April 9, 2008 – 1:33 pm


Goldman Sachs has become a magician, making assets appear from thin air. Floating on cloud 3 Goldman’s

share of Level 3 assets surged 39 percent to $96.4 billion at the end of February from $69.2 billion in November, according to a filing with the U.S. Securities and Exchange Commission today. The ratio of Level 3 to total assets rose to 8.1 percent from 6.2 percent.

The only question we have for the almighty is, “how long can you keep these aloft”? To which the Golden one replies

“Just because an asset is defined as Level 3 doesn’t mean we’re uncomfortable with the value of the asset,” said Lucas van Praag, a spokesman for Goldman Sachs.

But it is Mish’s words of grace that ask it best:

That’s an interesting way of putting it. Why not just say whether or not you are comfortable to make things clear? And while you are at it, why don’t you explain why have a price on commercial real estate loans last quarter but not this quarter?

I’m not sure, buy let me take a stab at it: the level 2 price put a pop in that balloon!

  1. 2 Responses to “On The Level 3”

  2. I’ve seen this show before with different actors. Look for these assets to be bundled and sold to vulture investors who have examined the underlying assets and are satisfied these notes aren’t over-leveraged, just caught in the same tide as the sucky ones. Much like Citi laying off a majority of their paper at the expense of their stockholders to “good friends of the bank” at a .9, look for Goldman to do a solid for some of their old money patrons down the line as well.

    By Mike on Apr 10, 2008

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