What the trader said: 'In the middle of complex trades without understanding them'

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The following are edited extracts of emails from Fabrice Tourre, the Goldman Sachs trader who has been charged with fraud, to his girlfriend:

From: Tourre, Fabrice
Sent: Tuesday, January 23, 2007 11:34 pm
To: Serres, Marine
Subject: Fw: ft-Friday

Darling you should take a look at this article ... Very insightful ... More and more leverage in the system, the entire system is about to crumble at any moment ...

The only potential survivor, the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me ...), standing in the middle of all these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstrosities!!!

Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job;) amazing how good I am in convincing myself!!!

Sweetheart, I am now going to try to get away from ABX and other ethical questions, and immediately plunge into Freakonomics ...

From: Tourre, Fabrice
Sent: Wednesday, March 07, 2007 4:18 pm
To: Serres, Marine
Subject: Dinner ...

Interesting, I will give you more details in person on what we spoke about but the summary of the US sub-prime business situation is that it is not too brilliant ... According to Sparks, that business is totally dead, and the poor little sub-prime borrowers will not last so long!!!

All this is giving me ideas for my medium-term future, insomuch as I do not intend to wait for the complete explosion of the industry and the beginning of distressed trading, I think there might be more interesting things to do in Europe ...

I spoke about this this afternoon with Nartey, who naturally confirmed that "he would love if I were in London, which would greatly facilitate communication with New York and would push the European sales force to concentrate on the risks of structured finance ...

I need to go to London for at least a week in April, get a better sense for the opportunity, but I am getting more and more convinced ...

From: Tourre, Fabrice
To: 'fb2204@columbia.edu'
Sent: Mon Jan 29 22:24:26 2007
Subject: Re: As discussed, 24 hours later ...

Yup, work is still as laborious, it's bizarre I have the sensation of coming each day to work and reliving the same agony – a little like a bad dream that repeats itself ... In sum, I'm trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day ... That doesn't seem like a lot, but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money.

When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: "Well, what if we created a 'thing', which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?") it sickens the heart to see it shot down in mid-flight ... It's a little like Frankenstein turning against its own inventor ;)

Anyway I don't want to bore you with my stories, I'm going to look in the yellow pages for the phone number of the ABX market and I'll send it to you, because I believe that a soft and sensual feminine intervention is necessary for Fab's survival.

From: Tourre. Fabrice
Sent: Wednesday, June 13, 2007 4:04pm
To: Serres, Marine
Subject: Re: Good morning sunshine

Just made it to the country of your favourite clients [Belgians]!!! I'm managed to sell a few abacus bonds to widows and orphans that I ran into at the airport, apparently those Belgians adore synthetics abs cdo2!!!