Now Lemme Tell You A Story, The Devil He Has a Plan

At least someone has found some clean water in the fetid swamp of American capitalism:

Most of Wall Street, and America, is still waiting for an economic recovery. Then there is Goldman Sachs.

Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday.

Analysts predict the bank earned a profit of more than $2 billion in the March-June period, because of its trading prowess across world markets. If they are right, the bank’s rivals will once again be left to wonder exactly how Goldman, long the envy of Wall Street, could have rebounded so drastically only months after the nation’s financial industry was shaken to its foundations.

What’s that? Who’s Driving?

*** Update ***

It goes without saying that everything in this NY Times piece is “technically true, but collectively nonsense.” Also.

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96 replies
  1. 1
    MBSS says:

    the invisble hand does it again.

    all praise the invisible hand. it’s the magick of capitalism. i’ll be reading some Rand and von Mises if you need me.

  2. 2
    Anne Laurie says:

    “If they are right, the bank’s rivals will once again be left to wonder exactly how Goldman, long the envy of Wall Street, could have rebounded so drastically only months after the nation’s financial industry was shaken to its foundations.”

    Not if the bank’s rivals have been keeping up with their reading! Now if the Times had phrased it “the bank’s rivals will once again be left to wonder exactly how Goldman got away with it, well… yeah, it wouldn’t be the Grey Lady, would it?

  3. 3
    dr. luba says:

    They’re making profits? So when do we get our money back?

  4. 4
    Dennis-SGMM says:

    Some people wondered about Bernie Madoff’s blowout profits as well.

  5. 5
    asiangrrlMN says:

    Hey! Looks like the free market works!

    /snark

  6. 6
    cbear says:

    It’s kinda like being part of a Nigerian email scam–without the email.
    Good times.

  7. 7
    General Winfield Stuck says:

    The big shark always eats the little ones when the tide rolls out.

  8. 8
    Redhand says:

    What’s the surprise, when you have every game in town rigged ten ways from Sunday?

  9. 9
    John Cole says:

    @cbear: There is a a prison rape analogy rape to be made.

  10. 10
    General Winfield Stuck says:

    Pretty soon Goldman Sachs will be rich enough to bail out the government and make Sarah Palin Presidente For Life. Beatches.

  11. 11
    Dennis-SGMM says:

    @General Winfield Stuck:
    It would be very instructive to learn how many members of our esteemed Congress have/had money invested through GS. That’s not to impugn them: we have the best Congress that money can buy.

  12. 12
    Comrade Kevin says:

    The Fox News disease has trickled down to the local affiliate here in the Bay Area. I just saw a report there about the Sotomayor hearings, and the reporter said that Sotomayor though that a “wise Latina” “would make a better ruling” than a “white” person. That organization is a fucking disease.

  13. 13
    cbear says:

    @John Cole:

    I’m sure there is, but even an asshole like me struggles with the sheer enormity of it sometimes and just can’t find it in me to employ my usual scatologically sophomoric humor to the situation.

    How bout this:

    I blame it on all those doped-up black and brown people robbing 7-Elevens, making babies, and buying houses with subprime loans.

  14. 14
    williamc says:

    @John Cole

    I too thought of prison rape when I heard about Goldman’s profits. Maybe something along the line of, “I already gave you all of my cigs, why are you still ass-raping me, bro?

    …oh and ACORN!

  15. 15
    jcricket says:

    If someone else assumes all your losses, back-stops any risk you take on and takes out a few major competitors, fuck yeah, you’ll make a profit.

    The profits were fake when they made them in 2006-2008, and they’re fake now. It’s either because the government has taken on all the risk, accounting shenanigans or they’re up to their old tricks (taking on ever greater risks by packaging shit on shit and calling it an SIV).

    We suck (we=America/Democrats/anyone who gives a damn)

  16. 16
    Comrade Kevin says:

    @williamc: The country is the prison, and we are the (other) inmates?

  17. 17
    Josh says:

    Hey, that’s my septuagenarian mother’s favorite Talking Heads song!

  18. 18
    burnspbesq says:

    No doubt the ayatollah Taibbi will renew and expand his fatwa against all people and things Goldman. Lloyd Blankfein = Salman Rushdie. And Taibbi’s case against Blankfein isn’t any better than Khomeini’s case against Rushdie. If he has proof of any of his allegations, why hasn’t he published it?

  19. 19
    Dennis-SGMM says:

    As much as I appreciate finesse, this might be the time for Lyndon Johnson tactics. As in “You vote for a fucking comprehensive health care bill or your precious Dick Cheney will be sharing a cell with Bush.”

  20. 20
    Shaolin says:

    One of my favorite tracks from one of my favorite albums.

  21. 21
    Ash Can says:

    @Dennis-SGMM: I’m not convinced that the proposition of keeping Cheney out of the slammer would give the admin any leverage over the congressional Republicans, because I doubt that any of them actually care about Cheney. What they care about instead is scoring political points for themselves. They’d vote against a cure for cancer as long as they could turn around and wail about how it would have meant the end of life as we know it and that they voted against it to save the entire world from yet another evil Democratic plot.

    Now, threatening them with jail time, on the other hand…

  22. 22
    JGabriel says:

    John Cole: Love the musical allusion.

    .

  23. 23
    OmerosPeanut says:

    @Dennis-SGMM: “…we have the best Congress that money can buy.”

    Damn. Money doesn’t buy shit these days.

  24. 24

    Couldn’t have anything to do with this. Unpossible.

  25. 25
    Augustine says:

    touch monkeys… gonna swallow you whole

  26. 26
    PeakVT says:

    Then there is Goldman Sachs.

    The king of the Gypsies grifters.

    Those f***ers get much better value for their money than the DFH’s do. Bastards.

  27. 27
    A Mom Anon says:

    They’re daring someone to stop them. No one is,so what the hell? Why not just keep stealing and cheating?
    This shit won’t stop until the people responsible are physically removed from the ability to steal. Period.

  28. 28
    Fulcanelli says:

    @burnspbesq: Spend some time over at Zero Hedge if you want the nuts and bolts. Pretty dense stuff, and you’ve gotta speak the lingo which is way beyond my pay grade.

    Props to Matt Taibbi for figuring it out enough to be able to translate it into English for us plebes. And they haven’t denied it, as Taibbi accurately notes. And he didn’t even dig anywhere near as deep as these guys do, and they know where to look.

  29. 29
    Brian J says:

    I wonder if this is a situation similar to the one where Citigroup posted an operating profit a few months ago. For non-financial types like myself, this seemed like a good thing, which I guess it was, but in the end, it wasn’t really a big deal. As someone who is versed in these matters pointed out, Vikram Pandit could have been selling lemonade in the parking lot as the building blew up and Citigroup would have posted a profit.

    Regardless, is this really a bad thing? I mean, I want some of these guys to fall down a flight of stairs as much as the next person, but if they are making money off of good opportunities as opposed to financial nonsense based on a housing bubble, isn’t this good for the system as a whole? Again, it’s easy to hate these people, but the last thing we need is more bad news for another financial firm.

  30. 30
    John Cole says:

    No doubt the ayatollah Taibbi will renew and expand his fatwa against all people and things Goldman. Lloyd Blankfein = Salman Rushdie. And Taibbi’s case against Blankfein isn’t any better than Khomeini’s case against Rushdie. If he has proof of any of his allegations, why hasn’t he published it?

    I think it is insulting when you are dumber than I am, because I voted for Bush. Let me break this down for you.

    Every single penny of Goldman profit is American taxpayer money, siphoned through AIG, who it was determined, was too big to fail. If we had let AIG fail, Goldman would be dead six ways over.

    Quit acting like these people are innocent geniuses. It’s fucking infuriating, and just makes you look like an eager mark.

  31. 31
    jon says:

    1990: The fall of the Soviet Union was inevitable because its economy was too centralized, too unresponsive to the needs and desires of its people, and in the hands of elites.

    2008-2009: We must save Wall Street!

    I’m proud to be an American, where irony would require some sort of critical thinking skills.

  32. 32
    IndieTarheel says:

    So this is what the other side of the rabbit hole looks like, huh?

    I second the idea of IDing which Congresscritters are in bed with this bunch. Also, the NASCAR patch idea has merit.

  33. 33
    Brick Oven Bill says:

    Robert Rubin: 26 years at Goldman Sachs. Clinton Treasury Secretary.
    Henry Paulson: 32 years at Goldman Sachs. Bush Treasury Secretary.

    Geithner and Summers are Rubin proteges. Geithner regulated Goldman as the head of the New York Fed. The grown-ups must have felt that Geithner was not smart enough to handle the job on his own, so he was given a Chief of Staff lobbyist from Goldman Sachs, Mark Patterson.

    Geithner made the decision to not bail Lehman out the week that McCain took the lead. Who withdrew the $500 billion from the money market causing things to crash that same week? Why are hedge funds not required to disclose their short positions?

    Here is the whole gang of geniuses, none of whom were knew that the Collateralized Debt Obligations were toxic, although they were the ones who packaged and sold them.

    These people need to be broken up. Go Matt Taibbi.

  34. 34
    burnspbesq says:

    @John Cole:

    1 of 2:

    Every single penny of Goldman profit is American taxpayer money, siphoned through AIG, who it was determined, was too big to fail. If we had let AIG fail, Goldman would be dead six ways over.

    Just not true. Read Goldman’s K.

  35. 35
    burnspbesq says:

    @John Cole:

    2 of 2:

    Quit acting like these people are innocent geniuses. It’s fucking infuriating, and just makes you look like an eager mark.

    If I knew who “Tyler” is and what his agenda is, I might be less skeptical.

    Look, Goldman (like all corporations) exists for one reason, and one reason only: to make money for its shareholders. The people who run Goldman are very, very good at it. Hating Goldman for being good at what they do is exactly like hating an army that is efficient at killing people and breaking stuff. Your beef, if you have a legitimate beef, is elsewhere.

    With that, I am out of this conversation. I’ve said everything I have to say. Let’s just agree to disagree.

  36. 36

    Lloyd Blankfein = Salman Rushdie. And Taibbi’s case against Blankfein isn’t any better than Khomeini’s case against Rushdie.

    Corrupt high-finance operators are the Hungarian Jews of Liberal Fascism.

  37. 37

    Hating Goldman for being good at what they do is exactly like hating an army that is efficient at killing people and breaking stuff.

    So what you’re saying is that there can be no such thing as a war crime if it advances the military goal, and there can be no such thing as a white-collar crime if it turn a profit.

  38. 38
    Brick Oven Bill says:

    Paulson was CEO of Goldman when the CDOs were packaged and sold. Goldman did the lion’s share of packaging these instruments. By the time they went bust in 2007, Paulson had installed himself as Bush’s Treasury Secretary, and Goldman was not holding significant amounts of the CDOs.

    There was surely fraudulent representations when these CDOs were sold. So why have the banks not sued Goldman over these fraudulent representations that cost them so much money? Perhaps because the US taxpayer was compelled to cover the losses? A backroom deal?

    Not only for American bankers, but for bankers world-wide. Bumbling Hank just wrote the checks. Goldman took the profit on the sales, and we covered the bill. The entire finance system should be ripped down and simplified.

    Peter Orszag should be arrested for the statement he made to Congress that the taxpayer could assume all of Fannie-Freddie’s risk for probably no money. Then he should be offered a plea deal in exchange for spilling the beans on these crooks. Orszag looks like one who would squeal.

  39. 39
    John Cole says:

    @burnspbesq: Goldman Sachs received at least 13 billion in AIG payouts. If we had not propped up AIG to the tune of hundreds of billions, Goldman would no longer exist.

  40. 40
    br says:

    @burnspbesq: What the hell is “Goldman’s K?” I’d like to read it.

  41. 41

    @burnspbesq:

    If I knew who “Tyler” is and what his agenda is, I might be less skeptical.

    OK I’ll spill the beans: he’s really Brad Pitt and he’s doing some prep for a new movie about anonymous bloggers taking on The Man. Unfortunately, George Clooney is not available to play the part of John Cole, but no worries, word on the street is that they signed Nathan Lane late last night.

  42. 42
    burnspbesq says:

    @joe from Lowell:

    No, that’s actually the polar opposite of what I was trying to say.

    If the army carries out its mission in accordance with the laws of war, but you don’t like the mission, take it up with the civilians who gave them the mission.

    If you don’t like the way Goldman makes its money, but it does it without violating any applicable laws, then your beef is with Congress and/or the regulators.

  43. 43
    Alan says:

    Yeah, here was Tyler Durden’s solution: http://www.youtube.com/watch?v=kUNSTAf2Vho

    heh

  44. 44
    disappointedGOPer says:

    The AIG money just fell into Goldman Sachs’ lap!

    They had no idea!

    Honest!

  45. 45
    Morbo says:

    @John Cole: Tsk, tsk, you left him an opening with the use of a superlative.

  46. 46

    @br: Reference to a required SEC report called a 10-K that’s filed annually. In this case you want to look at the 10-Q (quarterly SEC filing) because that is the real tell tale that shows the profits of GS are basically what the government gave them to cover all the fucking mess.

    BTW rumor on the Street is that GS now wants to revert back to being an investment bank to get out of the Feds klieg lights and back into the shadows. Anyone else read anything about it?

  47. 47
    burnspbesq says:

    @br:

    What the hell is “Goldman’s K?” I’d like to read it.

    Securities and Exchange Commission Form 10-K, the annual disclosure statement required of all public companies. None of these are exactly models of transparency (they are written by lawyers whose primary objective is to keep their clients out of jail), but it will contain some useful information about how Goldman makes its money. And it’s signed under penalty of perjury by the CEO and CFO. Whether that gives you a comfort level that anything in it is true is up to you, but having spent the last 27 years of my life periodically asking people to sign things under penalty of perjury, I have some visibility into the thought processes that go into that action, and it gives me a certain amount of comfort (not complete comfort – there are people who are perfectly OK with perjury).

  48. 48
    Brian J says:

    Peter Orszag should be arrested for the statement he made to Congress that the taxpayer could assume all of Fannie-Freddie’s risk for probably no money. Then he should be offered a plea deal in exchange for spilling the beans on these crooks. Orszag looks like one who would squeal.

    Really, when did Orszag say that? My guess is, you’re twisting his comments that it wouldn’t cost as much as the $700 billion price tag suggests.

  49. 49
    br says:

    @The Grand Panjandrum: Thanks. I wasn’t down with the lingo.

    Also too, thanks to burnspbesq for the reply.

  50. 50
    burnspbesq says:

    If you really want to constrain Goldman’s behavior, there is a really easy way to do it: force the firm to go back to being a general partnership. Nothing focuses a person’s mind on risk management and appropriate controls like having their entire net worth on the line every time the firm takes a position.

  51. 51
    Ash Can says:

    I’m looking for a little clarification here: The NYT article says that GS “recently paid back its government bailout money.” Am I correct in assuming that this was the amount the gov shelled out to keep GS itself afloat, and does not include any of the amount of the bailout of AIG?

  52. 52
    williamc says:

    @Comrade Kevin

    The country is the prison, and we are the (other) inmates?

    …kinda, I was thinking the country is the prison, taxpayers are all the prisoners, and Goldman is the prison “bitch-maker”.

    errr, obviously FAIL on my part, as “if you have to explain it, it’s not funny”…

  53. 53
    John Cole says:

    @Ash Can: Correct. Goldman paid back the TARP funds it received, which is completely different from the 13 billion it got from AIG, completely different from the debt guarantees it received from the Fed through TLGP, etc.

    Pretending that Goldman is anything other than taxpayer subsidized industry is a joke.

  54. 54
    gex says:

    @burnspbesq: Absolutely. All you need to do is to write bigger checks to Geither, Paulson, Summers, Congress in general, etc. than GS did and you too can have a say in our economic policy.

  55. 55
    Brick Oven Bill says:

    Brian J;

    Orszag not only said this, he put it in writing. The true price tag will likely be $2-3 trillion.

    They put black kids in jail for stealing sneakers.

  56. 56
    burnspbesq says:

    @ no one in particular:

    Perhaps I’m misremembering, but wasn’t the infamous $13 billion that went from AIG to Goldman collateral that Goldman was contractually entitled to demand from AIG under the terms of CDS agreements when AIG started to look like a risky counter-party? And weren’t those CDS agreements negotiated long before there was a widespread understanding that the mortgage-backed securities that were being “insured” by those CDS’s had much more default risk than previously believed?

    If the answer to both of those questions is “yes,” how does that support the argument that Goldman is somehow profiteering at taxpayer expense?

    Or, alternatively, if you’re arguing that Goldman should have waived its collateral rights under the CDS agreements, what is the basis for that argument? And is the argument primarily legal, ethical, moral, or political, or some combination thereof?

    Or are you arguing that the collateral provisions in the CDS agreements are, as a matter of law, void because they contravene some public policy? If so, what policy?

  57. 57
    Olly McPherson says:

    So was the the government obligated to provide those funds to AIG? No. And that’s the point in the daisy chain where I start feeling screwed by Goldman’s profits.

    When their Rude-Golberg profit machine burst a massive hole, Congress stuffed it with taxpayer money. And Goldman made obscene profits because of their influence–honestly obscene, given how many regular people have had to suffer.

    I suppose you’re right that the whole system is so badly fucked that it’s hard to know where to focus any outrage. But Goldman’s massive profits will do nicely for me to start.

  58. 58
    Janus Daniels says:

    burnspbesq wrote, “If you don’t like the way Goldman makes its money, but it does it without violating any applicable laws, then your beef is with Congress and/or the regulators.”
    Goldman Sachs is the regulators; regulation don’t matter because they write and enforce regulation (as and if they like). Now do you get the point?
    “… force the firm to go back to being a general partnership…”
    Which would do no good since, again, as previously and repeatedly written, Goldman Sachs and the regulators are the same people.
    Have we made this clear yet?
    as John Cole wrote, “Quit acting like these people are innocent geniuses. It’s fucking infuriating…”
    Oh!
    Now I see.
    Carry on; good trolling.

  59. 59
    Perry Como says:

    Perhaps I’m misremembering, but wasn’t the infamous $13 billion that went from AIG to Goldman collateral that Goldman was contractually entitled to demand from AIG under the terms of CDS agreements when AIG started to look like a risky counter-party?

    From AIG? Sure. From the US tax payer? Not so much.

    If the answer to both of those questions is “yes,” how does that support the argument that Goldman is somehow profiteering at taxpayer expense?

    Because the US taxpayer is where AIG got the $13 billion to give to Goldman.

    Or, alternatively, if you’re arguing that Goldman should have waived its collateral rights under the CDS agreements, what is the basis for that argument?

    They should have at least taken a haircut on them.

    And is the argument primarily legal, ethical, moral, or political, or some combination thereof?

    Possibly, yes, yes, maybe(?), yes.

    Or are you arguing that the collateral provisions in the CDS agreements are, as a matter of law, void because they contravene some public policy?

    CDSs are basically unregulated insurance. I’ve heard people make the case that some CDSs could be considered fraud.

    But I think the issue that is really pissing people off is the GS was at ground zero of the financial explosion. Their employees litter the government, including the head of the Treasury at the time two of GS’s biggest competitors were allowed to fail. The guy appointed to dole out TARP funds was a GS alum. Now GS is posting record profits in the middle of the worst economic circumstances since the Great Depression.

    Of course this is solely due to the brilliance of the people at Goldman Sachs, not because the government has allowed their competitors to fail and back stopped them at every turn. GS was so brilliant they spearheaded the lifting of capital requirements, allowing leverage in high finance get up to 32-1. I can go through the other list of all the shit GS was so brilliant at, but it’s been covered elsewhere.

    If GS does post record profits, there are going to be a lot of pissed off people, inside the industry and out. It’s obvious that Goldman has the implicit backing of the Federal government, something that gives it an unfair advantage.

  60. 60
    John Cole says:

    @burnspbesq: What part of “AIG PAID GOLDMAN WITH OUR MONEY” is eluding you?

    Seriously, this is not rocket surgery. If we had not propped up AIG with 180 billion or whatever it is, Goldman would have ceased to exist.

  61. 61
    Dennis-SGMM says:

    @Perry Como:

    CDSs are basically unregulated insurance. I’ve heard people make the case that some CDSs could be considered fraud.

    My understanding of these matters is so limited that I didn’t know until I read an article the other day that anyone could buy a CDS at the same terms as the original parties to the transaction. That finally made clear to me the comparison to absolute strangers being able to buy life insurance on your life. Now we’re paying off all of these play money transactions with real borrowed dollars. Have any of our Congress critters stopped hoovering up money from these firms long enough to bring CDSs under regulation?

  62. 62
    MBSS says:

    we gotta get burnspbesq and megan mcardle together. their child would be the savior and redeemer of our broken system. speaking on behalf of those who have no voice: large corporations, corporations colluding with the gov’t, and the establishment in general. and the child’s name shall be Ayn.

  63. 63
    Perry Como says:

    That finally made clear to me the comparison to absolute strangers being able to buy life insurance on your life. Now we’re paying off all of these play money transactions with real borrowed dollars.

    It gets better than that. In some cases, if the person that wrote the CDS left the company, that could be considered a default event and the company would be on the hook for paying the money.

    Have any of our Congress critters stopped hoovering up money from these firms long enough to bring CDSs under regulation?

    Hahahahaha. Good one. Regulating CDSs would be socialism you silly libtard.

  64. 64
    b-psycho says:

    Large corporations making money solely through the rampant corruption of the political system: proof that free markets don’t work?

    Actually, no. But it is proof that a capitalist system doesn’t. Hopefully more people come to realize there’s a difference.

  65. 65
    Dennis-SGMM says:

    @b-psycho:

    Actually, no. But it is proof that a capitalist system doesn’t. Hopefully more people come to realize there’s a difference.

    Please correct me if I’m wrong: under capitalism aren’t companies and institutions that do stupid things or make bad bets supposed to go under thus allowing the better companies and institutions to thrive? That doesn’t seem to obtain any more if the outfit that fucks up is over a certain size.

  66. 66
    MBSS says:

    of course there is a difference b-psycho. although our particular corporate oligarchy works great with free markets. and free markets encourage collusion and especially with the government. in fact it seems to be a regular pattern:

    1. free markets
    2. corporate buy government
    3. government regulates to markets liking (or they are one in the same like GS)
    4. ??
    5. profit

    but in theory there is no connection between the two, just in practice.

    my real motivation is just to take potshots at libertarians though.

    PS (you can switch 1 and 2 around and it still works)

  67. 67
    Ash Can says:

    I just want to point out here that BURNSPBESQ IS NOT TROLLING. On the contrary, his (her?) posts are among the few in this thread that aren’t based on a purely ideological and/or emotional response to GS and its latest report. Mind you, I’m not finding fault with that kind of response. This is, after all, at least as much a venting thread as an informational thread, and I realize that’s an understatement. But Burns is raising legitimate questions. Why, after all, should an industry participant have a less valid viewpoint than non-participants? To refute his points is one thing (hats off, e.g., to Perry Como @ #59, who did a bang-up job), but to call him a troll is patently ridiculous. If anything, I should think the curious types here would consider him a source of information and pick his brain on this subject.

  68. 68
    MBSS says:

    burnspbesq is making the argument that our beef is not with GS, but with the regulators. the problem is that GS are the regulators. they are one in the same. its disingenuous to say that GS is just doing what they do, making money, and if its legal, barely legal, or plainly illegal, then we need to take our case to the rule makers and not to those who make money within the rules like GS. but the problem is that GS is the government. and what they are doing is illegal and even if they are only skirting the barely legal area, then what they are doing is still morally, philosophically, and ethically wrong.

    corporate and government collusion is destroying our country and yes, it has nothing to do with truly free markets.

    GS is simply the prime example of that.

  69. 69
  70. 70
    Alan says:

    I wouldn’t be surprised if GS went to AIG and sold them on the neat idea of CDS. And to sweeten the proposal bought $13 billion worth. Just like they orchestrated the mexican peso crisis of the early 90s they then orchestrated its bailout. It’s a wonderful world GS lives in.

  71. 71
    burnspbesq says:

    The real problem here – a gap that I don’t know how to bridge – is one of a fundamental difference in perspective.

    Y’all hear the word “Goldman” and you see some opaque monolith, looming over the economy in much the same way that Bruce Cockburn describes the U.S. Embassy as looming over Managua.

    I hear the word “Goldman” and, because I have worked with Goldman, I see people – people I know personally, respect, and in most cases like. People that have proven themselves to be very smart and very good at what they do. It should come as no surprise that when people like Taibbi, the Zero Hedge people, and some folks here describe people that I know personally and you don’t in terms that are normally reserved for actual defendants in actual cases, I require a bit of, y’know, evidence before I pick up a torch or a pitchfork.

    Am I being unreasonable?

    Oh, and thanks to Ash Can for the kind words.

  72. 72
    John Cole says:

    @burnspbesq: Not to Godwin this thread, but what you just did is known as the “Hitler was kind to animals” defense.

    I’m glad that as individuals, some of them are nice people you like. But I’m still angry, and I just wish you would acknowledge that Goldman, without profound taxpayer largesse in the form of payments to AIG and various other efforts, would simply not exist.

  73. 73
    Dennis-SGMM says:

    @burnspbesq:
    When I was at Berkeley in the Sixties, some of the students set up a poll at Sather Gate to vote for who was the most dangerous person in the world. The winner, over Lyndon Johnson, Ho Chi Minh, Leonid Brezhnev and a host of others, was “The average guy who’s just doing his job”.

  74. 74
    Mike P says:

    Isn’t it time for a “technically true, but collectively nonsense” tag?

  75. 75
    burnspbesq says:

    @John Cole:

    Goldman had approximately $884.5 billion in shareholder’s equity as of 11/28/08. It had approximately $53.6 billion of revenue for the fiscal year ended 11/28/08.

    Surely you’re not suggesting that that’s all “taxpayer largesse.” Or that a $13 billion loss (for the record, that’s 1.47 percent of shareholder’s equity) would have bankrupted the firm.

    Are you?

    The argument that Goldman couldn’t have made that much money and grown to that size if it hadn’t somehow “captured” the regulatory process is one that is intellectually respectable; economists and political scientists have been arguing about that one since before any of us were born. And in the case of Goldman, the revolvng door does have some smell-test issues. For me, I don’t know that the case has been made. YMMV.

    If you want to argue that I am setting the burden of proof unreasonably high, that’s an argument I am provisionally willing to listen to; I do that sometimes. It comes with the law degree, I think.

    I’m just saying that before you burn down the castle, it’s useful to make sure that (a) you’ve got the right castle, (b) the bad guys are inside, and (c) there won’t be any unintended consequences coming back to bite the townspeople on the ass.

  76. 76
    Olly McPherson says:

    How much equity did Lehman Brothers have? Small percentages of loss (in relative terms, as we’re talking about $13 billion in this exact example) can have a devastating impact if they have to be delivered on short order.

    And that’s leaving aside the outrage that Goldman Sachs profited spectacularly on taxpayer money via AIG. Sure, the people who work there may be smart and talented and really swell guys, but I’m not feeling the admiration when family is out of work and 401ks have crashed thanks to a downturn spurred by their actions.

  77. 77
    b-psycho says:

    @Dennis-SGMM:

    under capitalism aren’t companies and institutions that do stupid things or make bad bets supposed to go under thus allowing the better companies and institutions to thrive?

    That hasn’t been the case in forever. In practice it actually means companies that suck live or die on the basis of a formula, involving such variables as who they know with power, when they started sucking, and just how badly they suck.

    In some corners the existence of this phenomenon is referred to as “actually-existing capitalism” or “state-capitalism”. I’d personally argue that this system is so deeply shot through with political privilege & centralization that an intellectually honest libertarianism is by definition anti-capitalist.

    @MBSS: The corporation itself is a creation of government. The only real difference between now & the colonial days is that back then the point was for the corporation to serve a political purpose, and now it’s the opposite direction.

  78. 78
    Perry Como says:

    How much equity did Lehman Brothers have? Small percentages of loss (in relative terms, as we’re talking about $13 billion in this exact example) can have a devastating impact if they have to be delivered on short order.

    Right before Lehman’s collapse they were leveraged somewhere around 30:1. Bear was around 32:1. iirc, Goldman never went above 24:1 (but I could be wrong).

    burnspbesq, I’ve known folks that worked for Lehman, Bear, Goldman, Mellon, Merrill, Citi and others that work for various private equity firms. If someone attacks Union Carbide because of Bhopal, does that mean the person is attacking every Union Carbide worker? Because that’s what it seems like you are saying.

    I can tell you, without a doubt, that there is a lot of anger at Goldman right now, and it’s not because these people hate investment banking. Goldman smells rotten and it seems that everyone other than Goldman knows it.

  79. 79
    Irony Abounds says:

    @John Cole:

    I think it is insulting when you are dumber than I am, because I voted for Bush. Let me break this down for you.

    Every single penny of Goldman profit is American taxpayer money, siphoned through AIG, who it was determined, was too big to fail. If we had let AIG fail, Goldman would be dead six ways over.

    Quit acting like these people are innocent geniuses. It’s fucking infuriating, and just makes you look like an eager mark.

    Standing Ovation!

    Gee, maybe Goldman will pay its share of the AIG money back. Ya Think?

  80. 80
    John Cole says:

    @burnspbesq: Yes, I do think it would have brought them down, because as we were told repeatedly, it would have set off a series of cascading losses. Remember all the glorious tales of how AIG could not be let to fail because of systemic risk, and harrowing stories from the entire crew?

  81. 81
    Irony Abounds says:

    burnspbesq: You might want to take a second look at those numbers. It’s approx. $64 billion in Shareholders Equity as of November 28, 2008, and much of that results from questionable assets. John’s point remains, if we, the taxpayers, had not bailed out AIG and not provided TARP funds, it is almost certain Goldman would have gone belly up. Now they act like their rectal waste doesn’t stink and are once again masters of the universe. Screw them.

    Goldman’s Balance Sheet

  82. 82
    Justin says:

    To add some more to the discussion…
    Taibbi has a post up today about Goldman’s computer software, he characterizes the events as Goldman essentially admitting in court that they have a computer program that could be used to manipulate the NYSE.

    http://trueslant.com/matttaibb...../#comments

    I suppose it can be excused though, a lot of these GS folks have spouses, children, pets and friends that love/respect them.

  83. 83
    burnspbesq says:

    @Justin:

    This is a perfect example of why I find Taibbi’s journamalism so infuriating.

    Yes, Goldman did say that the software in question “could be used” to manipulate markets. Taibbi can’t say “was used by Goldman” to manipulate markets, because he has no evidence to support that claim (yes, I am making an inference here – I am inferring that Taibbi has no evidence based on his failure to adduce any in print – I think that’s a reasonable inference). But he is inviting his readers to ignore the fact that “could be used” and “was used” are not synonyms.

    I respectfully decline that invitation. What you do with it is up to you.

  84. 84
    John Cole says:

    @burnspbesq: And you are missing the point. Goldman Sachs has, by their own admission, computer software that could be used to manipulate the market.

    But we’re just supposed to expect that these guys would never ever do that. That, of course, would be wrong.

    Do you want to play poker some time?

  85. 85
    Jimo says:

    Mr. Cole, while conceding that the AIG bailout was a disgrace, it was so as the end point of a long series of disgraces. By the time the crisis arrived, not bailing out AIG (and thus their counterparties such as Goldman) was unthinkable.

    If AIG hadn’t been bailed out then Goldman wouldn’t exist. Nor would most of the financial system on the planet with severe and quite real negative consequences for all. Goldman’s present profits no more belong to the taxpayer than the sum of all earned incomes derived from a public education belongs to the taxpayer.

    Addressing the question of Goldman is best done through regulation. We’ll know our work is done when investment banking is an incredibly boring, modestly profitable business akin to insurance underwriting. Let’s not take our eyes off the goal for the sake of a personal indulgence. [Note: the current President’s and Congress’ progress toward this goal? Just north of zero.]

  86. 86
    Perry Como says:

    Yes, Goldman did say that the software in question “could be used” to manipulate markets. Taibbi can’t say “was used by Goldman” to manipulate markets, because he has no evidence to support that claim (yes, I am making an inference here – I am inferring that Taibbi has no evidence based on his failure to adduce any in print – I think that’s a reasonable inference). But he is inviting his readers to ignore the fact that “could be used” and “was used” are not synonyms.

    Taibbi overstates the case that Goldman actually used the software to manipulate the markets. Really there’s nothing dispositive in the statement, but that a prosecutor admitted that the software could be used to manipulate markets is interesting.

    Of course we have to trust that Goldman would never use software that could manipulate markets to actually manipulate markets. But then I talk to my trader friends and they noticed the NYSE started acting more rationally right before July 4th and is much more “normal” now. I wonder what happened?

  87. 87
    Just Some Fuckhead says:

    <a href=”#comment-1298305″>John Cole:

    Do you want to play poker some time?

    Can we play with your money but I get to keep my winnings?

  88. 88
    Perry Como says:

    Can we play with your money but I get to keep my winnings?

    I can imagine a new stand up routine:

    “You might be Goldman Sachs if…”

  89. 89
    burnspbesq says:

    No, I am not asking you to assume that Goldman would never use the software in question to manipulate markets.

    I am asking you, if you believe they did, prove it.

    Not exactly the same thing.

    I prefer bridge.

  90. 90

    […] See Also: Was Adam Smith a liberal?, Justin Fox’s new book: ‘Myth of the Rational Market’, “The Hottest Places in Hell are Reserved for Those Who, in Times of Moral Crisis, Maintain a Neutrality”, How the financial crisis has killed the governance reform agenda, A Fleecing Of The Sheeple, Another Comment on Bonuses and Benchmarks, Taking Stock: Economy and Government, and Now Lemme Tell You A Story, The Devil He Has a Plan. […]

  91. 91
    Just Some Fuckhead says:

    @Perry Como: Perry Como, how would you like to insure against my possible losses for pennies on the dollar? This will give you a nice stream of revenue while you watch our game and in the incredibly unlikely – no, practically non-existent – scenario whereby I lose, which can’t happen by the way, John will cover ya.

    John, I’m all in. Now deal ’em.

  92. 92
    Perry Como says:

    @burnspbesq: I don’t have access to Goldman’s code and infrastructure setup, so I can’t prove anything. Taibbi overstates the case, but having a prosecutor admit that GS’s code could be used to manipulate the market is a bit disconcerting. We are talking about high volume trading that relies on ms (or even ns) decisions to take advantage of small moves in the market. Given GS’s enormous presence in the program trading market (which, admittedly, isn’t all automated), the statement raises a few questions.

    For outside observers — like me, that no longer have any skin in the game — it’s interesting to track the data and talk to the people that do. Goldman reeks. When GS’s automated system was shut down due to a security breach, the NYSE started to normalize and has been “rational” since then. Maybe it was the domination Goldman’s algorithms have on that exchange, but who is that serving? Is it really promoting competition and the efficient allocation of capital, or is it just gaming the system?

    @Just Some Fuckhead: No problem, as long as I get a clause that says in the event I leave the company backing the insuranceGambling Default Swap it is considered a default event and you get paid anyway. After I walk away with my bonus, natch.

  93. 93
    burnspbesq says:

    @Perry Como:

    Maybe it was the domination Goldman’s algorithms have on that exchange, but who is that serving? Is it really promoting competition and the efficient allocation of capital, or is it just gaming the system?

    Those are fair questions, and they should be looked at. The notion advanced by the guys at Zero Hedge that there is “good liquidity” and “bad liquidity” is not one that I dismiss out of hand.

    Let’s just set the pitchforks and torches aside while we figure this out.

  94. 94
    burnspbesq says:

    @Just Some Fuckhead:

    Perry Como, how would you like to insure against my possible losses for pennies on the dollar? This will give you a nice stream of revenue while you watch our game and in the incredibly unlikely – no, practically non-existent – scenario whereby I lose, which can’t happen by the way, John will cover ya.

    I’ll write that GDS for 100 basis points – but only if I get an amount of asiangirlMN’s assets equal in value to the amount you walk into the game with as collateral. And if the value of the collateral goes down, I get Tunch.

  95. 95
    Perry Como says:

    I’ll write that GDS for 100 basis points – but only if I get an amount of asiangirlMN’s assets equal in value to the amount you walk into the game with as collateral. And if the value of the collateral goes down, I get Tunch.

    Who knows? If there’s a market, there’s a sucker^W^Hn investor.

  96. 96
    Perry Como says:

    Fuck you WordPress interpreter. Fuck you.

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  1. […] See Also: Was Adam Smith a liberal?, Justin Fox’s new book: ‘Myth of the Rational Market’, “The Hottest Places in Hell are Reserved for Those Who, in Times of Moral Crisis, Maintain a Neutrality”, How the financial crisis has killed the governance reform agenda, A Fleecing Of The Sheeple, Another Comment on Bonuses and Benchmarks, Taking Stock: Economy and Government, and Now Lemme Tell You A Story, The Devil He Has a Plan. […]

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