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Goldman Says Fin Reg Reform Not So Bad, Even As Market Whacks More Market Cap On Possible Prop Spin Off
It seems these past few weeks Goldman's favorite topic to discuss is Fin Reg, which the firm pretends to support even as it dispatches an army of lobbyists to prevent it from occurring. A new piece from Goldman's Richard Ramsden attempts to quell the panic gripping financials in the wake of reports that the Volcker rule may have a green light to passing. Ramsden writes, "The argument for big banks does not rely on value alone. Consumer credit is improving, and we think there is more to come based on the underappreciated improvement in early unemployment" and he underscores that "Transfer of credit to government balance sheet [is] most pronounced in residential mortgages." So basically buy the banks because courtesy of the shadow backstop to consumers and banks in the form of the $6.3 trillion timebomb of Fannie and Freddie, consumers can buy more crap they don't need with money they no longer pay their mortgages with, as Uncle Sam is footing that bill in perpetuity. Indeed Ramsden concludes: "The argument for big banks does not rely on value alone. Consumer credit is improving, and we think there is more to come based on the underappreciated improvement in early unemployment." Once again Keynes rules, at least in the heads of misguided analysts who are confident that every problem in society can be fixed by issuing new trillions in soon to be toxic debt.
In the meantime, the recommendation is for leaving banks alone, as otherwise Wall Street bonuses may get the same impairment that bank balance sheets have avoided so far. So far today, the market is looking at Fin Reg reform and is thoroughly unimpressed with the Goldman strawman of the consumer resurgence.
And after all, what is the big deal. Hasn't Goldman said about 1 trillion times that prop trading is just 10% of its revenues? Why should the market punish the stock so harshly if Goldman is forced to spin off prop trading? Just cut off 10% of the firm's market cap and we are done. Too bad, the drop from $185 to $140 is more like 30% and climbing. Could Goldman, gasp, be lying?
Some useful charts for those who do follow fin reg reform closely are as follows:
and
In the words of several former presidents, make no mistake: Goldman is now fighting for its most profitable segment - its discount window backed hedge fund operation. As we expected yesterday, should Volcker be close to passage, we expect at least a 10% drop in the broader market (with Goldman leading the charge). Whether Goldman will short itself preemptively, and use the proceeds to margin and also buy CDS on itself, we do not know. After all, Goldman is merely a "market maker." And if you don't understand what it means, don't worry, Goldman does, and it is too difficult for mere morts to grasp.
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Don't worry, there is always a way to play system and profit.
Have they released a press release, an up or down call, or in general moved their lips (or the squid equivalent)?
If any of these things have occured, then yes, there is a 99 percent chance of lying and 1 percent probability of a terrible mistake, wherein they they mean to lie but get it wrong and actually speak with unforked blood funnel.
"As we expected yesterday, should Volcker be close to passage, we expect at least a 10% drop in the broader market"
Yes, as Max Keiser is fond of saying, the financial terrorists will strike again. And if Ron Paul (or any other congress-critter with some chutzpah) should point out--ahead of time-- that by voting on this issue, we could expect this to happen, well it's not so much Adam Smith's "hidden hand". Give 'em the finger.
I may be optimistic, but I am thinking the Volcker Rule will pass, and that in 6 mos time there will be no Goldman Sachs. If I'm right, a round of Johnny Walker green label for everyone.
Speaking of Ron Paul...He re-exposed Becky Quick as the dunce she is, this morning on CNBC's "Squawk in the Gutter."
Quick...so your gold ideas haven't really 'panned out" (no pun intended) as well as the gains in equities since Bretton Woods
Paul...I don't know much about that Becky. I bought all my gold at $35/troy oz. after Bretton Woods!!!
Quick... <<silence>>
+ 100
This GS story reminds me of when all of GM's profits and growth was driven by its financing and trading..... and we all saw how well that turned out for GM stakeholders.
Do the math, remove all of GS's prop trading profits and what is the top-line growth number ? They can kiss those bonuses goodbye as well.
Barack O'banker will do whatever it takes to save current Wall Street system - even if that means the complete destruction of the US economy.
They're all going to blow up whatever they do. It's just a question of how and when.
Think the government can keep the game going until November?
No way in hell...
it may have to do with the certainty of those profit. 100% win day streak and all. possibly also with decreased fill quality for the rest of the firm. if you got quant who tries to frontrun you day in day out at your disposal he can probably hook you up with a good strategy to avoid it.
The more the market falls the more pressure this administration will be under to cut a deal quickly with the banks.
The White house knows that HFT is the tool that that can be used to get the market back to bragging levels...
I have to take a time out from my usual hobby and entertainment of ridiculing Obummer and his owner Lloyd B. God for this off topic rant...
If I see Lance Armstrong... I swear I would like to ( Read: figuratively... NO THREAT NCA, FBI Homeland Insecurity)... punch him in his testicular cancer... figuratively.
Radioactive Ball Boy with the Illegal Blood Enhancers...
If you want to race, get on the freeway like every body else.
A Broke Ass Town Wasting MORE Tax Money It Does Not Have
In a nameless university town in Cali with 55k people and a $1.3 million deficit, in a small county with a $3 million deficit in a state with a $20 BILLION deficit... is paying the usual cops $48 to $60 an hour plus overtime cops to block off and direct traffic so Radioactive Ball Boy can ride around in circles through town.
You fuckers in your spandex bitch bike suits... do something useful.
This place is so fucked up I couldn't even get across main street on foot... some of us have work to do you idiot Amerikan cult of personality lovin' Radioactive Ball Boy worshipers...
I Hope You Grow Bitch Tits
And Lance... I hope you grow Bob size bitch tits and have to drain them half way through the race. Give Radioactive Ball Boy a dope test....
And now back to Lloyd B. God and Obummer...
The protests have started. On Huffington Post, protesters storm B Of A bank in Washington DC., forcing it to close.
K street under demonstrations
I got hopeful for a minute until I found out it was SEIU employees doing the protesting. That's just trading one leech for another.
But remember folks, the best form of anarchy is to go take your money out of your Fed member bank and put it in your local credit union. Or keep it at the house. Heck it's not like you're really going to miss that 0.2% savings interest anyway.
Your second best form of anarchy is to buy some gold or silver every week. You can even do pre-1964 coins, that way it's still legal tender and can't be confiscated.
come on! at least they're out there. Who do you think gonna lead protests and change, day traders?
If you're against this system, better learn to make friends with the unions. They're always the first and most boots on the ground.
Wont they spin-off investment banking and keep prop!?
Look at who is advising these fuckers: (from Bloomberg: http://www.bloomberg.com/apps/news?pid=20601087&sid=a3V0EC3rMHIg&pos=5)
So ... let me get this straight. They hired (or consulted with) a former chief advisor to the same Senate Subcommittee which called GS to testify about its possibly illegal/fraudulent trading activities and Obama's former White House Counsel is advising on matters related to the SEC and Senate Investigation.
I am absolutely outraged and so should everyone else. The Senate should refuse to conduct hearings until these connections are terminated. I thought this kind of thing was a violation of legal ethics rules because it gives the "impression of impropriety." Just goes to show that rules do not apply to powerful people.
The public should be up in arms over this kind of activity. Ridiculous!!
P2 - That sounds about as legitimate as a perfect trading quarter to me....
We are being systematically de-sensitized to fraud and unethical conduct.
EURUSD / EURJPY continues to show buying support on intra day chart.
EURGBP daily chart gives mild bullish warnings.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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I think that this financial reform would be a great decision for many people. It is hard nowadays to keep your financial wellness because of world wide crisis so such reforms can be really helpful and they msut be approved. Thanks for the nice post here and keep publishing such nice ones in the nearest future too.
Regards, Adam from priligy
Finding and shorting Chinese frauds is turning into a nice little cottage industry. Soon everybody is going to be looking for their own.
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