De tactieken van Goldman Sachs

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Meanwhile, Goldman is still depending on $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation. Which means you and I are still indirectly funding Goldman's high-risk operations.

Goldman is skillful at playing the market. Now that most of its major competitors are out of the action or still under the strict control of the Treasury and the Fed, it has the market mostly to itself. Expect the others to jump back in to high-risk deals as soon as they can. But Goldman is also skillful at playing politics -- something its rivals aren't nearly as good at. Recall that last fall, at a closed meeting between Treasury Secretary Hank Paulson (formerly Goldman's CEO), Tim Geithner (then at the New York Fed), and a handful of others to decide on the fate of giant insurer AIG, Goldman's cheif executive, Lloyd Blankfein, was at the table. The decision to bail out AIG resulted in a $13 billion giveaway to Goldman because Goldman was an AIG counterparty. Indeed, Goldman executives and alumni have played crucial roles in guiding the Wall Street bailout from the start.

So the fact that Goldman has reverted to its old ways in the market suggests it has every reason to believe it can revert to its old ways in politics, should its market strategies backfire once again -- leaving the rest of us once again to pick up the pieces.

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Op woensdag 15 juli 2009 11:58 schreef Perrin het volgende:
What Is Goldman Sachs?

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Okay, This Time Matt Taibbi Nails Goldman And The Bailout

Goldman will surely deny that its risk-taking is subsidized by the taxpayer -- but then so did Fannie Mae and Freddie Mac, right up to the bitter end. An implicit government guarantee is only free until it's not, and when the bill comes due it tends to be huge. So for the moment, Goldman Sachs -- or should we say Goldie Mac? -- enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong.”

“So what’s wrong with Goldman posting $3.44 billion in second-quarter profits, what’s wrong with the company so far earmarking $11.4 billion in compensation for its employees? What’s wrong is that this is not free-market earnings but an almost pure state subsidy.”

Pop quiz: which one of the above quotes comes from Rolling Stone’s Matt Taibbi and which comes from the editorial page at the Wall Street Journal.

We’ll get to the answer in a bit. What fascinating is that it’s so hard to tell which is the long-standing voice of capitalism and which is the writer for the one time icon of the counter-culture. To put it differently: what could have brought us to the point where both are aiming their scornful analysis at the most successful firm on Wall Street?

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Shattering the Right vs. Left Prism Once Again: The Wall Street Journal Goes After Goldman and the Bank Bailout
Yesterday's opinion section of the Wall Street Journal offered convincing proof that those who want a progressive financial policy and those who simply want to save capitalism are in agreement about the madness of the administration's Wall Street policies.

There, on the editorial page of the capitalist Bible, was a piece taking repeated shots at Wall Street darling Goldman Sachs. And, over on the opposite page, a two-fisted op-ed by former hedge-fund manager Andy Kessler in which he labels the government bailout of Wall Street "a dumb move" and "a bust."

I'm planning to shrink down today's Journal, laminate it, and hand it out anytime someone in the media starts analyzing the economy using the cobweb-covered, tried-and-untrue right vs. left framing.

You know that this way of looking at financial policy is dead and buried when Rupert Murdoch's pride and joy is publishing takes that I could happily have written myself.

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Paul Krugman: The Joy of Sachs
The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

Third, it shows that by rescuing the financial system without reforming it, Washington has ... made another crisis more likely.

Let’s start by talking about how Goldman makes money.

Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers. And Wall Streeters have every incentive to keep playing that kind of game.

The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. ... You have every reason, then, to steer investors into taking risks they don’t understand.

And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong. ... Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong.

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Goldman is self-interested, which means they don't share all their ideas, and they don't hire everyone capable who wants a job there, but that's inevitable and you can't let that color your views. The latest hatchet job in Rolling Stone is by Matt Tiabbi, who has a profoundly adolescent and paranoid world-view that seems clever and witty only at a distance. Those who think Goldman was the prime mover in our financial mess are simply wrong, as Goldman was as guilty as everyone who did not second-guess the assumption that aggregate housing prices do not fall in nominal terms (academics, legislators, regulators, investors, home buyers, investment bankers, rating agencies—did I forget anyone?).

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Op vrijdag 17 juli 2009 14:19 schreef macondo het volgende:

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Bron: http://falkenblog.blogspot.com/2009/07/is-goldman-evil.html

Aanrader trouwens.

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Goldman blew itself up last year. They blew up. The stock should be zero, their businesses should have been auctioned off and they should have gone the way of Bear and Lehman. They didn't, because the Feds carved out exception after exception for them, handing them free money, and backstopping their losses. This amounted to a deal which resembles the following: go ahead and keep all of your past profits and almost all of your future profits, and we'll make sure your losses are borne by everyone.

Why otherwise intelligent people aren't outraged as they churn out $1 billion in profits a month with an implicit government backstop (which their trading partners, clients, and counterparties love) boggles my mind.

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How anyone can defend GS is beyond my comprehension, and Taibbi is spot on.

Seriously, tell me what these people "make"? What do they bring to the economy? Nothing.

They have huge pools of money that they shift around and around in a financial slight of hand that bilks the world economy.

They inflate speculative bubbles all over the place in stocks, commodities, basically any market anywhere that they can leverage control over through money, government, whatever.

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Simply calling the Taibbi article a "hatchet job" doesn't make it one. Why don't you try actually refuting the points in the article? Additionally, you've only attempted (and rather half-assedly at that) to refute one, relating the housing bubble. But "academics" didn't securitize 7% of the loans that led to the crisis, did they?

It wouldn't bother me either if they were making money out of their profits. Except the didn't. If it wasn't for the direct capital infusion from .gov (and the over the weekend conversion to a bank holding company giving them access to .gov guarantees and loans) and the back door capital infusion from .gov via AIG, they were done. Bankrupt. Out on their asses like the employees at a Pontiac dealership.

So lets not pretend they make their money purely out of their smarts and are entitled to it.

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Op vrijdag 17 juli 2009 14:46 schreef Perrin het volgende:

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Heb je de reacties onderaan zijn artikel ook gelezen?

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Op vrijdag 17 juli 2009 15:13 schreef macondo het volgende:

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Anonieme reacties zijn niet van het kaliber van Falkenstein. Aluhoedjes heb je immers overal. Ook op hier trouwens, en mogen ze nog nieuws posten ook..

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Op vrijdag 17 juli 2009 15:43 schreef Perrin het volgende:

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En wat in het bijzonder vind je zo sterk aan zijn artikel? Weinig feiten en veel "GS is gewoon top!".

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Op vrijdag 17 juli 2009 15:43 schreef Perrin het volgende:

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En wat in het bijzonder vind je zo sterk aan zijn artikel? Weinig feiten en veel "GS is gewoon top!".

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Op vrijdag 17 juli 2009 15:43 schreef Perrin het volgende:

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En wat in het bijzonder vind je zo sterk aan zijn artikel? Weinig feiten en veel "GS is gewoon top!".

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Op vrijdag 17 juli 2009 16:15 schreef Drive-r het volgende:

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Voor de duidelijkheid: Goldman is ook top. In mijn ervaring de beste bank. Simpelweg een money-making-machine.

Kwestie van 'Don't blame the player, blame the game'.

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Op vrijdag 17 juli 2009 16:33 schreef macondo het volgende:
David (Drive-r) en ik (Samuel) zijn naast zelf werkzaam in de sector, natuurlijk ook van joodse afkomst. Dan ben je snel geneigd sympathie op te vatten voor Goldman Sachs natuurlijk...

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Op vrijdag 17 juli 2009 16:37 schreef Perrin het volgende:

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Want bij Goldman Sachs werken alleen mensen van joodse afkomst? En wat heeft afkomst nu te maken met of iets afkeurenswaardig is of niet? Als een kennis van je in een dronken bui iemand zonder reden helemaal dood mept, kies je zijn kant toch ook niet?

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Op vrijdag 17 juli 2009 16:37 schreef Perrin het volgende:

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Want bij Goldman Sachs werken alleen mensen van joodse afkomst? En wat heeft afkomst nu te maken met of iets afkeurenswaardig is of niet? Als een kennis van je in een dronken bui iemand zonder reden helemaal dood mept, kies je zijn kant toch ook niet?

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Op vrijdag 17 juli 2009 16:43 schreef macondo het volgende:

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Goldman Sachs is het Ajax van de bankensector, het zijn de superjoden. Dacht dat zoiets toch wel bekend was.

Google anders eens op "zionistisch complot" in combinatie met Goldman.

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Op vrijdag 17 juli 2009 16:45 schreef Drive-r het volgende:

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Je misvat zijn opmerking, het was sarcastisch omdat veel van de commentaren op Goldman vaak ook eindigen in een anti-Joodse tirade. Daarbij ben ik ook niet Joods, mocht dat helpen.

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Op vrijdag 17 juli 2009 16:25 schreef Perrin het volgende:

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Heads they win, tails I lose. Tijd om dit spel te stoppen.

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Op vrijdag 17 juli 2009 16:46 schreef Perrin het volgende:

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Nah, ik vind het gedrag van Goldman in combinatie met de VS regering al ruimschoots voldoende. En zo te zien breekt het nu ook een beetje in de mainstream door in de VS. Een kat in het nauw maakt soms rare sprongen..

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Op vrijdag 17 juli 2009 16:50 schreef Drive-r het volgende:

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Nogmaals, welk gedrag? Waarom is het alleen Goldman? Heb je ooit gekeken bij welke andere banken de beleidsbepalers in de US vroeger gewerkt hebben? Of welke advocaten kantoren, oliemaatschappijen, enz?

Waarschijnlijk niet. Maar iemand voert je een lijst Goldman namen en je schreeuwt moord en brand. Niemand klaagde toen het goed ging, terwijl het toen ook groot nieuws was toen Paulson zijn job nam. Mensen vonden het zelfs goed dat iemand met zoveel kennis die rol wilde nemen.

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