This is not how a debtor nation wins friends & influences people!!!!!

Here’s the quick and dirty on the SEC’s suit against Goldman Sachs (from the Agora Financial 5 Minute Forecast today):

• Uber-billionare hedge fund manager John Paulson -- the guy that was oh-so “smart” to see the subprime fiasco coming -- allegedly pays Goldman to assemble a CDO of destined-to-fail mortgages, which Paulson then bets against. No problem there, happens all the time. Paulson is not named in the suit

• Goldman pockets Paulson’s fee (in some way or another) then turns around and sells these securities labeled triple AAA to investors in Europe. They end up spread across banks in Holland and Germany. The SEC claims no party was informed the CDO -- called Abacus 2007-AC1 -- was built to fail. Oops. Fraud by omission

• Goldman, at some point, also bets against Abacus 2007-AC1. “Hedging” Goldman calls it. Following Paulson’s lead… meh, maybe not such a bad move, but not exactly on the up and up, either. Still not likely criminal.

Paulson banked a billion when Abacus 2007-AC1 blew up. Goldman got to keep Paulson’s fee, the profitable sales of Abacus and its own hedge profits… though it still claims the lost money in the long run.

Meanwhile, some commentary today on this subject, by Eric Fry for The Daily Reckoning w

hich is also an Agora Financial publication: “Citing Goldman's "moral bankruptcy," Britain's Prime Minister Gordon Brown called for a full inquiry by Britain's Financial Services Authority in conjunction with the SEC. Germany also said it would ask for detailed information about the case. Both governments had to bail out banks that lost hundreds of millions of dollars on investments marketed by Goldman.”

Folks, it is times like this when I begin to lose my patience. The loss of a moral compass by one of our largest investment banks (if all of this is true, as alleged) at a time when we as a nation need to ATTRACT monies to our capital markets – not drive it away – boggles the mind. A nation that is more based upon a service economy, rather than a manufacturing economy needs to have a stellar reputation for handling money. Nothing other than excellence will do – the gold standard, if you will.

Is every bullion dealer without blemish? No. Is every coins dealer perfect? No. But let me draw an important distinction between paper investments you buy on the paper markets and hard assets like Gold coins that you buy from a coin dealer.If you own the physical, tangible asset, that asset never has and never will be worth zero.Mark my words on this: a gold coin has NEVER been convicted of fraud.