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Goldman Sachs Responds To Zero Hedge
A week ago we posed several questions to Goldman managing directors Lucas van Praag and David Viniar. Earlier today we received a broad response. We present it in its entirety for our readers. We will provide our counter-response shortly.
Dear Mr. Durden:
We read your comments about prop trading with interest. I’ve addressed some of the points you raised, as well as the questions you directed to David Viniar and me. The fact that I haven’t necessarily addressed all your points shouldn’t be construed as tacit acceptance of any of them.
1) “Considering that Goldman must disclose a trading VaR, or value at risk on a quarterly basis, which over the past year has averaged over $200 million, one can back into actual prop capital and revenue”
Our VaR is primarily driven by client-related activity rather than proprietary activity. Using VaR to “back into actual prop capital and revenue” would produce a meaningless result.
2) “A month ago Zero Hedge presented a unique glance into Goldman’s prop trading activities courtesy of the 2008 tax filing of the Goldman Sachs Foundation”
Your premise wrong. There are tax and legal restrictions which prohibit the firm from trading on the Foundation’s behalf.
3) “Goldman disclosed that it had $352.2 billion in fair value of principal trading instruments at September 30, 2009. How much of this is considered allocated to prop if this is in fact a distinct strategy from principal?”
The $352.2bn is the fair value of our trading assets, the vast majority of which consist of trading inventory we use to make markets for our clients.
4) “Does the firm's FICC revenue line have absolutely no prop trading embedded within it? Goldman made $20 billion in FICC year to date: is none of this $20 billion due to capital at risk, or is it all due to wide bid//ask spreads? ”
We’ve said publicly that prop trading represents approximately 10% of this year’s reported net revenue. Some of that revenue is reflected in the FICC line.
We generate the vast majority of our revenue in FICC by facilitating trading activity for our clients and nearly all our revenues in FICC are “due to capital at risk” (your phrase). In periods when capital withdraws from the market, bid-offer spreads tend to widen and we benefit to the extent that we are willing to commit capital and do so successfully. These activities necessarily involve risk taking.
Over the last 5 years, prop investing activities have represented about 12% of firmwide net revenues
5) “What was the pro rata allocation to Goldman Sachs Foundation as a percentage of capital per each trading ticket in 2008? Does GSF have a dedicated trading silo within Goldman?”
As I said above, as required by law, the Goldman Sachs Foundation is managed separately. There are no “trading silos” dedicated to the Foundation’s activities
6) “Why did the Goldman Sachs Foundation not participate in Goldman's prop CDS trades?”
See above.
7) “How much did Goldman's prop operations lose in 2008 trading Russell 1000 futures?”
The amount was de minimus.
8) “How much did Goldman's prop operations lose trading all equity, credit and commodity products?”
Not disclosed
9) “When will Goldman clearly and distinctly segregate on its income statement the prop trading profit and losses, if these are in fact unique from "principal" trading as defined, and attach an MD&A to all relevant disclosure?”
Our proprietary activity is small in the context of the firm’s overall revenues and risk exposures.
10) “Goldman is insinuating is that the firm's prop trading really carries virtually no risk.”
We don’t think any trading activity is risk-free. Risk is risk, and our job is to make sure individual risks are appropriately sized.
11) “How do you define market risk?”
We define it as the potential for change in the market value of our trading and investing positions.
12) “Do you take fixed price positions?”
Please explain your question.
13) “Are you exclusively a hedger or do you ‘optimize’ your assets?”
Please clarify what you mean.
14) “Do you have a risk policy?”
Yes. We think of risk management as being one of our core competencies and it remains integral to our success as a firm.
Our management team is active in risk management discussions across the firm and open discussion on the subject are encouraged. By the way, we think fair value accounting is a critically important aspect of risk management. Another important tenet of our approach to risk management is the independence of control functions from the business units
We also use a variety of approaches to monitor risk. In addition to VaR, we use multiple stressed-based methodologies, including jump-to-default analyses, to quantify tail risks.
16) “How do you monitor trading/hedging limits?”
Virtually all of our equity and fixed Income businesses receive VaR based risk-limits, aged inventory limits and balance sheet limits. The limits are reviewed by senior management and Risk Committee on a regular basis.
17) “Mr. David Viniar, who recently said that the firm doesn't benefit from any implicit government guarantee. Goldman, as presented here, benefits directly from $21 billion in FDIC (taxpayer)-insured bond issues. How does Mr. Viniar reconcile this particular fact with his spurious claim?”
We don’t believe that we have any form of guarantee, implicit or otherwise, from anyone and we certainly don’t manage our business as though we do.
We issued debt under the FDIC’s Temporary Loan Guarantee Program and, like every other bank that issued debt under the program, paid the FDIC a significant amount of money upfront for the guarantee. We also pay interest to the investors who bought the notes. We stopped issuing debt under the program in March. The notes are not callable.
In the context of the firm’s approximately $900 billion balance sheet and hundreds of billions of dollars of funding, we don’t think any informed investor would believe that FDIC insurance on a small portion of our funding represented a “guarantee” of the firm.
Regards / Lucas van Praag
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really appreciate the view from the inside dr. excitement.
"they are the only one's who know where the bones are buried I'm afraid."
perhaps they're not the only ones? perhaps there are others who are willing to come forward anonymously and throw a bone or 2 on the pile?
a bone here, a bone there...after a while, it begins to look like cambodia during the khmer rouge.
There is ALWAYS a way - always - to short circuit these kinds of operations.
Behind all this criminality are humans, humans behaving as locusts. Humans have weaknesses. One of them is forgetting you are human.
Uncle, you speak more wisdom in fewer words than any father I know.
I know him from a few other blogs. Uncle Remus rocks! Consistently.
WW,
You were mad at deadhead up thread. I think the reason is you want him to be where UR is and he isn't. Everyone has to do this at their own pace their own way. Could be the insanely pissed are behind, not ahead of the curve. Don't know. I'm in the insanely pissed camp myself.
You soothe me, kind lady. I'm considering switching from my current self-medication to a strict prescription of: classic literature I've been meaning to read (re-read), daily exercise, 8.25 hours of uninterrupted sleep, and a peep of ZH, Reuters, and LewRockwell each day (to keep the edge off (even a little indulgence in survivalblog every once in a while; not everyday)).
You'll know it's working when my posts are fewer and further in between. If they stop altogether, you can expect the worst. I bow to all those that participate honorably in this psychological war of attrition.
Tyler & Co.,
Congrats.
Next, double down on your streaming servers, solidify your infrastructure, and start rolling out your developmental projects. It's time for Zero Hedge to move out of the basement.
and Marla... Thanks. ;-)
Solid reply from Goldman. Enough of this Goldman bashing bullshit. Most of you people don't even know what Goldman does.
Many of us can see the forest for the trees.
Please enlighten us.
Content counts.
Not sure about "most", but there are plenty of us here who worked both the IB side and HF side of the industry and know very well what GS does in addition to how they do it.
For the pre-eminent US investment bank to issue a response to an artful blogger, well, "solid reply" is not the first thought I have.
"let's get ready to rumble"
I would put in my mouth piece before I got in the ring!!
Thank you Mr. Praag
& i'll bet anon dickhead you have no idea what Edward III did ... do you. go look it up. & btw praemunire still stands on the books from that day. I also bet you think you're different encased in the expensive suit you don't deserve acquired by corruption & deceit
<repeat>
FreddyInBangkok,
My wife and I used to live in Bangkok, and I am continuing to build my network of financially aware/employed denizens of said fair metropolis for if/when we are able to return. It's awfully cold in Toronto, and there is little doubt that Asia will be the epicenter of global finance once this deflationary/inflationary spiral runs its course. How might we connect outside of this forum?
http://www.demotivateus.com/english-motherfucker-do-you-speak-it-demotiv...
The mystery of how can prop be such a small percentage of profits (forget revenues considering the expenses) to anyone who has traded with GS is probably simple. I'd imagine an honest look at profits would show that market making is actually prop trading with an order flow edge.
Theres a simple way to distinguish between the two... find out how often GS is filling paper before trading on their own accounts. Technically, according to the rules, they are supposed to fill customer orders before executing trades on their own accounts. Of course, the SEC has been looking the other way on that rule for years, since at least the early 90s.
As much as I hate to say it, as much as it pisses me off, when you get right down to GS's strategy, it's hard to blame them. They are gaming a system that allows itself to be gamed. If GS disappeared tomorrow, another firm would immediately rise to fill its space. And, if *most* here are totally honest with themselves, they would have to admit that if they had GS's clout, they'd do the exact same thing GS is doing.
GS is an easy target, but theyre not the problem. The problem is that the system they trade in is thoroughly corrupt.
WTF ever happend to "just because you can doesn't mean that you should"? Reeks of complete lack of principles to me.
Principles?
Yes, I refuse to give satan capital letter status.
Basically you've got it.
There is nothing like "customer order flow" to bail you out of a bad trade.
And when you have created, or are the only survivor left, or have the biggest bat in the jungle, then even market makers that cannot/will not risk positions overnight, become order flow. That is how it is for GS no doubt.
If you need to raise money right now, who can you go to? Who are you going to take your IPO too? Even in the days of the Silicon Valley break out, there were firms competing to raise money for start ups. Who's left at the dance? Basically you pretty much have to deal with GS at some level and on their terms. Think about it. So it has all more or less turned into order flow with an edge for them. Brilliantly executed I do have to hand it to them.
You have narrowed the issue appropriately here. Every time a customer leaves an order with a broker that customer has gifted that broker an option. The less stipulations attached to the order -such as limits on size, price and time to confirm- the more valuable that option is. The less price transparency, the more volatile the market, and the less sophisticated the customer all add to the value of that order flow option. Varying degrees of commitment can be put on the order as well. Many times different customers will leave opposing market opinions with a broker leaving that broker with a complex book of varying likelihood of potential trades. These can all be gamed against each other to maximize profit. There are many gray areas in execution/commitment timing that blur the line between risk and riskless trading. There are many different strategies like temporarily building a book on the bidside while holding a block of probable offerside takeout for example. Melding customer flow with a market opinion and position building can make it all a bit gray as well. They will never disclose these type of proprietary details and management may not even fully understand them. Obviously scale and reputation are paramount.
But it seems to me that this focus on risk is only one area of criticism to explore. Why not just ask them straight out why are you a BHC?
What percentage of your assets are self-originated loans?
How much in FDIC ins. brokered deposits have you issued?
Do you view yourself as TBTF and what does that save you in liability basis points?
How much profit do you generate serving government entities?
What percentage of this work is competitively bid?
Also, I think they could be questioned more on level 3 assets
"Goldman preys on the naive..."
It really is that simple.
Except the naive includes almost everyone who is NOT at GS/MS/JPM (or the former Goldmanites!) these days!
These guys KNOW and so they get in, they get out and get right back in when they know.
Even the guys at the Fed are NO match for what GS et. al. are and have wrought.
Obama?
Congress?
Pfffft....forget about it.
They have the World on a string.
Not sure what can arrest this mess, boyz.
Greg
"The amount was de minimus."
Illiteracy. Always a tell.
If GS & Co. are so brilliant, why doesn't the gov't give them all the money marked for QE 2.0, and reduce our deficits to nill in short order? Oh yeah, because they need us taxpayers on the other side of their trades to make money. Never mind....
Goldman being slime is nothing new. I traded EM in London in 1998. While that was many years ago. let me tell you about Goldman and their tactics.
As any relative value trader knows, you buy the cheap bond and sell the expensive and hope that the spread converges to some sort of "fair" value, however you may come to a determination of what is fair, but primarily looking at the shape of the spread curve.
So over a few days in the spring/summer of 1998, a larger seller of one Russian eurobond comes into the market. This happened to be a bond which was obviously cheap when looked at on a spread basis. Those in the market know that you can find out who the seller is by speaking with the brokers, so it didn't take long for market to know it was Goldman.
Selling eventually abated with this particular bond even cheaper than it was and many rel val traders like me licking their wounds. Can you guess what happened next??
Russia announces the issuance of a new Eurobond with the same maturity as this bond and at a spread significantly wider. So the market piles on and sells the sh@t out this one bond on a relative value basis as the new bond immediately trades up in the when-issued market.
Hmmm....so did Goldman front-run their client, the Russians?? Did they trade on inside information??
Gee...you think the Goldman capital markets team kept their mouth's shut???!!
The vampire squid was alive and well many years ago!
Goldman being slime is nothing new. I traded EM in London in 1998. While that was many years ago. let me tell you about Goldman and their tactics.
As any relative value trader knows, you buy the cheap bond and sell the expensive and hope that the spread converges to some sort of "fair" value, however you may come to a determination of what is fair, but primarily looking at the shape of the spread curve.
So over a few days in the spring/summer of 1998, a larger seller of one Russian eurobond comes into the market. This happened to be a bond which was obviously cheap when looked at on a spread basis. Those in the market know that you can find out who the seller is by speaking with the brokers, so it didn't take long for market to know it was Goldman.
Selling eventually abated with this particular bond even cheaper than it was and many rel val traders like me licking their wounds. Can you guess what happened next??
Russia announces the issuance of a new Eurobond with the same maturity as this bond and at a spread significantly wider. So the market piles on and sells the sh@t out this one bond on a relative value basis as the new bond immediately trades up in the when-issued market.
Hmmm....so did Goldman front-run their client, the Russians?? Did they trade on inside information??
Gee...you think the Goldman capital markets team kept their mouth's shut???!!
The vampire squid was alive and well many years ago!
and that was one trade, on one issue over a few days...
multipy that by all the paper out there...
and by the clearing operations they own, the preferred brokerages they own, the floor trading, options trading and specialist firms they own... it really is quite a "franchise". That does not count the real estate, the M n A and IB sides... Before, we had Solly to keep them in line... there in no one to keep them in check now, except maybe the Chinese... we all saw how well that trade worked out for the Soviets... LOL
An imbalance between rich and poor is the oldest and most fatal ailment of all republics -Plutarch
http://www.takeitbackday.org/
You guys ever get tired of Zero Hedge's permanent negativity and lack of creative ways to make money? I mean if you know all about these conspiracies and insider things going on shouldn't it be easy to make money off of them? Why would they just pump gold constantly trying to get you to buy into an inflated asset class that is currently a bubble? I created my own website that offers daily trade ideas, as well as investing themes that investors can act upon to make money. I am the anti-zerohedge in that I post daily trade ideas that can actually make you money, instead of being hipocritical and trying to scare people... Visithttp://www.pitbulltrading.blogspot.com for real investing advice ... !!!!!
Yeah, i will sure be taking investing advice from someone who can't spell hypocritical (and/or is too stupid to use spell check).
Good luck with that site.
Well he's trying to sell optimism hype bullshit trading information to a bunch of people who know better. I mean really how successful can he be? I mean this is like trying to sell teenage hookers to parents of teenagers in Salt Lake city. I mean how damn desperate and stupid do you have to present yourself to walk into a group of people like this with a worn out yahoo finance strategy.
He's his own punisher.
I'll bet you really cleaned up on that one.
That link is kind of hot.
Well played.
LOL. I finally had to click the link to see what you were talking about. LOL
lol...
Do you also offer spelling ideas?
Someone please flag as junk this sick punk! We are trying to man the bilge pumps on the Titanic, and detonate the iceberg, whilst you propose to sell lifeboat tickets. Please crawl back under the rock you came from--and take your vile filth with you.
Peepshow tickets.
I think the entire bailout was a cover-up for Goldman and the other Wall St banks. All of them should have gone straight to bankruptcy court, where all their criminal activities would have been exposed. They are running this country like a silent hand. It's no different than the Mafia. And the gov we have in NJ is from GS. What a dolt!
I'm not some sort of liberal anarchist, so Goldman should worry because the majority of Americans agree with all of us.
I think the entire bailout program was a cover-up for Goldman and their ilk. If those Wall St. "banks" went to bankruptcy court, like they should have, their criminal activity would have been exposed. They are no different than the Mafia, and they are running the United States like a silent hand. And the dolt we have as governor of new jersey is from Goldman. That goes to show you what type of people they have in that firm. I'm not some sort of liberal anarchist, I'm just a mainstream conservative, so Goldman should worry about my opinion because it is shared by a lot of people.
These Wall St. banks view the United States as a jet stream of cash. They don't add anything to our economy. All they do is try to grab as much money out of the jet stream as they can.
writing from the Red Sea
CEO of the SOFA
Game Changer
I am and portfolio manager with 20yrs of managing multi-billion dollar portfolios at the largest buyside firms for the largest institutional clients in the world.
I have been an active reader of zerohedge for the past 6mos. I have never posted or commented before. I read ZH for the snarky comments, market updates, accountability and analysis of people/firms good or bad market calls, the insider's view (things that CNBC or WSJ" would never write about that every institutional trader knows), but skip the conspiracy theory and sophomoric evil squid stuff.
I understand why Steve Liesman (who I think is better than most of the talking heads on CNBC) responded to ZH, good or bad news, if you are on TV, it's good to have people talking about you, i.e. higher nielsen ratings.
But, GS responding to a post on ZH? The tectonic plates of the financial markets just shifted three feet. Did anyone else feel that? I won't even get into the questions from ZH or the response, but the fact that they felt the need to respond! Responding is a no win for them. This isn't a softball pre-submitted question from an analyst on a well scripted earnings call. By responding, they have validated everything on this website.
A forum for credible discussions and questions that people want to read and learn more about is the core of free speech and has overcome the fear of speaking poorly about a very powerful and yes, broadly admired firm (understandably not here at ZH).
Congratulations Tyler Durden, ZH, and all its readers. This is a game changer, the relative power of ZH has changed, and will never be the same.
"You are not a beautiful and unique snowflake"
My thoughts exactly...
The bankster doth respond too much, methinks.
Similar to their SEIU statement.
For the smartest folks in the room they seem to be unawares of the grenade theory.
Walk into a room that has a live grenade and the only upside is that you get out without it going off.
So don't walk into the room.
Goldie won't win any converts here ...
So why respond?
So here's a grenade ... take it for what it's worth.
A few moons ago was working with a fellow that had an interest in my asset class.
Socially awkward, 8th grade confirmation ties with mismatched suit jackets, perennially nervous, hoping that the billionaires in baseball caps would bless his opening a hedge fund that would help fund a charitable endeavor.
Cut his teeth trading for hedgies on behalf of spooks.
Once over high tea very quietly suggested Goldie had what was called a 'doomsday box' that had NSA software codes allowing off-shore trading to front run the markets.
This was long before the initiation of this blog. When ZH started this fellows' story came back to me because ...
the term he used for this front running was ... Zero Hedging.
Anyone care to anonymously flesh this out?
Well, damn, AM, looks like it's just the two of us. WTF? ZHing sounds pretty interesting - and it's making me have second thoughts about the origin of the above posted response from a supposed, real-life squid. I've come back after many hours and only crickets have responded to your post.
Joshua Bolton was Executive Director for Legal and Government Affairs at Goldman Sachs in London from 1994 to 1999
Just a stab in the dark, but,..
His father was CIA ?
Totally agree. This blows my mind. Zh just reached another level.
I give a hat tip to the boys at GS too. Thanks for the input
Game Changer
I am a portfolio manager with 20yrs of managing multi-billion dollar portfolios at the largest buyside firms for the largest institutional clients in the world.
I have been an active reader of zerohedge for the past 6mos. I have never posted or commented before. I read ZH for the snarky comments, market updates, accountability and analysis of people/firms good or bad market calls, the insider's view (things that CNBC or WSJ" would never write about that every institutional trader knows), but skip the conspiracy theory and sophomoric evil squid stuff.
I understand why Steve Liesman (who I think is better than most of the talking heads on CNBC) responded to ZH, good or bad news, if you are on TV, it's good to have people talking about you, i.e. higher nielsen ratings.
But, GS responding to a post on ZH? The tectonic plates of the financial markets just shifted three feet. Did anyone else feel that? I won't even get into the questions from ZH or the response, but the fact that they felt the need to respond! Responding is a no win for them. This isn't a softball pre-submitted question from an analyst on a well scripted earnings call. By responding, they have validated everything on this website.
A forum for credible discussions and questions that people want to read and learn more about is the core of free speech and has overcome the fear of speaking poorly about a very powerful and yes, broadly admired firm (understandably not here at ZH).
Congratulations Tyler Durden, ZH, and all its readers. This is a game changer, the relative power of ZH has changed, and will never be the same.
"You are not a beautiful and unique snowflake"
My name is Billy. I am in 6th grade and we had a class project on the stock market. I wrote to 11 CEOs and CFOs with a list of questions. So far 7 have sent letters back with answers and a colorful catalog with pictures of happy people from all different backgrounds. There were also lots of numbers I didnt understand. But 1 company sent me a sample of there product and another sent me a T-shirt. Yea!
Hello!?! Plates did not shift. CFOs respond to questions, from anyone. We have this invention called "the public markets".
But hey, how's that "20-yrs of experience" serving you?
Hi, Billy. How was your overnight church retreat? Are you able to sit down, or is it still a bit sore? And tell your mom to stop leaving her panties at my place.
I'm with #169788 on this one. I'm not sure about page views, webistics, etc., but the growth in total number of comments is nearly exponential, the number of professional "contributor posts" increases daily, and ZH continues to receive detailed responses to inquiries by an ever growing segment of "the establishment."
Even my original source for ZH, the Wall Street Journal, continues to cite ZH for their own stories.
WSJ.com - Citadel Securities Executive Peter Santoro Leaves Firm
Billy, might want to check yourself. I think you just made a no-no.
I had a conversation with one person working with GC, they told him proudly, that 80% of all GC revenue is generated through prop trading. Hah?
I will consider the US lost until a well-used granite and lignum vitae gallows is a tourist attraction on the sidewalk at 85 Water.
18 December 2009
Gold Hit With a Bear Raid Yesterday - Memories of Citi's Eurobond Price Manipulation
If the longs had been exiting the market, the open interest would have declined.
These big plunges in price look to be driven by short selling, with weak hands being driven out, and then short covering or determined buyers stepping back in to maintain the overall number of contracts at a relatively steady level.
Recall the case in the Euro bond market, wherein Citi came in and sold an enormous volume precipitously, running the stops and driving the price down sharply. The Citi trader came back in and covered his shorts, pocketing the difference in his market disruption based on size. Citi Fined for Euro Bond Trades By British Regulator; Italy Indicts Citi Traders; Citi Haunted by Dr. Evil Trades in Europe;
I recall reading at the time how the Citi traders were incredulous at being outed by the regulators, because that is how they would do things in the States, running the stops and using outsized positions to perform short term price manipulation. In the states 'price management' has become quite notorious around key market events, such as option expiration. It is so prevalent that it has its own momentum among traders.
Even the Treasury recently got into the act, with young Tim's Treasury granting a $38 Billion tax break to Citi in order to enhance their financials and the price of their stock.
Citi had quite a record of bad behaviour around the world a few years ago. Citi Never Sleeps Financial power corrupts, and under regulated banks corrupt all that that touch, absolutely.
Has Citi cleaned up its act? Well, it was one of the banks at the heart of the debt securitization scandal that almost brought the US financial system to its knees last year, and is still a major source of global instability. The US seems unable to do anything to keeps its house in order. But in fairness, all the big US banks were caught up in the scandals, most notoriously in those exposed by Eliot Spitzer, who was later 'taken out' in a scandal exposed by a special federal investigation ordered by the Bank's good friends in government.
This may give you some idea of how the US markets continue to operate these days, with the banks loaded with cash and regulators turning a blind eye to their antics and outrageously non-market related trading positions. The large hedge funds do the same things, but do not have the clout that the banks have, especially with the commingling of guaranteed deposits and subsidized liquidity from the Fed.
It was not all that long ago that such speculative manipulation in the energy markets caused widespread disruption in the State of California by the predators at Enron. And little has been done by the US regulators to prevent this happening again and again. Reform is continually weakened and placed on hold for "the good of the financial system" and its global competitiveness.
Barrick Gold, filed a motion to dismiss the 2003 price manipulation lawsuit against it and J. P. Morgan on the basis that some foreign central banks and other bullion banks were involved, but were not named as defendants. These foreign central banks were immune from litigation. Naturally the scandal kicked up by this caused the defendants to regroup their strategy. Barricks February, 2003 Motion to Dismiss
The claim that J. P. Morgan was engaged in fulfilling government policy in its price manipulation was intriguing indeed. It is too bad that it was not granted and sent to discovery and disclosure. But it does highlight one potential reason why a government might not wish to downsize its 'too big to fail' banks, who can become instruments of financial engineering and policy, both foreign and domestic. Who can say what is truth, because unfortunately despite the many abuses, cases are normally settled with no admission of guilt, wristslap fines, and genuine reform is push aside for the sake of temporary expediency.
In closure, the opaque short position in the silver market held by J. P. Morgan and a few other banks is a potential scandal and a disgrace for a 'reform' administration. They do not deserve the benefit of the doubt any longer. Innocent until proven guilty is correct for the courts, but 'where there is smoke there is fire' and 'once bitten twice shy' has jurisdiction in the court of public opinion where trust is a necessary component of good judgement.
Friday, December 18, 2009
The CME Final, just posted, indicates that open interest yesterday rose 475 lots (1.48 tonnes) to 502,930 contracts. Volume remained as reported in the Preliminary at 258,576 lots, 15% above the estimate. See CME Daily Bulletin.
For a $28.80 down day (indeed down $46 intraday) this result is astonishing. Considerable stop losses must have been triggered, but apparently fresh short selling predominated.
Of course, the CME reported a similar event following gold’s $48.80 drop on Friday Dec 4th – only to apparently slip a 21,000 lot fall into the following Monday’s data
But then they did have the excuse of huge volume –almost 400,000 lots that day. And presumably they do not actually want to make these errors.
So on its face the gold market has seen the entry of a large volume of new Shorts, who will have to contend with reviving Eastern physical appetite. If commercially motivated, this is likely to be an alarming experience.
http://jessescrossroadscafe.blogspot.com/
how much does Van Prat get?
is he on the bonus list?
just in case no one has yet left a meaningless comment on this thread, i am doing so now in order to make sure that is covered too.
Goldman Sachs-- World-class liars supporting their ponzi scheme at all costs.
They should be shut down promptly!
LOL at the GS bashing in this thread. 90% of you would give your left nut to work there. If you can't beat 'em, join 'em.
I'm impressed they took the time to respond to a blog even though these are the GS talking points included in the envelope containing the bonus check.
Well, although a response letter/phone call of future employment would be highly flattering, I would send them this reply:
LOL at you, mindlessly brainwashed from a young age.
So it was just an accident Bugs Bunny was going around telling us every week of our childhood: "If you can't beat 'em, join 'em"
You make me sick, your disinformation campaign is pathetic and doomed to fail.
To all the Goldman apologists:
1. Goldman and their brethren are too big-Period !
2. The country is more important than Goldman et al.
3. No one else but GS could have had Hank come running with $23 billion of liquidity when no one else would give the Giant Squid squat.
4. Liquidity is at the margins, and always is, so Goldmans last minute bailout last fall was never repaid and never will be repaid. Without Hank's daylight raid of the American Taxpayer the Giant Squid would be another bankrupt entity.
And, say, where the heck are you hiding Hank anyway ?
Goldman has shown that public opinion is important by a response. But the fact is Goldman has two choices : genuinely help America or see a banana Republic destroy what they thought they had won. Problem with being the last man standing.
Goldman responds...so what? What do you really expect them to say? They have vested interests and want to perpetuate casino capitalism for as long as they possibly can. What is impressive is not the response itself, but the fact that they actually responded. Maybe they and other investment banks are worried about the future and how they will be able to protect their fiefdoms.
The GS strategy is quite simple. Make sure your high executives have an immense amount of company stock when they stop working there. Then, get them gigs on various boards and public offices, so they are integrated systemically in every level of financial decisions in America. All being aligned together, they will ensure they can get special subsidies passed for the benefit of GS and their own stock.
Finally, GS can accept high levels of risk on their capital knowing that if things get too out of control, they can come up with a plan to get bailed-out, if needed.
Referring to them as a parasite is quite fitting. They survive at the benefit of sucking wealth out of the entire system that they provide no real value to. Most successful parasites in our ecosystem survive by draining resources from its host, without overwhelming the host to the point of collapse, while providing no real benefit to the host. GS understands and most likely has planned for generations just how much they can suck out of the financial system without collapsing it.
It wouldn't shock me in the least to learn that GS already had figured out how to get its own bailout, through AIG, before all of this started. They must have felt pretty secure knowing they had the keys to the castle with Paulsen in charge. I love how of the $700B allocated to buying toxic mortgages that exactly $0 of it has actually been used for its intended purpose (although the Fed has been more than willing to buy up those toxic mortgages at par).
"Referring to them as a parasite is quite fitting." agreed.
the most effective herb for a parasite cleanse is wormwood. wormwood is also the active ingredient in absinthe. so perhaps a large dosage of absinthe might inspire some creative methods on how to expel the worms from the body politic before the next generation gets infected too. wouldn't hurt to try yes?
Van Praag of the Squid has the confidence to reply to Tyler's open letter, yet up until the last few hours, 9 out of 10 posters on this blog chose to merely sink down to a level of vituperative bile by way of comment.
That is not good enough y'all, hardly a glove landed.
I agree that to even get them to recognise zerohedge is a big moment -so capitalise on it.
GS & JPM need to be destroyed and their network of insider friends broken up.
How are you going to apply any meaningful pressure for all of that?
Agree,.. I wrote some angry bullshit, which ZH cencored, which I´am glad for.
ZH has lured them into the open, and we need to take them on as "gentlemen" and stay sober, and not waste the opertunity by steaming off anger.
M. Copenhagen
wow..
Nothing GS is doing is repairing the real economy. In fact, the governments attempts at repair are starving the real economy of cash
Ultimately, someday, some way the casino economy and the real economy match up...for all the leverage and the innovation and the risk management skill in the world does not avoid the truth that its the discounted cash flows of the real people....and their votes and their numbers...that really matters
"That is not good enough y'all, hardly a glove landed. ..."
What do you expect from a bunch that doesn't allow weapons?
"I think you're gonna find -- when all this shit is over and done -- I think you're gonna find yourself one smilin' motherfucker. Thing is Butch, right now you got ability. But painful as it may be, ability don't last. Now that's a hard motherfuckin' fact of life, but it's a fact of life your ass is gonna hafta git realistic about. This business is filled to the brim with unrealistic motherfuckers who thought their ass aged like wine. Besides, even if you went all the way, what would you be? Feather- weight champion of the world. Who gives a shit? I doubt you can even get a credit card based on that. "
" I hope we're all rich and retired before this all goes bad, because it's gonna go so bad that history will be measured from the event."
2 cents why GS responded... It is called market research. Stir the woodwork and critters come out. Now they know who and where to hit... And about the fuck word. The last time I checked it was in the dictionary, along with many other words of equal utilitarian value. Hey, the educated are known to have a broad vocabulary, are they not? ZH is the site for such people, is it not?
Pay close ATTENTION to this. Tyler, you have HIT a NERVE. / One, from a subtle observation, this post has gathered more responses than alomost any other post ever presented on Zero Hedge -- that tell us this very important fact -- Goldman is NOW vulnerable, scared, and defensive. That tells us, their good fortune may be closer to an end. Two, really, really smart and successful people (and those in a position of true strength and power), NEVER need to defend themselves and thus make the mistake of sticking their head above ground to do so. Instead, they just continue to achieve success, power, and money -- quietly, while ignoring the masses and their critics. It will be fun to watch what happens next to the Goldmanites and all their little elfs running around chasing their tails.
+++ It is not only the blessed squid that is poking its head up. The entire family has in fact been out in the open since ca. 2001. The point being that they do not know how to breathe fresh air anymore. Devolution you know... Oxygen has that nasty property of invigorating growth, while irreversibly clearing the mind a bit later. Thus, after the initial shock of extraordinary growth wears off, the mind starts to think in realistic, rather than fictitious terms. To push the genie back into the lamp is clearly not an option, however. The lamp is no more.
"'The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who, in the name of charity and good will, shepherds the weak through the valley of the darkness. For he is truly his brother's keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers. And you will know I am the Lord when I lay my vengeance upon you.'
... it could mean you're the evil man. And I'm the righteous man. And Mr. .45 here, he's the shepherd protecting my righteous ass in the valley of darkness. Or is could by you're the righteous man and I'm the shepherd and it's the world that's evil and selfish. I'd like that. But that shit ain't the truth. The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin'. I'm tryin' real hard to be a shepherd."
great movie....
Martin Armstrong talks about Goldman Sachs:
http://www.silverbearcafe.com/private/12.09/curtain.html
Llloyd Blankfein--Making Madoff look like Mother Theresa more and more by the day!
Can you say "MASSIVE PONZI SCHEME"???
Why is this still being enabled by our government when Goldman should have been allowed to fail???
Live by the sword, die by the sword.
There are to me two important things to note about this exchange between ZH and GS, as several readers above pointed out:
One, the general US public is beginning to sit up and pay attention to the role GS plays in their (and all of our) lives - beware the waking giant. Few as yet directly from ZH, but growing, and amplified each time another (more mainstream) publication picks up a theme from here, or acknowledges ZH directly. It's about reaching a threshold, and the first pebbles on the scree have started rolling, the loose snow is beginning to slip one snowflake at a time.
Two, as #169790 proves as an example, not only the public, but perhaps as (or more) important, the clients and trading partners of GS are reading this humble publication. I have strong reason to believe that several specific (extremely large) peers of GS regularly do - making it plausible that all of them soon will if they don't already. Not just a trader or two, but senior members and even C-level (or those reporting there).
That may be one possible avenue where possible leverage lies (other than actual legal and legislative routes already being employed) - we may all be harmed or shortchanged by the monopolistic position of and governmental nepotism towards a particular financial institution -- but there are firms out there losing millions and billions daily to said firm. Are we sure THEY don't know where some of those bones are? Perhaps from happier times, when they were partners in crime, or at least got a cut?
I can't express in words how much I absolutely *hate* these Goldman Sachs fucks. What dark god do these amoral snakes serve that they can think of their near-continuous rape of America as 'god's work'. And how of touch with reality can they be to even say such a thing? Psychopaths.
Thanks for the intelligent contribution. Fucking idiot.
And thank you for yours. Ditto.
He is actually correct - making juvenile posts like the above DOES make you a fucking idiot!
And thank you for your intelligent contribution as well. Ditto.
Not that anyone is going to read down this far but here it goes anyways. Dear GS, how much did your "risk mangement policy" depended on the government paying your bets if AIG could not? I mean, did a conversation like this every happen? "If we are as right as we know we are then how will AIG make good? "They can't" "But we think (know) X% sure that the government will pay our bets win this pops." "Oh, there's going to be a lot of bag holders out there, working folks." "They'll feel guilty and blame themselves". Was there discussion about this stuff like this? Or are you geniouses trying to say that your heads were that far up your own arses? Long story short, you're either a bunch of total Idiots or Liars. Which one is it?
I AM JUICYTHEANIMAL MOTHER FUCKERS
AnonymousMonetarist wrote;
Once over high tea very quietly suggested Goldie had what was called a 'doomsday box' that had NSA software codes allowing off-shore trading to front run the markets.
This was long before the initiation of this blog. When ZH started this fellows' story came back to me because ...
the term he used for this front running was ... Zero Hedging.
Anyone care to anonymously flesh this out?
Joshua Bolton was Executive Director for Legal and Government Affairs at Goldman Sachs in London from 1994 to 1999
Just a stab in the dark, but,..
His father was CIA ?
"Bolten's father, Seymour, was a career-long employee of the Central Intelligence Agency. "He may not have been active as a spy personally, but he was certainly involved in spy operations," said Bolten. Then again, Bolten doesn't know exactly what his father did. An otherwise garrulous fellow on other matters (he often expressed his conservative political views), Seymour Bolten never said a word about his work at home."
http://www.law.stanford.edu/publications/stanford_lawyer/issues/69/bolte...
Just a silly question.
Who owns Goldman anyway?
... and JPM and MS for that matter?
Anyone?
M. Copenhagen
Rockefellers, Rothschilds, old nobility of Europe...
Mr. van Pragg,
While your taking the time to respond to ZH’s questions is appreciated, I wonder if you realize that your opinions and justifications for what your firm does are no longer important? The change in climate in America---perhaps the entire developed world---is what is important from here on out. For you, your firm or your staff to ignore this new reality is dangerous both for your business and your very lives.
The system has always been gamed. Those who can take always have taken as much as they can get. What you do and what you try to justify is nothing new; it is just being done on a grander scale. The world and people being what they are, I concede the point that most people, if able to be in your position, would behave similarly. It is human nature. There but for the grace of God is a sword with two edges.
There is another aspect of human nature, though, that will take hold from here on out. When people are not aware they are being abused, anger does not arise. When people are living an acceptable and comfortable life, they are willing to ignore certain things, even if they are aware someone is gaming them. The game ends, however, when people are both aware they are being abused and their life is no longer comfortable. In those times, everything changes, usually with horrific and unimaginable results. We are there now, or nearly so.
At these times logic, even false logic, is no longer valid. I’ll give an example. You try to argue that your firm is no longer drinking from the public trough. This is incorrect factually (FDIC backed bonds in your capital structure) and by implication. Because your firm has reached the exalted status of Too Big to Fail, you carry an implicit guarantee of your entire capital structure, and indirectly, the net worth of your partners. You have a host of programs and policies aimed specifically at covering up your mistakes, whether these programs come in the form of ZIRP or TGLP or TALF or IRS tax breaks or such things as the AIG bailout. I might add that I suspect you and your staff have shared many a good laugh over Goldman Sachs’ possession of something called a Bank Holding Company charter. In a dozen ways your firm holds a put written by the American taxpayer on any sizeable losses you might ever achieve and on any mistake you might ever make. This also allows you and your colleagues to compensate yourselves grossly in excess of any possible value you add to society.
What is TBTF in reality? It is privilege unearned. It means that the many must sacrifice for the few. It is a cynical perversion of the term “all for one”. It is an entitlement undeserved. In practice, it has become a reward for misbehaving, and it takes not from the guilty, but from the innocent, as the innocent are the only ones who have the wherewithal to pay. Some would call this a moral outrage. Others would call it grossly inefficient and a slap in the face of the evolutionary and capitalist principal of survival of the fittest. Still others would just call it business as usual.
When the environment changes in the way ours now has, however, there is no more business as usual. The privileged position of your firm has become common knowledge, and it has come at a time when life is no longer comfortable nor acceptable to a large segment of the population. Again I will say that it is immaterial that other people, if fortune had placed them in your position, would do the same as you do and exhibit the kind of hubris or arrogance many ascribe to your colleagues. What is material is that in the here and now there is both a growing resentment of your firm and an increasing willingness for people to take actions against what they have come to believe is wrong with the country and society in which they live.
In mild form these actions might be carried out by a proxy, such as the elected leaders of the land, which might result in the dismantling of your firm. In less mild form, which is becoming increasingly likely by the day, these actions will be taken directly against the employees of your firm.
In your response to ZH you claimed that one of your firm’s core competencies is risk management. A wag might say that this competency covers far more than market exposure and VaR calculations, but also includes the manner in which your political connections, campaign contributions and lobbying activity lead to such outcomes as the immediate BHC approval, the AIG payout, lack of meaningful regulatory change, or the continued existence of TBTF.
This concept of risk management might well take on an entirely new meaning in the not so distant future as the anger and frustration of the people seek release. We like to think of ourselves as civilized, and for the most part we are, until we are not. The change happens in an instant. I wonder if you ever visited Beirut before the civil war? Or attended the Sarajevo Olympics? If you did either, then the events transpiring later must have come as a particularly strong shock. What was previously unthinkable happened. It can happen again, and it can happen where you are. We are still the same species as Robespierre; only the clothes are different. That is the kind of risk you might soon have to manage. Let’s hope you are more competent in that regard than you were in December 2008 in the markets, because there is no one to come to your rescue.
A good trader knows that anything is possible and even outlandish events sometimes have a way of occuring. There is a time to be a Cassandra, and that time is now. Read the comments on this post, particularly the ones from angry people. While most are just venting, they represent a microcosm of society at large, and in that larger society are people who act and not merely speak, and people who can incite and lead the masses. Leadership of this type is situational. Hitler born in 1700 would have died a struggling painter, but that same man can emerge in the 1930’s to lead a world to ruin.
Is it fair? Maybe not. Is it fair that taxpayers yet unborn will pay for the mistakes your firm and your industry made? Definitely not. Fairness is no longer the issue. Survival is the issue. The time to prepare is short. Only the willfully blind cannot see what is coming. Only the deaf cannot hear the beating of the drums and the sharpening of the knives. Have your record bonuses blinded you and allowed you to kid yourself into thinking the good times are back? The unemployed 17% of the populace, and those whose homes are lost or about to be lost would disagree. I hope that your arrogance is not so great that you believe you are safe, because considering the scale of what will happen, safe you are not.
It will come with a flash, in an instant, and it will be a day unlike any of the yesterdays you have ever known. You might not think it is fair, but you would be a fool if you didn’t think trouble was coming, and coming for you. When it comes, I wonder if you or your staff will feel that what you achieved and what you accumulated was worth the price you will have to pay?
Standing and fighting for a just cause is noble and is a mark of character. In the battle to come, I don’t know what side is noble or whose side “God” is on, but I doubt it is your side. Sympathy will be in short supply, as no one will buy the argument of “just trying to put food on my family’s table”. Pardon me for saying this, but all of your families are quite well fed and in no danger of going to bed on an empty stomach. Fighting for money, on the other hand, is just mercenary, and nobody has sympathy for mercenaries.
Only after the fact will society reflect on the madness that gripped it, and by then it will be too late.
Is there anything you can do to prevent what seems certain to occur? Maybe. It is worth a try. You might start by turning in your BHC charter and ending that farse, which will also force you to give up your place in line at the Fed’s window. You might call the FDIC-backed bonds and re-issue on your own dime. You might consider donating the difference between what you received on your AIG CDS’ and what would have been FMV, and donating that to a charitable cause. You might limit company-wide bonuses to, say, $1 million, and pay at least half of it in company stock. You might also split your firm into a number of pieces, none of which is large enough to be TBTF, thus forever distancing your mistakes from the taxpayers‘ wallets. You might do all of these and more, but I suspect you will not. If you do none of these things, I hope you are prepared to suffer the consequences. Answering to Zero Hedge will be the least of your worries.
I was the only one with a sign at BO speech at Federal Hall, on Sept. 14th. Where were the rest of you typing titans? Do not be afraid. The cops laughed at my deriding comments (their pensions are also victims), such as..."Gecko was wrong", was interviewd by CBC and Japan network after. Had a face full of MCCabrara at 11am arrival, asking me stuff, took a walk...
Please see this
http://www.youtube.com/watch?v=6D7rWLzloOI
LA
I was the only one with a sign at the President's Federal Hall speech on Sept 14th. Cops laughed at my derisive comments, such as Gecko was wrong..(their pension also victimized). Do not be afraid. Where were all you typists that fine day?
Dear by fallst
You are not alone and it is coming. And some of the typists have checkbooks and conviction.
While we are fact checking Goldman, let's find out how much Obama got from Goldman, directly or indirectly, after Goldman's man Hank brought Barry into the loop.
Sorry dudes, I'm aligning with the vampire-squid evil doers. We're going to win.
I think there was an Italian leader who said something similar in the beginning of the 1940´s,.. I think his name was Mussolini,… you might want to check out how that went for him.
Arrogance and ignorance has always been the cause of the fall of those who thought they were all too mighty to be beaten. Join them and reap! (but do cover your options).
This is not a war. I do not avocate t&p (torches and pitchforks).
Signs are legal. There is still Freedom of Assembly, but that needs a little work at the moment...
Just bring back Glass-Steagall. Get a CDS Clearinghouse. Also abolish CFMA which created Enron loophole, which allowed the gas spike last year. Just undo anything that Phil Gramm, proud employee of UBS, touched....
Just remember that 3+ 'undesirables' can be declared an unlawful assembly at the blink of an oppressive eye. Go two by two, and bring a videocamera (to document rights violations), if your message is angry enough. If they ask for ID tell 'em you left it at home - 4th Amendment is your shield against law enforcement that doesn't have probable cause. If they are going to arrest you, there is nothing you can say to get out of it - always keep your mouth shut. No need to be disrespectful, but refuse to 'obey' oppressors.
Obama stimulats Israeli Defense Stock
Just like the last time Obama announced the decision to send more troops to Afghanistan the market has reacted and sent spectronix ever higher.
Spectronix investors are anticipating more orders and buying the stock like crazy since Obama's decision to send more troop is the beginning of December.
http://millitarystocks.blogspot.com/2009/12/obama-stimulats-israeli-defe...
Obama stimulats Israeli Defense Stock
Just like the last time Obama announced the decision to send more troops to Afghanistan the market has reacted and sent spectronix ever higher.
Spectronix investors are anticipating more orders and buying the stock like crazy since Obama's decision to send more troop is the beginning of December.
http://millitarystocks.blogspot.com/
Goldman Sachs was bailed-out by the government because it's counterparties were bailed-out. What "profits" would Goldman have if those counterparties defaulted? They cannot say the government had to deal with the Systemic Risk that was going to collapse the system and then claim they would have been fine because they were not a part of that system! Just because they might have been once-removed from some of the bailout does not mean they could have survived if all their gambling claims turned into empty IOU's.
But forget that. Time to award big bonuses - and use a pittance of the "profits" from helping create massive misery for charity so they can earn their angel wings. Let the rest eat cake.
In isolation, I do not think they would have been damaged by an AIG bankruptcy. Their explanation seems plausible. A systemic disaster - the business death spiral - would have eventually augered through them, so it depends on how pervasive the dying would have become. This is what they mean when they say everybody benefitted from the bailout - including them. I benefitted. Should I refuse a raise?
GS must destroy America because...it's profitable.
It's not a war?
I'm glad that's what you think. Meanwhile, my benefactor, the vampire squid, gorges me with the blood of new victims. Life is good on the side of the vampire squid. We control the world, and its people are our oysters: shuck 'em and suck 'em down.
Hey, we figured it out. All we need to do is repeal only two Phil Gramm Acts of Treason. The Gramm-Leach-Bliley Act (would revive Glass-Steagal) , and the Commodity Futures "Modernization" Act ...CFMA ...(would kill CDS and Enron loophole).
There...this process and groupthought has come up with something.
Very Simple..repeal those two Clinton LameDuck End-Arounds.....
The larger issue is Corporatism; we have, to name a few,
Regulatory Capture and Financial Coup d'Etat
http://www.pbs.org/moyers/journal/10092009/watch.html
Democracy Inc.
http://press.princeton.edu/titles/8606.html
Health Inc.
http://www.pbs.org/moyers/journal/12182009/watch.html
War Inc.
http://www.youtube.com/watch?v=45ZK4dlJM0Y&feature=related
News Inc. and more and Ron Paul seems to be the only politician to say it openly
http://www.youtube.com/watch?v=Jbi-0Tg1b_g
since a military coup is not an option, nothing short of a revolution will stop this, but the National Security State would not relinquish control easily.
http://www.youtube.com/watch?v=_sstDwKTCpM
"We don’t believe that we have any form of guarantee, implicit or otherwise, from anyone and we certainly don’t manage our business as though we do."
Really? Then why did GS need a Federal Reserve-sponsored bailout? Why were they given bank status? Why couldn't they be allowed to fail? After all, if GS is only a brokerage house, then the world can live without it.
I will always maintain that the propping of failed financial institutions does more damage than any other tactic. If AIG, Fannie Mae, Freddie Mac, and the big banks had been allowed to fail, the sun would still have risen. Life would have continued.
Systemic collapse would only have been a catastrophe for the ultra-rich. Everyone else would have been just fine.
When will the actual shooting start? That is what I want to know. Why the delay?
When diapers and baby formula are no longer available locally, extended blackouts, or law enforcement gets a little too rough in front of enough people.
Graphic diversions illustrating some of the thoughts and ideas above:
Gold in Sacks http://synd.imgsrv.uclick.com/comics/sc/2009/sc090716.gif
In Goldman We Trust http://blogs.ft.com/gapperblog/files/2008/09/banknote.jpg
GS and the Fed http://seeker401.files.wordpress.com/2009/07/goldman.jpg
Skipper Lloyd http://www.investmentpostcards.com/wp-content/uploads/2009/10/goldman-sachs.jpg
Proper to make all this money? http://www.makethemaccountable.com/images/0904/GoldmanSachsProperNews.jpg
van Praag's To-Do List (classic from July) http://www.investmentpostcards.com/wp-content/uploads/2009/07/to-do-list.jpg
Those were all great CD. Thx.
To show charity, GS should hold their holiday party in a mortgage-defaulting, blighted community. And instead of paying for use of any facility, they can let the people there root around in the garbage that is left after the party is over.
Someone should tell the good Mr. Lucas van Praag that the correct phrase is "de minimis" not "de minimus". Such basic verbal ignorance suggests, first, the likelihood of broader intellectual deficiencies on the part of Goldman's chosen spokesman, and, second, that the lawyers who undoubtedly expended hours poring over every carefully selected word in this artfully crafted response are themselves equally illiterate. Draw your own conclusions regarding the substance of these remarks.
They have an explicit guarantee:
TOO BIG TO FAIL
The fact that they cited their big number balance sheet figure shows that this is their weakest point. While trying to put it in the context of numbers, they try to frame the argument. Of course it is not about numbers, but rather the capture of the monetary system via dominant control over the Treasury. The guarantee is that the government letting Goldman Sachs fail would be the last thing it does if GS has anything to say about, and it just so happens they do. This allows the firm to "manage its risk" in a fashion that stretches not its balance sheet but that of the highest regarded borrower out there, the government. It is this control over both sides of the printing press that creates this guarantee and makes this statement:
An outright lie. The fact that they are taking such an enourmous amount of risk shows that they are indeed relying on the guarantees of being the definition of too big to fail into account when they manage their "business", although I would rather call it an establishment, since businesses usually make something. This is closer to running a casino,where everyone is forced to play, with the biggest money in town backing you in case anyone gets lucky.
if Mr Van Pragg believes that Goldman has no implicit guarantee, perhaps he should answer this question:
1) Would the failure of Goldman Sachs be a systemic risk to the financial system?
If yes, then there is an implicit guarantee.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaLwI2SKYQJg
Wow, great catch buzzsaw... A minor piece about Goldmanites moving offices turned into a litany of the taxpayer largesse the firm collects day in and day out. Kudos to Ms. Harper - a wonderful pre-Christmas gift to our friend Lucas.
Now if only we could get more people in positions of power (and elsewhere) to READ...
In other news, Mr. van Praag has been unusually busy this past weekend:
http://www.businessinsider.com/goldman-sachs-responds-to-london-rumors-fact-based-journalism-in-the-uk-is-an-oxymoron-2009-12
Note the peculiar lack of categorical denial, instead employing masterful inflection of the incoming fire by debasing the journalistic community in the UK re: this story in The Independent instead of responding to its substance...
I will go out on a limb to predict that a beautiful public-interest (puff) story a la Neel Kashkari complete with soft focus, puppies and fireplace is already in production (at a minimum, though they may be more ambitious).
http://www.vcstar.com/news/2009/dec/19/squid-fishing-in-ventura-santa-barbara-counties/
How much you pay for your squid? In Thai markets small for $2 a kilo, $4 for large.
Among all GS bs spelled out by ZH, the easy fruit is this:
I want to see a controlled test in which ANY group of GS traders can reproduce the results of $100M plus trading days and only 3 losing days in a 9 month period. While I have no smoking gun, this result does not happen!!!!!!!
If you win every hand, I may not know how you are cheating, but I still know you cheat. Don't. Do. Business. With. Squid.
Tyler, remind VanProd none of us are buying this 3+ standard deviation event.
Also, if opec had skied oil to $150, some country would be looking for a new head to replace the one US offed. When goldie / fed cartel does it, they call it profit. For that alone, Blankie should be looking for new job, just glad to get out.......
Stiglitz also points to the Fed’s $182.3 billion AIG bailout as an example of how policy has been tilted to support Goldman Sachs.
“The biggest single gift was the AIG rescue,” he says. “No one has ever provided a good argument for why we did it other than we were bailing out Goldman Sachs.”
GS got 12.9 billion after the Federal reserve started loaning AIG money. In exchange for that 12.9 billion, they returned 4.8 billion in highly liquid securities to AIG - 4.8 billion in cash for 4.8 billion in cash equivalents. In addition, they sold 5.6 billion in CDO's to Maiden Lane III, which they say were marked to market. People can argue about that all day long, but Deloitte and Touche did not have a material disagreement with the value.
So that leaves 2.5 billion (12.9 minus 4.8 minus 5.6 = 2.5). So to get 2.5 billion to GS, we injected 182 billion (potentially) into AIG. What you have here is a Nobel Prize winner who can't think his way out of a paper bag.
And since the bailout, GS has been sending collateral back to AIG.
"Goldman Sachs was the biggest beneficiary, receiving a total of $12.9 billion in cash, consisting of $5.6 billion to cancel insurance on CDOs, $4.8 billion to repurchase securities and $2.5 billion of collateral."
I think there may be a few conceptual flaws in your arithmetic, regardless of whether Stiglitz is correct. $5.6B cash - for ripping up insurance contracts. Net profit, right there. $4.8B to repurchase securities which no one other than the US Gov't was buying at the time. 'Highly liquid' you say? Hmmm... it seems there were some who disagreed with that characterization in late 2008. As to D&T not having disagreement... are you for real? In any case, since the federally sponsored program was in place to create market for said securities, you may even technically be correct that they were 'marked to market' -- the market of one. And $2.5B was collateral payments - wouldn't GS be entitled to keep these, as the credit events these were protections against actually DID take place?
And as to whether an outlay of $180B is insane to effect a direct payment of a mere $13B - you a) have not really been paying attention to federal spending plans and policies over the last few decades, and b) are ignoring the incredibly lucrative market of continued issuances of the derivatives/swaps which brought AIG down, as well as the further windfalls generated by the 'unwind' of AIG's positions. The initial $13B may very well have been the mere first installment, a directly traceable payout...
The last minor discrepancy -- if any of what you are saying is true, might not LvP have mentioned it at some point over the course of the last year?
Deloitte and Touche audited the Maiden Lane III financial statements. The CDO's are level three. They have an extensive discussion of it (they appear to be valued at around 53% off par). In the two months held, Maiden Lane did write them down, but that would not necessarily mean GS's CDO contribution went down. The vampire squid is intimating his contribution to ML III has gone up since the audit was done.
Audit link:
http://www.newyorkfed.org/aboutthefed/annual/annual08/MaidenLaneIIIfinst...
They are declaring $517,000 in interest income for the two months held. Based upon that, I do not think the model estimates of value can be very far out of line.
Are you THE Giovanni Zucchetti?
Still working at SocGen?
Careful Fellas, first they respond to your queries, then they let you in their huddles, soon you'll be a freshly-minted MD and Tyler Durden will be as masked as George Schultz' tiger tat on his ass....
Marcus Goldman like many priests of the Ashkenazi tribe was wholly obscessed with maintaining the supposed purity of his ancient bloodline requiring that he marry his first cousin Bertha Goldman and why he arranged the marriage between his youngest daughter Louisa and Samuel Sachs, the son of close friends from Lower Franconia, Bavaria, but most importantly whose veins contained the same running wine. For almost fifty years after its inception, Goldman carried out this same protocol throughout the firm for all of Goldman Sachs partners were members of "intermarried" families. With what great paternal pride and boastfulness would the grand luciferian patriarch now preside.
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