Professor Elam

Sunday April 18 2010

The Government has a habit of attacking business success at the top of the markets. Radio Corporation of America was the tech stand out of the 1920s, the Federal Govt sued RCA at the end of the market run up. 

The SEC began investigating Drexel in 1986, the market would crash the next year in Oct 1987

At the end of the market run up 1982-99, the Clinton Administration sued MSFT. MSFT stock has gone nowhere since staying mostly in a $25-30 range. MSFT was arguably the poster child for software success running most of the PC operating systems on the planet. The dot.com crash began in 2000. 

Now the Federal government has sued Goldman Sachs GS, the most profitable securities firm ever. Mish notes today that other banks and brokers are just as guilty of playing against their own clients, but Goldman is a richer prize as it still stands alone. We would guess that the lawsuit will be settled in a nolo contendere manner neither admitting nor denying anything. But we suspect the GS partners, like the Arthur Andersen partners, will sense game over and exit, effectively escaping the government  executioner's guillotine. Remember AA was finally found not guilty, after the firm collapsed. Interestingly the movie Wall Street II Money Never Sleeps, will debut in Sept of this year. Wall ST I debuted shortly before the 1987 crash. Hmm, will the lawsuit and the movie portend another crash this year?