The Corporate Ownership Society (4.00 / 1)

Goldman Sachs has made record profits in the billions with public bailout money this year, and more big bonuses  are on the way. Unemployment goes up every day. Financial corporations continue to do whatever they want to do. Congress members flop about like fish out of water, telling us that they can not even discuss health care options that would displease insurance corporations and that we need to cut Medicare and Social Security. The Democrats we elected are just as beholden to corporate lobbyists as the Republicans. Military contracting corporations get contracts for stuff the military doesn't even want.  There is nothing really new in all of this, but it is just clearer than ever who now controls the government.  

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by: DeanOR @ Mon Jul 13, 2009 at 14:37:48 PM CDT

White-Knuckled Trading or Insider Information (4.00 / 1)

Goldman-Sachs is a chosen instrument of the USGovernment. They cannot help but make money.

Weimar printed it. The Treasury Department has many more ways of creating money and distributing it to crony capitalists today.

We have a financial recovery program, not an economic recovery program.

::JRBehrman

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by: JRBehrman0 @ Mon Jul 13, 2009 at 14:56:55 PM CDT

Even Scarier News: The Real Economy Is Not Recovering (4.00 / 3)

As Robert Reich, Secretary of Labor under Clinton, explains in his article, When Will The Recovery Begin? Never, the economy cannot recover because our lawmakers in Washington, D.C. have no viable plan for reviving the purchasing power of ordinary working Americans, which is the sole avenue to reviving the economy.

The reason they have no plan is because they are only concerned with maintaining the purchasing power of wealthy families in the financial sevices sector via the $12.8 trillion bailout they have authorized.

They still subscribe to the trickle down philosophy that the only thing they have to do is throw taxpayers' money at bankers and speculative investors at the top of the financial pyramid.

Even in the face of rising unemployment approaching the 10% mark, president Obama recently declared that a second stimulus is not necessary.

As I argue in my diary this past week-end, The Emerging Progressive Majority Must Get Immediate Control of Government, as long as we are governed by a plutocracy run by influence peddling legislators who do the bidding of their corporate campaign contributors, it is unlikely there will be a sustainable recovery of the real economy.  

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by: Nancy Bordier @ Mon Jul 13, 2009 at 15:42:47 PM CDT

Does anyone know what percentage of Goldman's business (0.00 / 0)

and revenue is based on doing what an investment bank fundamentally exists to do, namely provide financial services and advice to companies in need of such (e.g. IPO's, M&A, divestment, loans, etc., asset management), and what percentage is based on trading and investing for its own account (which does serve an indirect purpose in providing needed liquidity to the economy, but which also creates financial hazards)?

I.e. what percentage of Goldman's business is actually needed by the economy, and what percentage is simply greed? So long as it's lawful, they should have the right to engage in the latter, but not on the taxpayer's dime. The bailout was specifically for the first kind of activity, and if they're not engaged in much of that, why did we even bother to loan them money?

And did the goverment make anything on these paid-back loans, in the form of interest?

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

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by: kovie @ Mon Jul 13, 2009 at 15:43:23 PM CDT

Very good questions, kovie (0.00 / 0)

I wonder if anyone, inside or outside government, has the answers?

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by: DeanOR @ Mon Jul 13, 2009 at 15:52:15 PM CDT

[ Parent ]

When they release their quartely numbers Tuesday (4.00 / 1)

perhaps this will be partly broken down. Not sure what requirements existing financial regulations place upon such firms to break down where their profits and losses come from within their various business divisions. I do know that a lot of financial firms made a killing by buying up lots of securities when they were extremely low earlier this year, and then selling them went they jumped back up in value. While they have a right to do this, it shouldn't have been done with taxpayer money, nor with any inside knowledge that they might have had given their close relationships within the previous and current administrations.

None of this, of course, helped the economy in any meaningful way (sorry, but the net economic contribution of well-paid financial services employees to the economy is simply not that significant, most of whom likely protected their assets during the past half year rather than spent them on goods and services).

Also, I'm betting that to the extent that the goverment will make any money off of these bailout loans, it will be in the form of fixed interest, even though we effectively owned a stake in these companies and as such deserve, I think, a share of the profits. We might be getting that money back, but it should have been amply padded, given how well these companies did with that money. We took on the risk, they got the rewards. That's highway robbery IMO.

Of course, they're such nice people and Obama enjoys their company and advice, so who are we to complain? Does he even realize how they've been using him, and does he even mind? Does he not realize that he's their elected puppet, and does this not bother him? My god, between their, and energy and defense contracting companies' obscene (and unearned) speculative profits over the past 10 years, we could easily pay for a health reform bill.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

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by: kovie @ Mon Jul 13, 2009 at 17:23:18 PM CDT

[ Parent ]

yep (0.00 / 0)

This is exactly why we need to re-enact Glass-Steagall.  It would prevent an institution from being both.

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by: ccarollo @ Mon Jul 13, 2009 at 18:30:10 PM CDT

[ Parent ]

First Quarter 10Q (0.00 / 0)

is here:
http://www2.goldmansachs.com/o...

Bulk of their profits were from trading and principal investments. Another Billion was from investment banking.

It's a complicated question in some ways.  You can argue the IB activity supports raising capital for companies.  But the 5 billion in trading profits is more complicated, and I think you can argue that that much of this is just betting on the markets.

Full disclosure: I worked for a competitor (Credit Suisse First Boston and competed against them, and usually lost, in the Investment Banking space).  I hate them with a passion (they are in fact the fourth branch of government) but it is a little personal with me.  

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by: fladem @ Mon Jul 13, 2009 at 19:32:35 PM CDT

[ Parent ]

I worked for this competitor too some years ago (0.00 / 0)

as an IT contractor, assigned to the IB. Specifically, its high-tech venture capital/internet division based out of Silicon Valley that Quattrone ran before his downfall, and which turned out to be a bad faith player in the market itself at the time. Years before that, I worked for another IB/trading firm, the one that Michael Lewis used to work for, and when I was there it was involved in its own scandal, when it tried to corner the Treasuries market. You've surely heard of both of these incidents. So it's not just Goldman, obviously, although they do seem to be the one firm that's emerged from a decades-long era of scandal and greed with its resources and public reputation intact. Interesting. Clearly, they have friends in high places.

In any case, I'm guessing that most of their recent profits were, as you say, from betting, which other than providing liquidity to the financial markets, is pure speculative greed, and has not helped the overall economy. They seem to be making money when the economy is up, and when it's down, each time sucking a bit more from it. Something wrong there, when a company makes huge profits without it benefitting society in any meaningful way. That's parasitical, and even an economic conservative--the honest ones, at least--would agree that this is not healthy. There's something wrong when Old Man Potter keeps getting richer while everyone else is barely getting by, or going into the poor house. Even if their earnings were honestly made, it would be morally wrong under such circumstances. But I'd argue that they're not being honestly made, because they derive from special access and power. And that has to end. To co-opt the recent saying, they're too big to succeed.

I don't know how it's to be done, and it would of course have to be mindful of the constitution and sound economic policy, and of a very corporate-friendly judicial system. But something has to be done to end its, and the financial sector's, parasitical stranglehold on the economy. It's literally killing us. We have the financial resources to solve all our societal problems and then some. They're just being unfairly, and I would argue illegally, in some cases, allocated, and that has to end, and be reversed. The status quo is untenable.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

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by: kovie @ Mon Jul 13, 2009 at 20:53:03 PM CDT

[ Parent ]

Trading Desks (0.00 / 0)

love volatility above all else, and there has been a little.  

I wasn't a trader - I was/am a deal guy.  

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by: fladem @ Mon Jul 13, 2009 at 23:23:11 PM CDT

[ Parent ]

even more suspect (4.00 / 1)

Since the story broke of a software theft, now many, including Bloomberg (yes this is making the MSM) are wondering what precisely does this "software" do.

We covered some of the details in Something Wicked This Way Comes - Goldman Sachs & Software.

So, this is very smelly GS is going to have record profits after just having to be bailed out....on multiple fronts.

NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Mon Jul 13, 2009 at 16:17:15 PM CDT

We're only seeing the tip of the iceberg (4.00 / 1)

For anyone that hasn't seen it yet, Matt Taibbi's new piece in RS is a ripping read:

http://www.rollingstone.com/po...

But that piece was written before the revelation about Government Sachs' trading software, which Zero Hedge has been following zeal and was talking about for months:

http://www.zerohedge.com

When the head of JP Morgan's algorithmic product desk Carl Carries says that high frequency trading is merely a form of parastic market making, people should run for the hills (not in the least due to JP Morgan's proficiency in transforming theory to practice especially as it pertains to various daily trading patterns in the SPY).

So we've got insider trading, the near sole proprietor of market-making, market manipulation, front-running and GS has most of the Obama administration in it's hip pocket (ie, official agent corruption). GS will also, it seems, the primary market-makers for Cap And Trade. Good times!

If GS can't kill this story (and the Times piece suggests even they feel the need to write about) then this could be a watershed moment.

Great comments all 'round on this thread!

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.

-- Frederic Bastiat, "The Law", 1850

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by: Emocrat @ Mon Jul 13, 2009 at 19:35:45 PM CDT

[ Parent ]

I'll be more blunt to be more clear (4.00 / 1)

Goldman Sachs is the real government.

The clowns on Capitol Hill are just bird cage liner.

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by: Paul Goodman @ Mon Jul 13, 2009 at 16:47:34 PM CDT

Not QUITE this simple, but close (4.00 / 1)

You have to include energy companies, defense contractors, agribiz, insurance companies, etc.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

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by: kovie @ Mon Jul 13, 2009 at 17:24:53 PM CDT

[ Parent ]

Someone needs to put together the pieces (0.00 / 0)

And maybe Mike is the one to do it.

Goldman-Sachs is suing a former employee for stealing some proprietary computer code, warning that in the wrong hands it could be used to manipulate markets:

http://www.bloomberg.com/apps/...
"The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways," (U.S. Asst Attorney) Facciponti said, according to a recording of the hearing made public yesterday. "The copy in Germany is still out there, and we at this time do not know who else has access to it."

Which suggest to me that manipulating markets is actually the purpose of this particular piece of code and may explain why G-S is reporting such great profits today. That is it may be that G-S is out there using the U.S. Attorney to press the case that somebody else stole their set of burglar tools.

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by: Bruce Webb @ Tue Jul 14, 2009 at 13:07:27 PM CDT