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

[rbartell]

The amazing thing is that asiaprop doesn't even realize that most of the people he is accusing of knocking capitalism are the ones that are most upset about the socialist intrusion of capitalism. (there are some that are using this as an opportunity to attack capitalism for other agendas, but they are not here on ET)

Capitalism involves reward AND risk. Most of the people here complaining about Goldman Sachs have a problem with citizens with little attachment to the problem paying to take the risk side out of the equation. Yeah, that's right, half of capitalism is about losing when you make bad bets.

Freedom is great too. I suppose if they eliminated penalties against murder and there were murders happening left and right asiaprop could say to the people complaining; "So now you're against freedom too."

Asiaprop either:
A) doesn't know what capitalism is OR
B) can't understand that the very people he is fighting against are more capitalistic than he (they want full capitalism, not just the reward side)

Quote from WaveStrider:

The system is tilted in their favor. Whether you think that is capitalism or socialism depends on your point of view.

For instance, even when "caught" doing something illegal, financial companies merely pay a fine, chalk it up to a cost of business, "admit no wrongdoing", and keep on keeping on.

 

[rbartell]

You're completely missing the point. We could sit here and go through a thousand examples. My point was to illustrate a hypothetical example of a fraudulent activity that 99.5% of people would agree is unacceptable yet still legal. The two examples you listed don't meet both criteria. It was a demonstration that your adherence to strictly what was legal and illegal makes you reason like a robot instead of a person.


I don't have a problem with the two examples you listed, but I do have a problem with corporations having their losses SOCIALIZED with tax money and obligations to China. I guess that makes me and the rest of the pissed people against capitalism by your twisted logic. Unreal.

Quote from asiaprop:

lets go with this comparison. Going a step further some could argue that charging bucks here and there for late payments or bounced checks is a form of draining a bank account the legal way. And I would probably have to shut up if it happened to me, so yes, I walk my talk.

Another fair comparison is fx bucket shops. People who trade with them and experience huge spreads during news releases, unbelievable levels of slippage, platform shut downs, and and and are to be blamed when losing money even though the broker acted within the legal framework.

This is corporate American as most Americans love it (so it seems to the rest of the world at least), it lets the small Joe participate in the big game among all the sharks, so small Joe should not scream when bitten into the ass.

 

[WaveStrider]

I watch her on Fox News sometimes.

http://www.nypost.com/seven/07192009/business/good_for_goldman__bad_for_america_180130.htm


GOOD FOR GOLDMAN, BAD FOR AMERICA

"Goldman gets the most attention for its deft handling of its own account, but a big chunk of its trading pie also involves the selling and trading of US government debt -- federal, state and local. Indeed, as one of the biggest primary dealers of US Treasuries, Goldman Sachs has a huge vested interest in the United States digging a deeper and deeper hole."

"To put it bluntly, Goldman Sachs is a play on the bankrupting of America -- the more we borrow, the more they make. "

 

[Anaconda]

Quote from asiaprop:

a) thanks for educating us ;-)
b) its a little bit trickier than just renting couple tankers but I guess you are not interested in those details as you assumed everyone else does not know about contango.
c) GS has never been bankrupt at any point in time. Stay with the facts and dont mix everything up.

a) you need the education, more than you realize

b) It's really not that complicated as long as you have the capital to get the tankers. Money talks, bullshit walks. And the details are in the contract specs, not exactly rocket science. The industry has been doing this for a while, it's a standard operation, as long as you don't get screwed and left with barrels sitting on the dock.

c) It takes a real idiot, a total GS fanboy or a wanna-be backoffice suckup (hmm, YOU?) to not realize that GS was done for if not for Henry Paulson quickly turning them into a bank holding company, throwing them 10 bil in TARP funds, having AIG payout 100 cents on the dollar in CDS agreements and having the Fed commit to GS to support them with extra liquidity. I mean really, just how much more capital could have been thrown at them? Oh, ever wonder who caused the sharp down moves in oil last fall? That was GS dumping their oil contracts because they needed cash ASAP.

 

[Martinghoul]

Quote from 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.

Dude, I do not know what which part of the sell side you're involved with. Obviously, there are areas where finance research is not relevant, but everyone in the world of macro trading/investing (esp rates and fixed income) listens to economists like Krugman. This relationship is not a one-way street, either. Look up the academic papers published by Jan Hatzius, Goldie's Chief US Economist, and you'll see what I mean.

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 ;-)

Here I actually agree with you. It IS, in fact, the fault of the government that they didn't make Goldman pay the right price for the various types of assistance that the bank received. That is exactly the failure of the system that Krugman and other economists talk about. My favorite pieces on the subject are by Simon Johnson (http://www.theatlantic.com/doc/200905/imf-advice) and Andrew Haldane (http://www.bankofengland.co.uk/publications/speeches/2009/speech397.pdf). You will note that none of these economists blame the banks, who acted exactly as expected given the constraints placed on them.

The point is that the system has to change to prevent institutions like Goldies from abusing it lawfully, because the long-term costs of these abuses are far greater than any benefits financial innovation creates.

 

[ivanbaj]

Quote from Martinghoul:

Dude, I do not know what which part of the sell side you're involved with. Obviously, there are areas where finance research is not relevant, but everyone in the world of macro trading/investing (esp rates and fixed income) listens to economists like Krugman. This relationship is not a one-way street, either. Look up the academic papers published by Jan Hatzius, Goldie's Chief US Economist, and you'll see what I mean.

Here I actually agree with you. It IS, in fact, the fault of the government that they didn't make Goldman pay the right price for the various types of assistance that the bank received. That is exactly the failure of the system that Krugman and other economists talk about. My favorite pieces on the subject are by Simon Johnson (http://www.theatlantic.com/doc/200905/imf-advice) and Andrew Haldane (http://www.bankofengland.co.uk/publications/speeches/2009/speech397.pdf). You will note that none of these economists blame the banks, who acted exactly as expected given the constraints placed on them.

The point is that the system has to change to prevent institutions like Goldies from abusing it lawfully, because the long-term costs of these abuses are far greater than any benefits financial innovation creates.

You are what you read.

 

[asiaprop]

...correct...in the same way every other corporate acts. Do you think P&G, Pfizer, GE, Microsoft act any differently? If you dislike that as a corporate you can "pay" yourself out of wrongdoing then, AGAIN, take it up with the legal system in the U.S., not GS.

Quote from WaveStrider:

The system is tilted in their favor. Whether you think that is capitalism or socialism depends on your point of view.

For instance, even when "caught" doing something illegal, financial companies merely pay a fine, chalk it up to a cost of business, "admit no wrongdoing", and keep on keeping on.

 

[asiaprop]

did I not repeatedly quote that I wished banks were NOT bailed out? I am also in favor of companies accepting the full consequences of taking risk. Sure, financials screamed for help but it was the legislative and executive that sold out the tax payer. As a business owner would you not exhaust every possibility in order to survive? If someone is stupid enough to give you money you dont deserve would you reject it and rather close shop or would you take it?

My point was that GS has manged their risk way better than almost any other financial firm and they have already repaid the money they received in direct bailout funds (I dont think any of us is in the position to argue back and forth what else GS owes to the world). If you want to take up your grievances with anyone take it up first with a) politicians, b) regulators, c) mortgage subprime borrowers, d) mortgage lenders, e) any other financial firm, f) GS, in this order.

Quote from rbartell:

The amazing thing is that asiaprop doesn't even realize that most of the people he is accusing of knocking capitalism are the ones that are most upset about the socialist intrusion of capitalism. (there are some that are using this as an opportunity to attack capitalism for other agendas, but they are not here on ET)

Capitalism involves reward AND risk. Most of the people here complaining about Goldman Sachs have a problem with citizens with little attachment to the problem paying to take the risk side out of the equation. Yeah, that's right, half of capitalism is about losing when you make bad bets.

Freedom is great too. I suppose if they eliminated penalties against murder and there were murders happening left and right asiaprop could say to the people complaining; "So now you're against freedom too."

Asiaprop either:
A) doesn't know what capitalism is OR
B) can't understand that the very people he is fighting against are more capitalistic than he (they want full capitalism, not just the reward side)

 

[asiaprop]

again, complain to the people in charge!!! Write a letter to your representative because they voted in the majority for this bailout. I dont remember having seen any GS reps when the vote was casted. Have you?

Quote from rbartell:

You're completely missing the point. We could sit here and go through a thousand examples. My point was to illustrate a hypothetical example of a fraudulent activity that 99.5% of people would agree is unacceptable yet still legal. The two examples you listed don't meet both criteria. It was a demonstration that your adherence to strictly what was legal and illegal makes you reason like a robot instead of a person.


I don't have a problem with the two examples you listed, but I do have a problem with corporations having their losses SOCIALIZED with tax money and obligations to China. I guess that makes me and the rest of the pissed people against capitalism by your twisted logic. Unreal.

 

[asiaprop]

ok, and where is the connection between GS being a primary dealer and GS's "vested interest in the United States digging a deeper and deeper hole"? I seem to miss your logic here.

Quote from WaveStrider:

I watch her on Fox News sometimes.

http://www.nypost.com/seven/07192009/business/good_for_goldman__bad_for_america_180130.htm


GOOD FOR GOLDMAN, BAD FOR AMERICA

"Goldman gets the most attention for its deft handling of its own account, but a big chunk of its trading pie also involves the selling and trading of US government debt -- federal, state and local. Indeed, as one of the biggest primary dealers of US Treasuries, Goldman Sachs has a huge vested interest in the United States digging a deeper and deeper hole."

"To put it bluntly, Goldman Sachs is a play on the bankrupting of America -- the more we borrow, the more they make. "