Goldman's Cohn On The Fed's One Way Con

Tyler Durden's picture

While stating the somewhat obvious - that the Fed's actions will cause 'pain' when they (try to) stop QE - when it comes from a high-ranking officer of the establishment elite (as opposed to a tin-foil-hat-wearing, BLS-exposing, HFT-undermining, fringe blog) such as Goldman Sachs' President Gary Cohn, perhaps more mainstream will begin to question the path we are on. Cohn's interview on Bloomberg TV ranged from his reading habits (Greg Smith's tell-all) to the world's central bank printfest and how "we will have to go through the pains of stopping QE" and from his views of the election status quo to the global economic malaise, he does so well on the reality front - until he shovels undying praise on Mario Draghi's back for his "spectacular job" - though admits he has not solved Europe's real problems.



Cohn on whether he'll read Greg Smith's book:

"Is it coming out next week?  I probably will read it."

On Federal Reserve stimulus:

"I worry about everything. My job is to worry. It's something that you have to worry about. The Fed has pretty good information what's going on in the economy. They've got pretty information what's going on with employment. We know that the Fed wants to create job growth. We know the Fed wants to create asset appreciation. I understand what they are trying to do, whether I agree with it or disagree with it. I understand what they are trying to do and I will tell you this is going to be difficult to stop or to exit. There will be an end of quantitative easing. We will have to go through the pains of stopping quantitative easing."


"I don't know if I disagree or agree. Right now based upon our economic cycle I understand what the fed is doing I understand what the ECB is doing I understand what the bank of England is doing and I understand what the bank of Japan is doing. Unfortunately they are all kind of doing the same thing so it has less impact than it might if the others were on the sideline. But I understand in this globalized economy where we've got free movement of currency, where we've got free movement of risk assets and everything is relatively fungible that the Fed is trying to do what they think is in the best interest of the U.S. economy."

On the importance of November's election:

"We will see what happens about the election. I don't know more than anybody else does…It looks like to me the Republicans will maintain the House, it looks like to me the Democrats will retain the Senate. And I don't know what's going on in the presidential race and I think all of us are operating under those assumptions, but I can guarantee you this: we've got other plans with other assumptions if the world were to change."

On the global economy:

"The global economy is in a tough place, and the reason it's in a tough place is that we're in a unique period of history where all of the major global players in the economy are going through a relatively tough period of time.  If you look at what's going on in the euro zone and what's going on in the United States, you look at what's going on here in Japan, and you even look at what's going on in China today, you've got a lot of anxiety in the system to where were going and how we're going to get the global economy growing. The world that we live in today also has a linkage between all of these major economies around the world and what we're really looking for is one of these countries, or some of these countries to show some leadership in growing their economy where other economies can grow with them at the same time. At this point we're really lacking some leadership."

On whether Goldman Sachs is at a funding disadvantage compared to the bigger banks:

"There's this common view that we're at a funding disadvantage because of the deposits. We have a fairly large deposit network right now, close to $60 billion of deposits out there. The reality is that you can only use deposits for a very specific part of your business. There's a couple rules called 23A and 23B that do not allow you to take retail deposits and move them into your investment banking business. So our investment banking business is on equal footing with everyone else's investment banking business when it comes to financing that business. For the businesses where you can use deposit funding, they clearly have an advantage, but their books are so much bigger to our books relative to their advantage. We don't need more deposit funds to fund our business, in fact, of the $60B in deposits we have today we don't even have use for that entire $60B in deposits."

On whether he still believes that Europe needs a Lehman-type moment:

"I still really do believe it needs a moment. Remember this is politics, this is economics, this is balance of payments, there are a lot of factors at play here.  I'm not sure if Spain's going to be one of those moments, I'm not sure that Greece still might not be one of those moments. I'm not sure what the moment will be, but I do believe there's going to be a moment where everyone takes a deep breath and says we've got to fix this situation."

On Draghi:

"I think Mario Draghi has done a spectacular job he really has.  Since Mario Draghi took office as the head of the ECB, he came in and showed really leadership, lowered interest rates has done out and done all of the other things that you would want a dynamic central bank leader to do. He has removed a lot of the risk off the table, but he hasn't dealt with and he can't deal with the real long term problem of Europe which is economic growth."

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Jason T's picture

good CEO's read a book a week I was once told.  

redpill's picture

I honestly don't care what this squidfuck has to say.

NewThor's picture

Ponzi + Con = Conzi

Which is the oppositte of the Fonzi,


Zer0head's picture

Just before 8am today on Bloomberg TV Sara Eisen in Tokyo and Tom Keene in NY were discussing Nextel and SoftBank and Tommy boy started blurting something about how Goldman new this with the implication that Sara and he knew this as well vis a vis her schmoozing with the likes of Kohn. Sara glared at him and he shut up  (sadly no video clip of that intercourse)

MillionDollarBonus_'s picture

Guys, it’s just scary how right I am about the markets and the economy. I bought S&P futures on the first weekly close above 1400 during this summer rally in line with my bullish view of the economy, and my position was literally moving my direction within days. Haha ... It’s surreal how smart I can be sometimes. It’s like I can just see the future; it’s just there in front of me, and I’m surfing the markets like perfect wave on a clear day. 

Peter Pan's picture

Not very cohnvincing as far as I am concerned.

redpill's picture

I like to press my crotch against the computer screen because it makes me feel closer to you MDB.

Sock Puppet's picture

You some kinda "Constitutionalist"?  This is what happens to subversives.  Might even happen you.

Link: "He's a Constitutionalist"

JohnnyBriefcase's picture

This is exactly why I always buy new monitors.

Sixdeuce062's picture

Though the haze of your smoke filled room while checking the stock market on your Obama phone

cranky-old-geezer's picture



What?  It takes brains to figure out Bennie is gonna inflate S&P?  After 4 straight years of it?

WhiteNight123129's picture

MDB are buying on a hyperinflation call?

redpill's picture

Except they both jumped the shark.

NewThor's picture

That's still better than Betty Liu jumping Warren Buffet.


venturen's picture

I think you meant to say Corzinie...a fine Goldman product!

disabledvet's picture

How 'bout if he spontaneously combusted like the drummer(s) in Spinal Tap? Would you watch then?

fightthepower's picture

What an asshole, he could stop QE any time he wanted to.  Bernanke works for the big banks. 

LongSoupLine's picture

Fuck you Cohn, you cookie-cutter Goldman piece of shit.  Eat Shit and Die you fucker.

Pegasus Muse's picture

That Cohn dude reminds me a lot of Steve Liesman -- sounds the same,  looks the same, same supersized goofy bald heads. 

azzhatter's picture

I'll bet he's been blown by LIESman

knukles's picture

That picture's just plain wrong.

Mark Carney's picture

I was gonna say he looks like Blankfeins long lost retarted older brother......

Mad Mohel's picture

I think thats from the yarmulkes.

Meesohaawnee's picture

the biggest beneficiary of POMO. yea . painful indeed to bonuses..the only "spectacular job" draghi has done is blowin bernake and leavin some hot spunk in his face.

CPL's picture

The Rent is too damn high.

The horrible decay of incisor issues.


Would consider if their weird powers were combined.  They could not do any worse.

razorthin's picture

higher than fo years ago

CPL's picture

They could be a dual Prez/VP bid.  They could flip a coin for the job.  


i believe that with the right marketing and their names on the ballot, they could take 100% of the sick of the nonsense vote.  There's the platform


Sick of the nonsense party

razorthin's picture

They may know that pain very soon, should Romney be elected.  But I trust Romney's words about as much as I trust Obama's.

Gully Foyle's picture


Dude, Romney will be moving "left".

Maybe not radical left but John Roberts left.

There isn't much further right to go for either party without becoming Tito's Yugoslavia.

Esculent 69's picture

Further right than becoming Tito's Yugoslavia? Which right are your talking about? If because the socialistic/communistic government uses the military against it's own people it is considered politically right wing then you sir have a disconnect of the definining terms, at least in the USofA, of the meaning of words.  The Republican party was formed and has been about the Constitution of the United States which guarantees a Republican form of government; i.e. a representative government.  Like Ron Paul who believes in the limitation of government force over it's own citizens by following the constitution is what political right means in this country. The political left in this country believes the constiution is outdated and is constraining to let the political elites to do what is best for the greater good. If you do not go along with  the greater good or you speak out in a  way that is displeasing to the government then you find yourself in jail like the guy who the government says is responsible for the video that caused the attacks on 9/11/2012. The guy is still in jail for his freedom of speech. Those that use authoritarian tactics againsts it's OWN PEOPLE are politically LEFT!  The politcal right want to use the military to protect you from outside enemies.  One wants to inprison/ kill its own people while the other wants to protect its own people from those that wish to kill its fellow citizens no matter which party they belong.  

Ghordius's picture

The Squid supported Obama, last time. The Squid is supporting Romney, this time. Just saying...

Atlantis Consigliore's picture

Short Limit Bonds, short cash bonds, short munis, short everything.....

not taking the punchbowl away, TAKING THE PRINTING PRESS AWAY  

and the humphrey hawkins, employment FED law.

Dr. Engali's picture

I didn't hear him say anything about muppets in that piece.

Gimleteye's picture

when the crack addict goes cold turkey--ouch! how does QEwhatever stop?  high interst rates?  bank runs?  pain indieed should be felt by the irresposnible bankers, lamposts come to mind, maybe they will see the way


lotsoffun's picture

to some degree - QE does actually stop bank runs, and i'll explain why.  because - by forcing people into risk assets to see any return - they move their money from 401k and savings accounts into the stock market.  which - as we know means that when the time is right - the casino owners sweep the table and collect what you thought were your winnings.  meaning, since you took it out of FDIC money market account and bet it - those $$ you thought were yours are now mine.  and - there's no need to go to the bank for a bank run and take your cash - because???  come on guys.  come on.  IT IS GONE.  problem solved.  no bank run.

does anybody think i'm joking and they don't know this? 



Zero Govt's picture

"We know that the Fed wants to create job growth"

How's that going, 4 years and $4 Trillion down the sink????

2 months ago the Fed said they'd take a calm "wait and see" approach to unemployment. 

Last week the Fed said they're pissing an unlimited amount of money into outter space to stimulate employment.

What changed so dramatically in 1 month?

We weren't born yesterday Mr Con, sorry Cohn, the Fed is lying through its teeth it gives a shit, it's just another sick fucking lie to cover your bankrupt arses

Gully Foyle's picture

Zero Govt

Dude, how many rich people kept their jobs and actually increased their income?


Zero Govt's picture

Mr Cohn is crap, his bank is garbage, if he had a stitch of integrity he'd go see a liquidator tomorrow and save Bernanke another material lie to the country about helping unemploymnent, a smokescreen for him bailing out Goldman Sucks (again???)

Cohn is lying through his teeth the Fed keep an eye on unemployment because 2 months ago they said they'd take a "wait and see" approach, but they beat the latest news on unemployment (a drop in unemployment) to the punch and rolled out the big guns

why do nothing 2 months ago with "wait and see" and when the official unemployment figures are officially improving this month press the panic button???

it's absolute bolllocks, they've been caught with their pants down

Zero Govt's picture

Gully, i didn't junk ya (honest) but to answer your question on the specific issue of Bernanke creating jobs for the financiers yes he's kept them in (worthless) jobs but he's funneling money to bankers that are shedding jobs by the thousand

why funnel money to an industry culling jobs? Why back bankrupt losers anyway as a way to recovery?

in every way Bernankes arguments don't hold water and his lying's exposed


redpill's picture

Gold is not a stock, it's a reflection of the value of the currency it is priced in.  For the price of gold in dollars to collapse, the value of USD would have to sharply increase.  And in case you didn't realize, we're in a race to the bottom of global fiat currency devaluation.  Try to make that reality fit with your chartsturbation.


Bay of Pigs's picture

"Blow off top"? What the hell are you talking about dude?

LOL. Get.The.Fuck.Out you retard...

centerline's picture

Elliot waves?  In this centrally planned world?  Shit.  I speculated back in 08' that this sort of analysis was used to assasinate bears and fuel the BB put.

I could imagine about anything though... including a crushing blow to PMs in the short term.  Only investors/traders/speculators would be hurt though.  The growing number of people trying to hedge against reckless bullshit by central banks and governments could care less about the price relative to already purchased metals.

fuu's picture

Why don't we play a nice game of STFU there Mr. Fisher.

muppet_master's picture


is "investing" in the QEorganizer's pumped up PORKULosus CON casino...


gimme a -35% drop from now in spx to 950 area..THEN i'll buy b4 dead cat bounce....then watch out below 3-2009. 

yogibear's picture

LOL, Bernanke and the bunch of wacko Fed member Keynesians stop? No way. 

They are trapped. 

They will allow and encourage massive inflation. They want it.  If Bernanke's son has $400,000 of school debt doesn't that tell you what his plan is? 

Bernanke intends to inflate like there is no tomorrow!


Bernanke recently stated that his son, a medical student, will graduate with $400,000 in student loan debt. 


Landotfree's picture

if you don't have inflation then the system starts to implode.

"They want it."   They can want the moon to be made out cheese but it isn't.   

If the Fed could magically produce what you say we would not be missing the $20 trillion from the system.  The Fed is no more powerful than the Wizard of OZ, it's all you nutbags that think the helicopter is coming that momentarily stopping the implosion.   The implosion will begin again in due course.