Goldman Sachs, Facebook, the SEC and Bubble 2.0 | Hacker News Reader

Goldman Sachs, Facebook, the SEC and Bubble 2.0

broadstuff.com

45 pointsbensummers12 comments

"Bigger Fool Theory" has officially been added to my vocabulary for explaining the current spate of ultra high valuations for companies like Facebook and Twitter.

* Greater fool theory http://en.wikipedia.org/wiki/Greater_fool_theory

The investment banks are stuffed full of money they got from the fed buying all their worthless MBSs they sold to them at par. They are just dying to find some other bubble to invest it in.

You see, when too much money is idly sloshing around the economy it sooner or later finds a bubble to invest in. It has to be something new and shiny though with "unlimited" growth potential in order to really get the bubble going though.

As usual the Onion does a better job explaining it than I ever could:

http://www.theonion.com/articles/recessionplagued-nation-dem...

Great article.

The last sentence is what I thought when I first heard about this: "The one sure thing you can tell from this is that Facebook clearly can't self fund itself enough for what it needs, even on $2bn turnover a year."

It will be really interesting to see some actual, real-life numbers from Facebook regarding their profit/loss/revenue/expenses. My guess is that we will soon enough.

This is what I thought too- they can't be profitable if they are raising more money. But then I read it wasn't Facebook selling equity, but early investors selling their private shares.

http://finance.fortune.cnn.com/2011/01/04/five-reasons-why-i...

So maybe Facebook is not getting the cash infusion.

My 2 cents - Facebook will be releasing a phone timed just right for their expected IPO in 2012 - my guess is that they wouldn't be able to approach any handset manufacturers directly without telegraphing their intentions to G and Apple - perhaps a social OS wrapper around Android ?

I give a Facebook Phone 1000:1 odds. More likely is that they are banging their heads against their desks trying to figure out how to make money off 500 million users.

so you're saying goldman figured out how to sell debt that will never get repayed and collect fees (pay bonuses) on the deal?

i'm shocked, shocked

Ask HN: what about the law of 500? Is it a good law ?

Can you have a 2001 style bubble.. with one company?

With a side of Bezos, Pets.com, and an AOL-Time Warner merger?

Reminds me of...

Goldman Sachs says Ireland will be ok

http://www.politics.ie/economy/143357-goldman-sachs-says-ire...

How Goldman Sachs Helped Greece to Mask its True Debt

http://www.spiegel.de/international/europe/0,1518,676634,00....

How Goldman Sachs Made Tens of Billions of Dollars from the Economic Collapse of America

http://www.globalresearch.ca/index.php?context=va&aid=16...

Oh, Goldman Sachs. Are there no depravity which you are absent from?

I submit that your links are not appropriate for Hacker News. They are not of sufficient quality that someone with a hacker's interest in finance would find them interesting.

Link 1 is an exceptionally low quality discussion about a Goldman analyst report. I can stop there, but I'll add further that if you actually read the report under discussion, it says quite clearly that Ireland will not be OK unless there is a bailout, due to the risks that all financial institutions regardless of capitalization face during a crisis. In other words, Goldman's analysts believes Ireland will be OK given a good bailout, which is not a shocking opinion at all.

Link 2 I have little comment on, because it provides no useful contextual information. Trying to read this account of financial engineering is like trying to read about a science study in the daily paper. All the details are left out, and a newspaper cannot be trusted to get the big picture right. The phrase "special kind of swap with fictional exchange rates", for example, might be accurate, but it just smells like the writer misunderstood a forward contract or something.

Link 3 is Matt Taibbi-level flamebait, except Taibbi is a better writer. I have no patience for this stuff anymore.

None of these links have been accurate or meaningfully informative, yet they seem to be very popular. The financial news discussions on HN is becoming increasingly frustrating as it becomes more and more like r/economics. If someone disagrees with any of my assessments, I would appreciate a reply.

Reply on news.ycombinator.com