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The Chart That Cost John Mack His Job
The OCC is out with the most recent "OCC’s Quarterly Report on Bank Trading and Derivatives Activities Second Quarter 2009." We will provide a more comprehensive sweep of the quarterly report later, even as the pointless debates in the blogosphere rage over the definitions of gross vs. net exposure, and how $200 trillion is a big, big number (here's a hint, the only time you care about the distinction between gross and net is when you are about to have, or already are engrossed in, a full-blown liquidity crisis. And guess what: in a liquidity crisis gross is net. Bilateral netting and other fairy tale terms become meaningless when bank X, which just happens to be your counterparty on a few billion in swaps, becomes the next AIG, and when your attempts at collateral calls get a full voice mail box).
One thing that did however catch our attention, was the spread by commercial bank of any entity's Total Credit Exposure versus Risk Based Capital. And while VaR is a useful, if effectively gamed, metric for representation of instantaneous or periodic risk, this one is difficult to distort or present in a rosy hue. It is simply the ratio of an organization's Total Credit Exposure to its Risk Based Capital. As readers will recall, the rumored reason for Mack's demise was his unwillingness to take risk. And here is the proof. Comparing the relevant ratios between Goldman with Morgan Stanley, which had Risk Based Capital of $20.2 and $7.7 billion, respectively (respectably comparable), the surprise is evident when one compares the numerator of the fractions: Morgan Stanley's Total Credit Exposure was $95 million while Goldman's was $186 Billion: a TCE/RBC ratio of 921% to 1%! There is something to be said about having the taxpayer as a perpetual guarantor for any and all risk. In fact, Goldman's TCE to Risk Capital ratio was more than three times higher compared to the second riskiest organization: HSBC, which was at 304%.
The sad conclusion: the only CEOs who may have lost their jobs over the past 9 month period for their actions (or lack thereof) were those who did not take excess risk with shareholder capital, and did not abuse moral hazard, now made a financial doctrine compliments of Chairman Ben. And somehow Ken Lewis is still in his throne. Welcome to the new new normal.
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We were just talking about this at a break the fast party with a friend that works for one of the big risk management consultants. The system is rotten to the core and we are all to blame. I don't see clients bailing from the Goldman ship over to Morgan Stanley because they want to deal with a more responsible firm with less balance sheet risk. People in the end vote with their business and they vote Goldman not MS. You could sit and complain about how much money GS makes front running clients but at the end of the day, why do those clients stay?
I'm gathering an answer resembling "because of their propritary trading desk" wouldn't be the correct one.
exactly, so if everyone is so afraid of getting screwed by them, especially on the trading side why do people still call their prop desk first.
Shhhh, Goldman, er I mean NYorker, er I mean GS, is online one....and they are really mad-
that's my point; if everyone is so afraid of getting screwed by them why do they still call their prop desk.
Goldman is the best PB. Their service and knowledge is way about its peers (although Barclays has made great strides, and is giving the best haircuts).
Perhaps the sheeple don't call the GS prop desk.
And most don't appreciate the indirect link-- or the reach-- to which Goldman extends in the institutional world.
I'm work in the instituional world myself, and am not 100% sure that absolutely none of my trades go through the Goldman prop desk. We do as many agency trades as we can... but are they "really" agency trades???
In a related story from Reuters: another "Goldman Grad" is being groomed for a powerful position in Europe.
ROME, Sept 29 (Reuters) - Italy would be "honoured" if Bank of Italy Governor Mario Draghi were to be appointed head of the European Central Bank, Foreign Minister Franco Frattini said on Tuesday.
ECB governing council member Draghi's prominent role as chairman of the Financial Stability Board means he is often mentioned as a potential replacement for Jean-Claude Trichet when the Frenchman's term as president of the ECB ends in 2011.
Frattini, asked on Italian television what he thought of such speculation, said: "We would be honoured, it would clearly make Italy proud, but of course the European Central Bank has very clear rules and procedures, so we will see what happens."
"We are all to blame"
Slow down there speed racer. We are all to blame my ass. Maybe you took part in this cataclysmic fucktosis but I certainly didn't. And people that understand what is going on shouldn't stay with Goldman. They will because our country is morally bankrupt. And because of this things will continue to get worse. A financial company making ass loads of money in a depression means taxpayers are getting bent over. Trust me, I'm no prince, I like to have a good time but I am not a thief. I am in disbelief that more people aren't in jail right now. Totally f-ing corrupt.
Do you have any money in mutual funds. Because if you do, you are part of the blame. Giving money to people who make millions for trying to mimick an index, not giving a crap about corporate governance and voting their shares properly or being good fiduciaries. Forcing companies to separate CEO from chairman and actually acting like a board and keeping companies from doing stupid stuff like listening to bankers and buying their shares when they are overvalued and doing nothing when they are down 70% and have all the inside information in the world knowing that they are not priced right. When you put money in your 401k every month and give money to these money managers you make the problem worse by voting with your dollars and you are no better off than me calling the Goldman prop desk.
Quant-this: fuck this. You are an idiot and a moron for painting broad based generalizations. I don't contribute my 401K to funds mimicking indices. I know many others that don't even do a 401K because they are so disgusted by the system. In fact, my contributions go straight to money-markets, because, at least in 8 years, they wont be (30%) discount. I will go Macke and talk to you like a child, "If you can understand what I am saying, nod yes." You fucking idiot-ever since we went off the gold standard in 1971, we have had a monetary crisis virtually every 10 years on clockwork. 1979-1982, 1987-1991, 1998-2001, 2008-?. I guarantee your 401K will be worthless by 30% or more by 2018 (which is not even discounting the inflation the Fed is printing, in which case, it will be decimated even more).
Don't you dare accuse me of voting with my money by giving to fund managers. I will be damned if I'm going to fund their coke habits, Scores' accounts, 2nd home in the Hamptons or paying for their kids private school. Fuck those assholes who think they can consistently beat the market. I would rather take my miniscule, but consistent 3% annual compounding returns than giving my hard earned mnoey to those assholes.
By picking a name like Quant-this, you still assume your assanine models work. Fuck you for blowing up the finance world, ushering in socialists like Obama, Darling, Brown, etc.
U had me at "fuck this", u lost me at "socialists".
Spoken like a true trogloditic moron. By the way, it is spelled "asinine" not "assanine". Of all people, I figured you would know that.
LOL.
no - he had good points even if they were a bit
misdirected...
and if you are are going to criticize people for
misspelling then please don't spell "trogloditic"
even if you can find a low rent dictionary
spelling it that way....
TD knows who I am, you dont. You have no idea what I do or the reach and scope of my portfolio and businesses. The name quant.this meant as a mock to the quant world, which I do have a small part in but mostly I am a private investor, and a very succesful one at that. Are you really so insecure that you need to resort to this kind of dribbling and take a comment which was meant as a generalization (which is 100% correct by the way) and take it personally. Really guy?
But if you dont think that the problem with the market (which I agree stinks to the core) is just Goldman's fault and not just the entire system from those putting money into 401k plans, to managers not doing their job properly then you are the moron. You could be putting money in a money market account but almost everyone else is not and voting with their dollars for a rotten dirty system. In the future dont take things so personal and listen to the message.
We are not the enemy....They are and the sooner we remember that the better things will be. Stay focused on the problem and the target. Don't get sidelined by word games.
Can we have a group hug now? Reading confrontational statements leaves me feeling needy.
Fuck you, you fuck. I'll fuckin' fuck you and your fucking fish-eating friend, right in front of your fuckin' mothers!
No, I don't have any money in mutual funds. I trade/invest in individual companies, commodities, and sometimes currencies. I don't use a 401k. I have a rollover IRA that I mainly trade through. I don't use money managers (some are fine though). I do everything myself.
Mostly in cash at the moment hoping the dollar gets some legs so I can trade into something else. Or need the market to take a nosedive so something looks like a decent value again.
Haven't really thought through your comment because it didn't apply to me. No disrespect but it's Monday and I partied like a rock star this weekend.
I'm one of those people Robo Trader makes fun of but consistently do very well so I'm gonna keep doing what I am doing.
Learn something new everyday on this site.
Good on you; I did not mean that the entire financial mess is your fault. It is obviously the fault of the guy in the post above who called me a moron. I kid, I kid. What I was saying is that you cant just blame Goldman. The whole system is messed up and those who think they are innocent are probably feeding the system when they buy stocks, expecially through money managers (most of them, because the ones that are good, you probably cant afford to invest in - and I dont mean you per say but in general).
The Federal Reserve is to blame; they are the enablers. Anyone else is just taking advantage of the moral hazard they permit.
If you see a $20 bill lying on the street, you are going to pick it up.
agreed....
this is largely incentivised by tax policy
which encourages rentier activity....additionally,
perpetual inflation requires highly risky behavior
to obtain real returns....
until tax policy is rebalanced to favor productivity
over rentier activity then the perverse incentives
will continue...
although some people are immoral and many have
shown their true colors in this crisis, it is often the case that
systems insitutionalize immorality....and that
we have done....going back to the populist government
programs which spawned so much of this perversity...
the capital class has way too much power and is at the point where it dictates government policy in its
favor....which continues the downward spiral of the
rest of the economy....
Perhaps you can enlighten me on this matter (I am no expert) but my understanding is that most of us average-joes - e.g. not finance professionals - have retirement plans based on 401ks, the idea being that the employer deposits some of our income into tax-deferred 401k plans, and usually offer matching as well.
As far as I know, we have no real choice in this matter. The employer sets up the retirement plan, and we either participate in it or we don't. I suppose we might be able to negotiate some other alternative, but I think for most people this would not be within their grasps.
So I suppose I have to wonder why the 401k system of retirement plans seem to be so prevalent? Are there laws that somehow make this the only reasonable option for employers offering retirement plans to their employees?
hopefully your employee gives you some choices of where to put your money within the 401k plan. You should see if there is a money market alternative of even an index; because the truth is that when we give our money to mutual fund managers (99.99% of them) we aggrevate the problems everyone is complaining about.
Think about this - why is it that TD had to start the whole HF front running backlash, should it not have been responsible money managers managing billions of dollars for others who complained as they lost out on a few basis points every year because of these friction costs. No, why, because they dont care, they get paid regardless, and very well mind you.
I'll let you all in on a little secret - being a fund manager for a fund that takes mostly 401k type money is very much like a top business school, getting in is the hard part (meaning getting the job) but once you do then you dont have to do much to just get by (believe me, you could get straight Bs at my MBA program without lifting a finger).
All I'm saying is that the WHOLE system is messed up, not just GS, yes the FED as well, but it's the whole system that was messed up. Look at housing, if people where responsible and they didnt A) buy houses they could not afford, or B) mortgage brokers being unethical, or C) bank not doing proper underwriting, then the structure product traders would not have had the junk to put together that they did. Had people not been putting so much money in 401ks and listening to CNBC then the stock market would not have gone so high that TIACREFF and CALPERS had to go look for returns elsewhere and start a hedge fund bubble. If that hedge fund bubble was not there, then who would be buying crap instruments with money lent by the prime brokerage units whose same IB's underwrote the instruments that caused the banks that owned those IB's harm and cost tax payers money.
All I am saying is that there is plenty of blame to go around and it starts with the funds that wall street has to invest that comes from us. There is no Mr.Calpers or a Ms.Tia Creff; these are the largest institutions in the world, who's investment thesis bankrupted the world by buying commodities and squeezed users of those commodities with the very money given to them by those who were affected by the crisis.
It's the tax incentives on both sides that make them so popular, and the employer match. Oh yeah, and the fact that there are basically no (enforceable) rules governing their setup, administration, or disbursement - when compared to a traditional or Roth IRA.
They are extremely flexible tax-deferred accounts - which make them particularly attractive options for small businesses, the overcompensated, and scam artists.
Think about it, without any effort as a small business owner/employee you can basically invest 15-20k a year in a tax deferred account, with an employer match (which they usually don't pay taxes on either) - then take a loan against it, where you pay yourself the interest.
Also, I'm not sure - but I don't think there's much stopping an appropriately qualified individual from setting up their own fund vendor, thus completing the circle and absolving one's self from nearly any tax liability.
das Land der unbegrenzten Möglichkeiten
An absolutely powerful person is never responsible.
An absolutely responsible person is never powerful.
Take that blame you're trying to spread around. Grease it up nice and good and shove it right back up your butt. Cause nobodys going to share with you. As power increases responsiblity decreases. As responsbility decreases power increases.
"Power without risk aversion is death"- Slight change to a line in Chill Factor.
If that was related to me then read above. And if your comment is I only buy index funds, then you are partly to blame for feeding the computers (who at the end of the day arb cash and futures).
If you are like me and mostly buy private businesses and try to do something productive with capital, you are excused. But to think that everyone is innocent is to not understand the interconnectedness of the market and how things operate.
The same reason Madoff's clients stayed. They know there's a scam, but they think they're in on it.
"we are all to blame" ?????
NO. I am not to blame, and neither are any of my family members, or friends, or relatives...
WE ARE NOT TO BLAME, DAMMIT.
Agreed.
Is every single viewer of this site to blame? Surely not. But I think the initial point was that blame is spread far more diffusely than we like to imagine. Life is not like a comic book, and Lloyd Blankfein is not a one-man evil-doer. Blame comes in different types and different degrees.
I bought a house in 2005, knowing quite well that we were in the midst of a bubble. That, I believe, casts some blame on me. Why? Well, a few reasons, but among them is that in paying too much for my house, I drove up the prices for all the other houses in the neighborhood. I knew better; I'd been complaining about the bubble for years. That doesn't make me equally culpable to, say, Alan Greenspan, but it does make me culpable to some small degree.
Yes, exactly. People took the comment so personally like I was saying that they themselves came up with the plot and planned it out over cigars with Loyd et. all.
There is just a lot of blame to go around and in order to fix things, those who want to make a difference need to look around and look for what is causing the problem, and the problem is not GS or even the Fed. The problem is the whole system.
Because they are idiots?
TD on the right track with VaR = TCR/RBC is a game with government guarantees while MOTU gamble away OPM.
The more telling observation may be this:
When derivatives default, net exposure becomes gross
exposure. Off balance sheet over the counter derivatives
have no AAA third party guarantor, which ICE is trying
to remedy.
Fractional reserve banks are very dangerous during depressions with defaults.
OCC discloses in footnotes that 1-4 Family
mortgages are 1.77 times the Top 25 Bank's Capital,
Securities 1.67x, and C&I loans 1.06x.
Fractional reserve banks using derivatives many times
their capital are the most dangerous during deflationary depressions.
The most important table not included or addressed
by the OCC Q2 2009 Bank Report is the ratio of
derivatives to assets.
GS derivatives are 338 times assets, JPM's are 48x,
C's are 27x, BAC 26x and Wells 4x, enough to destroy
these banks a second time.
We like shorts on the Big Banks below their highs.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
Turns out it's pretty risky not to take risk.
"why do those clients stay?"
true... SHAME!!! :)
I repeat, what value does Goldman Sachs add to our economy, our society, our standards of living, our traditional way of life?
How can an industry that so clearly is responsible for destroying our economy and ruining the prospects of the middle class continue to get away with the largess and compensation excesses of the investment banking community?
Our politicians are timid minions to the desires of this elitist class of manipulators.
The values of our society are becoming increasingly corrupted by the defining silence of the regulators and policy makers who should be taking action but are paralyzed by the thought of reduced contributions in their campaign coffers.
We are a nation that is led by cowards. Where is the integrity? Who will stand up for the 99.9% of America that does not benefit from this corrupt system, created by the elite and for the sole benefit of the elite?
"I repeat, what value does Goldman Sachs add to our economy, our society, our standards of living, our traditional way of life?"
I don't know about you, but I get a quite a good laugh from their conviction buy lists.
LOL
Lets see here. Didley didley didley...OH
Hedge fund executive plunges to death at casino...
is it didley or gigley?
I'm reiderating irish folk songs- so it's didley...
Giggity.
Like a commentator noted on the BofA reit post this morning,
lets not forget that for the most part, almost all of BofA's REIT upgrades actually worked and made clients money. right?
The really sad conclusion is: As long as everyone on Wall Street is making money, nobody is interested in the details.
As long as we make the week, month or quarter, and we all get our bonuses who cares about the long term. Conversely as long as the Dow (because that is how this administration measures the economy) able to maintain double digit returns into the 2010 election cycle, who cares about the long term (unemployment maybe the flaw in the plan but that is for another post).
The disasters of 2008 have been conveniently forgotten by all on Wall Street. Lehman died, to bad so sad. AIG, well the latest GAO report states things are stabilizing (wtf that means i have no idea). Joe Cassano, apparently cooperating with authorities (probably pay a nice fine and all is forgotten).
The officially sanctioned, US policy of "we have the backs of the banks (which worked really well to mitigate risk at FNM and FRE), really means that the US government and the Federal Reserve (really one in the same entity) have officially sanctioned the exact same risk taking behavior that almost caused the end of the world in 2008. With one difference, the Fed is now providing the market massive doses of methamphetamine in the hopes of stimulating superior risk taking behavior. Moral Hazard on speed - excellent!
The new financial doctrine Tyler refers to, isn't really a financial doctrine but merely the business plan of Goldman Sachs.
The amazing thing is everyone (present company excepted) is going along with the charade. Hoping that this time will be different? Hoping that when the deck chairs on the titanic are rearranged for the last time, that there is still space available on the last life boat?
We are all playing one giant game of chicken.
Indeed. Great post Lizzy.
I would add that Wall Street appears to have the market cornered on slicing the filters from lith production and have left the actual runs for the 19 yo bot bosses for their mid afternoon lap dance breaks. hehe And, are you certain it is the government & federal reserve being one and the same and not the other way around?
Bilateral netting and other fairy tale terms become meaningless when bank X, which just happens to be your counterpart on a few billion in swaps, becomes the next AIG, and when your attempts at collateral calls get a full voice mail box).
Webster, I hope you see this classic. WhoT!
we think mack's the next in line for the knife.
(after kenny boy part 2 -- the southern boy redux)
we have no love lost for his future sufferings
(karma's a biatch)
however, we will continue to believe no matter which federal country club he's ultimately assigned to, Mack still ain't the droid we're looking for.
remember that JP Morgan was split in 2 during the last 'depression' due to glass-steagall.
mack may be a jack, but jack ain't got shit on the queen of dimon.
unless of course he starts squealin like a pig....
http://www.youtube.com/watch?v=9gLN3QoN-q8
"Welcome to the new new normal."
Sounds like thank you Sir! May i have another as in hazing. Truly the taxpayer is nothing but blood cells in the Beast and we gave it a few quarts even when we said no. There is no way to starve it since lizzy nailed it. "We are all playing one giant game of chicken."
And obviously with more risk takers,the probability of a black swan events increases(I guess a mathematical inference,but it want hurt if a mathematician beside Taleb can show us some calculation). So now the next MS ceo must bring his var somwhere close to that of GS so that he can keep his job. And just in case ML and others are not doing it,it is time for them to get on in the program. Throw in some of the hedge funds and,citadel,may be even CME and NYMEX(why the margin on futures is too high>let us make it a buck per contract. After all that is what lottery tickets sell for). And how about Fidelity and other giant mutual funds?they might as well leverage now since we have a guaranteed up market,yesterday,today and everyday. And slowly but surely our probability of a black swan becomes closer to 100 %.By the way, who is writing all the cds'es and the cdo's these days(in another word,who is the new AIG on the block)?
I need to point out that GS risk based capital is not comparable to its peer banks. GS is permitted to calculate RBC based on SEC rules, the bank's rules are different.
It's impossible to determine if GS positions are riskier from this data set, (though I suspect they are), since they don't use the same formula to calculate risk based assets.
And when this blows up in GS's face just like last year will the USG be there to bail them out again? I hope by then enough Americans will have awoken to what is going on and demand no more TARPs and bailouts.
We tried that the first time..300-1..against
http://www.occ.treas.gov/ftp/release/2009-114a.pdf
Tyler, fact check,
Page 13 indicates that JMP has 283 percent of Risk Based Capital, not 1 percent.
You realize this post is about Morgan Stanley not JP Morgan. Table 4
TD ,
You must now realize you misread table 4.
MS Bank NA UTAH is not the full MS book.
OOPs (again)
The exposure is what it is. Goldman's BHC (not FHC) has been represented on a comparable basis since Q4 as is the requirement by the OCC (which did a tremendous job of intercepting AIG risk). The issue is the virtually perfectly balanced "bilateral netting" book at MS which is the whole point.
Tyler, Is not the OCC failing to report all the credit exposure of either GS or MS? Table 1, banks, notional
GS 40 Trillion, MS zilch, Table 2, holding companies
GS 47 Trillion, MS 40 Trillion.
GS was state bank, MS federal charter? Seems that MS bank structure does not filter through the OCC?
Nonsense. You can't draw any conclusions about MS virtually balanced bilateral netting book from these numbers.
I'm thinking Morgan Stanley may have never recovered from last fall--and maybe that is why they can't leverage more--i just don't buy that they are doing less to be the good Samaritan....how can anyone really know anyway with the use of spv's?
MS has been concerned with their exposure to the CRE space. The fed wanted MS to use the discount window and its other facilities to finance its prop trading and front running activities and even Mack wouldn't go that far. Amazing. Mack the considerate and Lewis the submissive.
Morgan stanley has to do all the gold and silver manipulation so they have to be careful. They could probably be more risky when it was left to bear sterns.
Morgan stanley and Bank of America used to just do variations on the theme of JP Morgans HFT Flash trading. What they did was say you had a debit card with them.
You had 400 in the bank when you woke up.
You go out buy a cup of coffee and donut for 4 bucks at 8 am
Then you pay for cab ride to the store for 35 bucks
Then you eat lunch for 10 bucks.
Then you buy a jacket at the store for 340 bucks
Then you take a cab home for 40 more bucks.
Oops you are overdrawn for 29 bucks. Time to pay a 35 dollar overdraft fee.
Not according these banks. Since they feel they have the right to order and arrange everything the way they see fit it would go like this on statement.
400-340=60
60-40=20
20-35= -15 overdraft fee 35 -50
-50-10=-60 overdraft fee 35 -95
etc etc. you get the picture.
http://www.ripoffreport.com/Banks/Bank-of-America/bank-of-america-exorbi...
Bankers just can't resist tweaking data to make the most money. I mean if JP Morgan can do it in hidden computer dark pools why can't they do it OUT IN THE OPEN ON PEOPLES REGISTERS.
Probably because well that would be stupid.
What's the issue? GS is fully hedged. The Bernanke/Geithner put only costs a few million in campaign contributions per cycle.
america - head buried in sand (quicksand actually)
Yup.
Stands to reason - when you act responsibly, you get thrown under the bus.
No good deed goes unpunished.
Since I don't gamble (although I live in Las Vegas) like many others here I'm in cash -
Waiting for the dollar to drop AND the bubble-fake rally to end so I can buy some VALUE
Right now you can usually find me at Caesar's at the crap table ....
Tear the entire thing down and start anew. Bring on the pain.
Mack if you get to read this. All the love in the world from a former trooper.
Ok, I lost my job because of your hiring freeze, but you guided the ship much better than the drunk pirates at the other banks.
For those who never heard Mack (or Whalid) speak. He was most definately locking down the hatches and preparing for the big one. He will of course be proven right soon enough.
Soooo-
Let’s say you land in Vegas.
And the only Casino (Wallstreet-roll-the-dice-Game) left standing is the MGM Grand
(Bankruptcy pending BTW)
Which casino do you park your bags at???
The thirty-four others that are out of business, or the one that still is in play?
Well…., you being the one that came here to play stays with the only game in town.
You… still want some Action.
You…. still want a Show.
You came here to Bring It…, and Win Big!!
That you shall have.
A Show to end all Show’s!
YOU my friend are a playa’!
And we will give you a wonderful send off!!!
Don’t stop playing or you’ll miss the Grand Finally!!!
Playa’s… Step Right UP…,
Stay at your Terminals,
Much more to see here, much more.
Just look into this “Flashy memory mess ‘er upper thingy” and all will be right again.
YOU WIN!!!!!!!!
GUYS - Can anyone see me - Am I a Ghost here now??
I'm almost willing to consider that there might be some character on display here in the most unlikely of places: Wall Street. There are three possibilities, only one of which is negative. First, the risk could be hidden OBS. Second, Mack might have felt it bad form and ill mannered to take taxpayers money then go back to risk as usual. Third, Mack may believe that a 30% down day is coming along with more AIG's, so the true risk is not being priced by the market.
Now I know (because their PR man said so) that Goldman Sachs is a force for good, but I just can't seem to get a grip on why we the taxpayer should be so beholden to a firm whose major profit center and risk center seem to be self-dealing. Is it really in the best interest of the average Midwestern math teacher or assembly line worker to have children, knowing that these babies have to pay taxes to cover monies alloted to Goldman's Prop Desk so that the average senior trader's compensation can go back to nine digits where it belongs?
I cannot help but think we're getting f**ked, and since Goldman mostly is playing with itself, perhaps it would be better if they just f**k themselves and swear off the public dole for eternity, and never approach the TCE or TALF windows again. Oh, and since they "hedged", they don't need that $12.7 billion Bernanke gave them for their AIG CDS, or even the collateral they took from AIG which necessitated the establishment of Maiden Lane III.
Oh, but that might mean character shows up in more than one place on WS and that might shake the foundation of the space-time continuum. Cheeky, you have an equation for that one?
The real wonder is why Mack is still there after all these years. He has screwed it up big time! The guy has turned MS into an worthless also-ran. A company that once was worth twice GS is now worth one third of it.
MS was turned from a meritocracy into a place where you got ahead depending on how well you sucked d..k.
I guess you can have a 921% Total Credit Exposure to Risk Based Capital when you are betting on KNOWN outcomes. In fact, you are an IDIOT if you KNOW what's gonna happen and NOT lever up 921%.
If you boys think its all a crock of shit why don't you just diversify overseas. Anyone with a brain knows that the US market is going to shrink as a proprtion of MSCI ACWI. The G20 is the new G8. Why not front run the index funds and go short US first?
Excellent, that OCC report is really worth reading. John Mack was smart because he didn't take excessive risks. In the end, it cost him his job, but he was much more prudent than the other bankers.
Regarding some of the above postings. Everyone should keep the "personal attacks" out of these discussions. They really serve little purpose as contrary thoughts and arguments can be expressed without demeaning oneself, or others, in the process. On the other hand, after 30 years in the business, we've always approached Wall Street with this particular observation in mind: "...Wall Street, the most highly regulated, legally corrupt industry in the world..."
ROME, Sept 29 (Reuters) - Italy would be "honoured" if Bank of Italy Governor Mario Draghi were to be appointed head of the European Central Bank, Foreign Minister Franco Frattini said on Tuesday
Italy DEBT/GDP 120%
May be Draghi will have to prove himself before bringing this record to ECB.
A reminder of Blair willing to be head of EEC comission.
If you owe the bank $100 million you're in trouble.
If you owe the bank $100 billion, the bank is in trouble.
Still waiting for a drug war analogy.....
I don't think this adds up. GS and MS are bank holding companies. Meaning these are companies containing at least one commercial bank. It does not mean everything that exists at these companies exists within a commercial bank. If you compare the total amounts at the bottom of page 23 with those on pages 22 or 25, you will see that the top 25 holding companies have about $2.5 trillion in assets and $88 trillion of derivatives notional not contained in any commercial bank or trust company, and therefore not accounted for in the TCE/RBC table on page 25. In particular, the table on page 25 appears to exclude over $36 trillion of derivative notional at BAC (presumably from the late Merrill Lynch) and nearly the entire $40 trillion at Morgan Stanley, as well as over $7 trillion at Goldman Sachs.
The blame, dear readers, is this notion that corporations have constitutional rights. That makes campaign contributions (read that "bribes") free speech. That in turn allows corporations to write the laws that govern them, and/or hang up when the SEC calls.
To disable the corruption we have to reverse this -- get money out of politics, but first corporations have to lose the unimpeded right to pump unlimited money into elections.
My comment is that all should read the following and watch
the DVD "The Money Masters."
Books:
1. Brotherhood Of Darkness
2. The Creature From Jekyll Island
3. The Rothschilds
4. The Protocols of Zion