Goldman Sachs

Thrust upon a middle class bleary, they were plundered, while weak and weary, Over many a tainted and spurious document came a forger’s reward.

Events in Italy must be watched closely. The country that gifted Fascism to the world in the 1930s was widely admired even by FDR, who held Mussolini in high regard and was no doubt inspired in many of his own policy choices. Will Italy lead the way once more, as politicians in Europe and the US watch to see what oppressive policies they may get away with? And while Russell Napier (correctly) foresees capital controls being imposed and suggested that one parks his cash in Singapore dollars, Italians may want to get themselves out as well before the current group of Professors slams the gates shut. Things are moving even faster than one of the world’s leading financial historians could foresee.

We dont' need any water, let the mo@#$#%ker burn!

• Markets await US Non-Farm Payrolls data, released 1330GMT
• UniCredit experiences another disrupted trading session, trades down 11%, then returns to almost unchanged
• Iran causes further unease with plans to engage in wargame exercises in the Strait of Hormuz

As seems obvious from the market's reaction over the last week, European problems are not solved by short-term liquidity band-aids. In fact, as Goldman notes this week, the same economic and political risks remain even if some funding relief has been put in place. With sovereigns and financials leading one another to new lows since the LTRO, the negative feedback loops remain in full force. Given the difficulties on the road ahead – and significant ongoing differences across governments on how to resolve them – the risk of political miscalculation or errors is unfortunately still very clear. In the limit, those instabilities could still put the union on a path towards a break-up. Economic weakness in the meantime will intensify the challenges for the weaker sovereigns.

How many of those millions of dollars in cars does the "Foreclosure King" still have? How is he able to stay so warm and cozy in his castle on the intercoastal in Ft.Lauderdale staring out at his 100 foot yachts and where is the Florida Bar in all this?

As US markets remain in hibernation for a few more hours, Goldman picks out the five critical questions that need to be considered in the context of 2012's economic outlook. Jan Hatzius and his team ask and answer a veritable chart-fest of crucial items from whether US growth will pick up to above-trend (and remain 'decoupled' from Europe's downside drag), whether inflation will find its Goldilocks moment this year and if the US housing market will bottom in 2012 (this one is a stretch). Summarizing all of these in a final question, whether the Fed will ease further, the erudite economist continues to expect an expansion of LSAP (focused on Agency MBS) and an official re-adjustment to an inflation targeting environment. Their view remains that a nominal GDP target combined with more (larger) QE improves the chances of the Fed meeting its dual mandates (unemployment target?) over time but expectations for this radical shift remain predicated on considerably worse economic performance in the economy first (as they expect growth to disappoint). We feel the same way (worse is needed) and recall our recent (firstly here, then here and here) focus on the shift in the balance of power between the Fed and ECB balance sheets (forced Fed QE retaliation soon?).

How Jim O'Neill still has a job is beyond us. Not only is he the head of the worst performing vertical at Goldman Sachs, not only is he the creator of the Bloody Ridiculous Investment Concept (BRIC), but now this? Come on...

But fear not: the arrested are not the firm's "god's work-ing" employees; more of the OWS persuasion. From PressTV: "US police have arrested 17 members of the Occupy movement in New York as the nationwide crackdown on the anti-corporatism protesters continues." When we get additional confirmation of this arrest from US sources, and not-Iranian media, we will update. Luckily, since none of the protesters can close a Goldman (which is still a Bank Holding Company) checking account, we are confident the story will end here.

While we are not completely shy of saying we-told-you-so, in the case of the players in Solyndra's fantastic rise and fall, we are more than happy to. Back in September we highlighted Goldman Sachs' key role in the financing rounds of the now bankrupt solar company and this evening MarketWatch (and DowJones VentureWire) delves deeper and highlights how the squid has largely stayed out of the headlines (what's the opposite of lime-light?) in this case despite its seemingly critical assistance and support from inception to pre-destruction. Goldman's involvement in Solyndra, and its lofty valuation projections, lent credibility to the company and helped rouse investor interest and it was this private interest that was cited by DoE officials as a considerable factor in its loan guarantee program. As we said before, anywhere you look, Goldman has been there and left its mark...

I Think This Means I'm Not Getting Invited To The Squid's Christmas Party This Year :-( I understand that taking stabs at the Vampire Squid is risky, but the sources of these interviews stem from Russia and the Netherlands. Is it time for the guys stateside to represent?

It may not be quite the entire 1% but it is close. In his presentation to Bank of America on Tuesday, when discussing "talent (or tentacle) retention, Lloyd Blankfein disclosed this whopper: "Almost 300,000 individuals applied for full-time positions at Goldman Sachs for 2010 and 2011. We hired fewer than 4% of that population, and, though most had multiple offers, nine out of ten people offered a job with us accepted." In other words, it is more difficult to get into Goldman than Harvard. As a reminder, the US labor force has 140 million people at last count (or, coming from the BLS, rough propaganda guess). In other words, more than 0.2% of the entire US employed workforce (because let's face it, Goldman won't hire anyone without prior experience) applied to work at Goldman Sachs. And by the retention rating, it seems that the number one dream for every job seeker in the US is to get the fat letter from Goldman HR. Speaking of training, we also get this pearl from Lloyd: "This year, we expect to provide 800,000 hours of training to our people, an average of 25 hours per person." Just what is it that these people are taught so intensely?

Who would have thought that doing away with your prop trading unit would have consequences? Surely not Goldman spokesman Lucas van Praag or anyone who read his response to Zero Hedge from December 2009 in which he made the argument that Goldman's prop trading unit is largely irrelevant to the firm. Alas, as the last quarter showed, it was. A lot. $2.5 billion worth. Net result: GS stock is now trading at imminent MBO levels, and more importantly, there is no joy in bankerville:

• GOLDMAN NAMES SMALLEST CLASS OF MANAGING DIRECTORS SINCE 2008
• GOLDMAN SACHS PROMOTES 261 EMPLOYEES TO MANAGING DIRECTOR

However as the video below proves, it still does, and always will, feel good to be a banker.

Not on even a Sunday is the headline barrage over:

• MARIO MONTI ASKED TO FORM NEW ITALIAN GOVERNMENT
• MONTI TO MAKE COMMENTS AFTER ACCEPTING OFFER TO LEAD ITALY
• MARIO MONTI THANKS NAPOLITANO FOR OFFER TO FORM GOVERNMENT
• MARIO MONTI SAYS ITALY MUST BE PROTAGONIST IN EUROPE
• MARIO MONTI SAYS HE'LL ACT TO SAVE ITALY FROM CRISIS

And so the international advisor to Goldman Sachs drones on. In the meantime, the €300 billion in BTP sales is set to resume in just over 13 hours.

Even the squid has a bad day once in a while.