue fiat currency, like the Federal Reserve. When they create fiat money out of nothing, they loan it to the US Government in exchange for what is basically an IOU from the US Government. But they attach interest to each dollar they create. That means there are not enough total dollars in the system to pay back all of the debt.
There was never enough gold in the US gold reserves to pay back all of the debt represented by gold-backed dollars either.
Therefore, the US Government cannot possibly pay back its debt.
What else is new? The US Government had debt it could not pay off long before Nixon took us off gold.
It can't ever do that, not even if the total federal budget were less than the tax revenues, because the money is loaned at interest the moment it's created. The US Government has to borrow more money from the Fed, at interest, to make payments on the existing interest. Therefore, not only can it never get out of debt, the debt must also continue to increase.
The Fed, from whom we are borrowing money at interest, is principally owned by the government and remits its profits to the US treasury (after doling out the appropriate share to member banks). I wish we only had to borrow from them.
Thus, fiat currency dollars don't represent wealth. They represent debt. If all debts were somehow paid off then there would be no money in circulation.
I'm pretty sure that's true of all moneys, everywhere. A piece of currency in my pocket represents somebody else owing me a debt, and it always has. Sometimes this debt has been denominated in a specific amount of a specific metal.
The difference is that representative currency dollars directly represent a specified amount of a tangible asset. They can be redeemed for that amount of that asset at any time. Their value cannot be lower than the value of that tangible asset.
It can if there's a crisis of confidence in the issuing agency's ability to cover their redemption.
They represent wealth, not debt.
All money represents debt. By definition money represents a promise to pay by somebody else; if it didn't, it wouldn't be money.
"I don't care about the Constitution!" --Bill O'Reilly, November 17, 2009
To be an effective trader, basically what you do is step in to a transaction between two people and shove them far enough apart that they can't communicate. Then you go to the seller, tell them that you and your buddies are their only market and you will pay them $XYZ for everything they have. A real low-ball figure. Do your best to put them in the fucking poor house.
You then take whatever you bought to the person who was already interested in buying it, and tell them you and your buddies are the only source for whatever it is you bought, and if they want any of it they'll have to pay you $XXYYZZ. An absurdly overvalued figure. Do your best to put them in the fucking poor house.
What's going on is that traders at no point are about facilitating exchanges between two parties. Every step of the way, their goal is to screw everybody who's still holding a single red cent so hard that their fillings fall out, and then collect those fillings -- gold, too, is an investment.
... still waiting for this free-as-in-beer free beer I keep hearing about.
I bet 100% of the investors are going to short that stock big time. No way I am buying into the eventual public IPO.
When Facebook goes public, it will the very definition of a bubble. The company's tangible physical assets are probably less than $500 million. In some objective sense, they are measuring value based on the actual number of Facebook users.
This means they are dependent upon the interest of users to maintain that value. So was AOL, so was Compuserve, so were a lot of other things that lost a lot of value in a very short time.
I get the same sense I did when I saw the AOL deal go through. WTF, this cannot be right. I can't tell you what kind of game changing, cataclysmic innovation is going to affect their value, but it's going to emerge.
Every single thing that US gov't ends up trying to protect US citizens from backfires. It's the same thing with US government's foreign policy - all of it eventually backfires.
FDIC and 1-0% interest and Freddie/Fannie and all capital destroying regulations backfired and created one bubble after another, the last one will bring down US bonds and US dollar.
SEC is part of US government, creating regulations that should not exist. SEC should not exist.
The FB deal (though I could not care less about FB) is about not disclosing their information publicly. But their information will go to the stock holders. The stock holders will have their prospectuses, but they are entering a partnership.
There is NOTHING WRONG with a partnership - where company's stock is held by a number of individuals who agree to a number of rules, like in this case, one of the rules is that the individuals cannot trade the stock on secondary markets until 2013.
Do you want to be protected from participating in a partnership by SEC? Well, you got it.
Quite a huge number of people were 'protected' by SEC before the housing bubble blew from shorting and eventually they were protected from becoming wealthier. Good going, but that's what gov't is doing.
All of the /. anger about this GS move is misplaced. Now, personally I wouldn't be buying the FB shares, it's just not something I believe in, maybe I am wrong, but I rather be wrong than sorry. But the reason GS is doing this is not to fuck with US somehow. No. The reason is because the US gov't is fucking with US citizens.
US gov't does not consider you to be adults. They haven't for a long time. Since the moment the Fed was created and they started buying your votes with your money. Well, maybe you aren't adults. Or maybe the adults are running the show, and the eternal teens are running around, being herded. Well, you know what happens with a herd eventually? It's eaten.
SEC wouldn't allow a partnership to be formed in US that wouldn't comply with public rules. Well, a partnership is only 'public' as far as the public that owns the stock. But it's not them, who won't be getting the information. It's SEC and the public who doesn't own the stock.
If you are public who doesn't own the stock and you would buy the stock without any of that information, that's your business. But SEC won't let you. Hey, maybe you are gambling, but where in the US Constitution does it say that US gov't has the authority to prevent you from gambling? The US gov't is counterfeiting money - they have no authority to do that either.
Anyway, US citizens are becoming prisoners of their own gov't - can't have Swiss bank accounts, can't own FB stock, can't have a sane country that's not in war every year, can't have capital to have real jobs. All because of gov't.
They say that the people deserve their gov't. Look in the mirror - do you?
You can't handle the truth.
Gold (or whatever you make your coins out of) has no intrinsic worth - the only reason we value it is because it is scarce and pretty. Given a world famine, try using gold to trade for something when all everyone wants is food. The value of that gold is determined by the demand for it, and if there is no demand...
And if you think gold will always be in demand, I'd like to point out the example of using shells as money, or any other ancient form of commodity money.