The New York Times reports that Goldman Sachs admitted in an email to clients it has traded ahead of its investment advice to them. Nice lede:

For years, Wall Street whispered that Goldman Sachs profited handsomely by trading ahead of — or even against — its own clients.

On Tuesday, a Goldman executive made an unusual admission that, in some cases, the rumors were true.

To put this as plainly as I can, the worry is that, say, Goldman (an Audit funder) buys a stock and then pumps it to its clients, who then go out and buy the same stock, pushing the price up. Goldman makes an easy, quick profit.

Goldman says this is nothing new to its clients. Maybe it isn’t, but it sure looks bad.

That’s a nice little scoop by Andrew Ross Sorkin.

Roger Lowenstein made some logical points in the Times Magazine this Sunday on why underwater mortgage holders should walk away from their homes.

Think of private-equity firms that close a factory — essentially deciding that the company is worth more dead than alive. Or the New York Yankees and their World Series M.V.P. Hideki Matsui, who parted company as soon as the cheering stopped. Or money-losing hedge-fund managers: rather than try to earn back their investors’ lost capital, they start new funds so they can rake in fresh incentives. Sam Zell, a billionaire, let the Tribune Company, which he had previously acquired, file for bankruptcy. Indeed, the owners of any company that defaults on bonds and chooses to let the company fail rather than invest more capital in it are practicing “strategic default.” Banks signal their complicity with this ethos when they send new credit cards to people who failed to stay current on old ones.

It’s just business. That’s capitalism, baby! And Lowenstein says a mass movement could get the banks off their duffs to help fix the housing crisis:

White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms.

— Speaking of the ongoing housing crisis, CNBC’s Diana Olick is on the right track there with this post on how things are only getting worse: Prime securitized mortgages are going delinquent at triple the rate of a year ago. A third of prime jumbo mortgages are underwater. Oh, and option ARMs?

Only 9 percent of these loans had full documentation from the borrower and 76 percent were originated in California, Florida, Arizona and Nevada, our four disaster states for housing. It should therefore come as no shock that they are suddenly approaching subprime in their delinquency status. So while we all sit around saying that the subprime loans have already worked their way through the system, they’re fast being replaced by POA’s. “For 2006 securitized issuance, 61% of subprime loans have defaulted, as have 49% of the option ARMs,” according to the Amherst report.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.