Let's Talk About How Goldman Makes Money; 1 in 6 in USA Unemployed or Underemployed

[Daal]

The administration deserves credit for being able to pass the largest fiscal package in the US peace time history right after a terrible polical problem with bank bailouts yet Krugman had the nerve to complain how that was not big enough, now there is a man who wont stop till his visions of a almost fully managed economy takes place.
All of that just to follow some dead economist whom he worships

 

[TMcKenna]

I bought some GS January 2.5 puts today @0.05

 

[fkbsuhites]

When the president himself has elastic ethical views, what do you expect from his supporters?

Bush Jr. sold govt. protection for unethical activities to the highest bidder for 8 long years of republican immorality. In some cases the imbecile did not bother to have another bidder competing with his favorites like Halliburton.

We are here at the brink of economic collapse because of 8 long years of a miserable immoral presidency voted into office by illiterate imbeciles compounded by the activities of his immoral financial supporters.

Quote from Roman Candle:

Goldman is the Welfare Queen of Wall Street - the major and primary expertise of the Goldman partners is the ability to socialize losses (i.e., have us, the public, pay for them through their governmental connections) and privatize profits (maintain the bounties from profitable activities in their own hands-again through their governmental connections). They do this through their intertwining networks in the halls of government, the Treasury, Fed and business. A Barron's article several months ago laid Goldman's most recent machinations bare in discussing how Goldman has used government guarantees of certificates of deposits to raise $20,000,000,000+ at extremely favorable interest rates to finance its proprietary trading activities - where equivalent financing raised without government guarantees would have cost 500 or 600 basis points more - and which would have materially cut into Goldman's profits. These guarantees were supposed to help banks raise money to lend - Barron's article noted that Goldman's CFO bragged about using the funds for its own trading activities. In my opinion, Goldman never met a conflict or potential conflict that it couldn't circumnavigate, at least in terms of its own code which embraces an extremely elastic view of one's ethical and fiduciary obligations. And the arrogance of this group is exemplified by Hank Paulson's attempt to get Congress to legislate unprecedented financial powers to him with no judicial oversight to "bail-out" the economy . The financial press in the past has, in general, been either too ignorant, or too in awe of Goldman, or both to write anything other than slavishly flattering pieces. If the general public knew all of the facts about Goldman I suspect there would be the same outrage

 

[theDudeAbides]

Why are people outraged by success more than failures in America now?

I guess it sells papers and it's an easy story to simplify and sell to the populace.

Fascinating how the mgmt teams from C, ML, LEH, BSC, and others are the subject of less focus when they allowed their own exposures to take them down.

 

[Specterx]

Quote from asiaprop:

GS did (almost) everything right

Did everything right? Goldman would be bankrupt if we hadn't rescued them through AIG. How hard is it to be a risk-taker when you all you've got to worry about is the upside? It's all a shocking example of regulatory capture.

 

[MaklodaSux]

Quote from theDudeAbides:

Why are people outraged by success more than failures in America now?

I guess it sells papers and it's an easy story to simplify and sell to the populace.

Fascinating how the mgmt teams from C, ML, LEH, BSC, and others are the subject of less focus when they allowed their own exposures to take them down.

Because they didn't deserve or earn success. They deserved to be bulldozed over and turned into a fucking park.

 

[asiaprop]

everyone who invested in structured mortgage derivatives was supposed to be a "professional" buy-side investor. You certainly had no access to this market nor anyone on the street. All professionals are supposed to know how the rating agency business works. What are you screaming about? That 80% of investment banks had a strong buy rating on Amazon right before the internet bubble burst and you got in right at the highest point? That means the whole system is crap? Sorry, but I dont buy into such flawed logic.

Let's not forget after all that it was the politicians and home buyers who were not supposed to own a home who brought this mess about. Investment banks only sized their opportunities which is perfectly fair in a free market economy.

Quote from PragmaticIdeals:

Asiaprop and the rest of the pro-GS crowd fail to understand that 'free capitalism' does not entail a right to fraudulently sell worthless securities that have been fraudulently labelled as AAA to fraudulent banks looking to making fraudulent short-term profits as the fraudulent bubble inflates due to the fraudulent manipulation of the Federal reserve (on the free market).

All while shorting the market and fully knowing how the fraud would seep its way through the system to a critical point.

Sure, nothing illegal may have been done, but does that make it good for society?

---

Asiaprop's response:

"GO CAPITALISM!!!!~~~~~"

 

[asiaprop]

1) I also work in the industry and hardly see anyone on the sell-side who gives a whole lot about anything academicians pump out. I know buy-side firms such as Fidelity (including Panagora) and the likes love to buy this crap because they simply do not employ the capabilities to truely perform in-depth quantitative research on their own. But most sell-side quant and S&T desks, at least those who make money, give a darn what Krugman has to say.

2) That banks were allowed to walk away was the fault of politicians not the banks themselves. Had they not received bailout funds then 3-4-5 other banks would be gone by now and as a true proponent of free markets I would have really liked it. At least we would have had a real correction, something this inflated market really needs. Instead you have those crooks walking around in D.C. who have nothing else to do than serving their constituency.

Goldman would have survived without a penny of bailout funds no question. However, Citi, BoA and couple others would be gone. So what...well...at least we can argue that the bailout saved a lot of jobs and so ACTUALLY DID SOMETHING GOOD TO SOCIETY ;-)

Quote from Martinghoul:

Ha-ha, now you be talking completely loco, man...

Firstly, your sweeping statements about the respect practitioners have for academics and their work are plain wrong. Secondly, the fact you haven't seen it doesn't mean it ain't there. Finally, even if it were true that the all-knowing, all-seeing and infallible Practitioner-Gods of Wall Street (of which, btw, I am part) don't value academic work, these people are sometimes WRONG, shocking as this may seem to you! So I am sure you'll forgive me for putting a wee bit more weight on the fact that Krugman has received the ultimate accolade an academic can aspire to.

But that's exactly the point. Surely you do realize that the IBs have f*cked up that very basic job of distributing risk that they were paid to do. But even that is not the problem. The problem is that after screwing up, they managed to walk away virtually unscathed, free to screw up again in the future.

Those are not the only choices. As I mentioned before, I will contribute to to the force of public opinion, in hopes that the collective weight behind it is powerful enough to change the poorly designed incentive structure of the system.

 

[asiaprop]

please name me one firm or a single analyst who publicly admitted he/she did not know that most of those products did not merit AAA? On the same token, name me one analyst or portfolio manager who buys stocks because most sell-side houses have a buy rating on them. Or do you go to dine in every dirty joint in Brooklyn just because it says "best burger in the world", "best steaks at the East Coast".....

Suddenly those who could not get their mouth full enough out of pure greed and got burned in turn are those who did not know. You are the one who is naive if you really think so.

Quote from piezoe:

Many of Goldman's reprehensible activities were clearly not illegal but merely unethical. Based, however, on the payments to plaintiffs made by Goldman Sachs so far, it is safe to say that Goldman has also broken laws. Apparently it is illegal to misrepresent a product you are selling, such as promoting a triple A-rated CDO that you, in fact, knew should not have a triple A rating, because you knew all along that the underlying mortgage bonds where of questionable value and you therefore sought to influence, i.e., bribe, rating agencies by hiring them as consultants to tell you how to package the CDO in order to qualify for a triple A, and because you shorted the same CDO's that you promoted as sound investments. Expect more suits to follow.

 

[fhl]

Quote from asiaprop:

everyone who invested in structured mortgage derivatives was supposed to be a "professional" buy-side investor. You certainly had no access to this market nor anyone on the street. All professionals are supposed to know how the rating agency business works. What are you screaming about? That 80% of investment banks had a strong buy rating on Amazon right before the internet bubble burst and you got in right at the highest point? That means the whole system is crap? Sorry, but I dont buy into such flawed logic.

Let's not forget after all that it was the politicians and home buyers who were not supposed to own a home who brought this mess about. Investment banks only sized their opportunities which is perfectly fair in a free market economy.

Pragmaticideals says that the rating agencies were frauds, the commercial banks who made the loans were frauds, and the federal reserve is a fraud with their low interest rates.

His conclusion: GS has no right to sell securities or short stock because all of these other entities are frauds.

If GS can't market securities or trade for their own account, just what are they supposed to do? Well, it doesn't take long to figure out that pragamticideals thinks that GS 'rightful function' is to be the regulator on the street that reigns everyone else in.

It's sort of a follow the money thing. Or as lawyers say, go after the deep pockets. If someone made money, get it from him. It's what put Obama in office.