Goldman Sachs

[Valmy]

Even the janitors who work for GS in Hong Kong are paid like 20 months of salary per year. 

Have you applied?

[Sheilbh]

Even the janitors who work for GS in Hong Kong are paid like 20 months of salary per year.

Yeah.  My understanding is that GS have very low salaries for such a big and successful company but that everyone from the janitor up gets very good bonuses.

Sort of like the John Lewis Partnership (minus the socialism) where the pay is decent for the shop floor staff and considerably higher for the senior management but the real reason to work there is the annual bonus/dividend, which was, I think 13% of annual gross salary this year.  I think that's the lowest it's been in over a decade.

[The Minsky Moment]

  As for the AIG counterparty payments, GS claims it was fully hedged on those claims and would not have lost money had AIG defaulted.

They were fully hedged on paper - but there is a real question about how the counterparties to those hedges would have held up had AIG defaulted.  So they did have something to gain by AIG being rescued.

that said, I am in fundamental agreement with you on this issue

[alfred russel]

  As for the AIG counterparty payments, GS claims it was fully hedged on those claims and would not have lost money had AIG defaulted.

They were fully hedged on paper - but there is a real question about how the counterparties to those hedges would have held up had AIG defaulted.  So they did have something to gain by AIG being rescued.

that said, I am in fundamental agreement with you on this issue

In theory, if you are hedged with a counterparty that can't pay, you aren't fully hedged--even on paper. On the one hand, GS is claiming they were fully hedged, but on the other the amounts were so large I can't imagine any private institution paying out without a government bail (especially during the end of last year). AIG collapsed so fast that GS may never have had to get the sign off of their auditors on their hedging claim, and even if they did they may have been able to argue about an implicit government backstop.

I'd be interested to know the details, but that may never come out. If I had to guess, I agree that the government's checkbook was probably the ultimate source of any payment they were going to get. (which would have made it a bit ballsy for GS to refuse to negotiate a lower payment from AIG).

[Monoriu]

Even the janitors who work for GS in Hong Kong are paid like 20 months of salary per year. 

Have you applied?

11 years ago, I made the decision to chicken out 

[Martinus]

They have been engaging in a lot of speculations on currencies in Eastern Europe in February/March this year. The word on the market was that they were bringing down the local currencies to cash some fx options (to the degree there were talks about undertaking some governmental punitive actions against them). Could be the result of that.

[Admiral Yi]

They have been engaging in a lot of speculations on currencies in Eastern Europe in February/March this year. The word on the market was that they were bringing down the local currencies to cash some fx options (to the degree there were talks about undertaking some governmental punitive actions against them). Could be the result of that.

I read earlier that investment banks have been making money on large bid/offer spreads on bonds and on IPO business (especially related to bank recapitalization).  The article said these sources of profit will not be sustained.

[citizen k]

With friends like Goldman Sachs who needs enemies
July 16, 10:57 PM · Tim McCown - Philadelphia Progressive Examiner


I don't know whatever happened to investigative journalism.  Wall Street is robbing us blind and literally destroying the economic foundation of this nation.  Wherever he is if Osama Bin Laden is watching surely he must be thinking no matter what I do to America I could never hurt them as much as the confluence of our own government and Wall Street.  As Robert Reich notes,  Goldman's is still wagering its capitol and funding giant bets with our money and after all the damage to us financially our complicit government has done nothing to change that.

You would never know any of this because instead of the truth the press gives us the insanity of stories.  Stories like John Ensign and Mark Sanford whose behavior as atrocious as you might think it is, has nothing to do with lost jobs or beginning to create a foundation for economic recovery.  Or we breathlessly pretend that every detail of the pathetic and stupid questioning by the Senate of Sonia Sotomayer for the Supreme Court actually matters.  This woman is not on the edge she is probably one of the best qualified of any nominee recently and once again does this recreate economic prosperity?  Is this what we get instead of the whole truth?

What the press ignores on purpose is that Goldman's is still successfully playing politics.  Former Treasury Secretary Hank Paulson is a former CEO of Goldman's.  Tim Geithner, when he was at the Fed in New York was little more than a compliant dupe. Our government is chock full of Goldman's alumni who move effortlessly back and forth between Government and Goldman's looting this nation.

An example of this complicity between Government and the Wall Street looters is in the meeting where it was decided to bail out AIG.  Geithner, Paulsen and the current CEO of Goldman's Lloyd Blankfein were all part of the decision making.  The decision to bail out AIG meant a 13 billion giveaway to Goldman's because it had credit default insurance with them.  Somehow Goldman's execs and Alumni guiding the Wall Street bail out policy wasn't considered  conflict of interest by our press, who now breathlessly exclaim their awe at Goldman's recent record profits or should we call it what it really is record thefts.Paul Abrams in Huffington Post on July 15th called AIG a ponzi scheme so big that Bernie Madoff could not even match it.  AIG had no cash reserves backing the financial products it agreed to insure.  In the bail out it served as a conduit for 13 billion.  Without the bail out that Goldman's helped engineer both would have been belly up.  Instead Middle Class America is being bankrupted for profit because we are not too big to fail; they are.

Andy Kessler in The Wall Street Journal on July 16, 2009,  noted that just about every move we have made has failed.  We saved Bear Stearns.  We let Lehman's go.  We forced Merril Lynch, Wachovia, and Washington Mutual into other banks.  We took control of Fannie, Freddie, and AIG and took over two car companies.  We have a zero interest rate and have guaranteed bank debt.  We set up TARP.  When the banks refused to sell toxic assets for what they were actually worth we just went ahead and gave them the money. We are still in the economic toilet for all that money no matter how our leaders try to tell us it isn't so  You can put perfume on B.S. but you know what,  it is still B.S.

Goldman's traders have profited from taking advantage of openings left by our government aiding in reducing Goldman's competition.  Goldman's is still depending on 28 billion in outstanding debt that is backed by the FDIC which means that in reality you and I are doing the funding of Goldman's high risk operations including speculating in oil futures for profit which takes even more money out of our pockets.

It also might benefit you to know that whatever rise the Stock market has made has been made with one trillion dollars of our money that Ben Bernanke flooded the market with.  Bernanke has been the market and it will be interesting to see when Wall Street traders have to use their own money and not your and my tax dollars whether they will be buying stock then.  This is the so called green shoots they have been touting as proof their economic policy is working.

Of course you haven't heard much about this because the press is too busy trying to anesthetize us with stupid irrelevant stories.  The press has ignored on purpose, the fact that people are getting really wealthy by bankrupting Middle Class America and our elected officials are aiding and abetting this.

None of our plight has been an accident it has all been done on purpose.  The Wall Street economy has nothing to do with anything that directly affects the economy of Middle Class America.  We receive no benefit from Wall Street.  They don't even create jobs here any more.  Our government doesn't work  pure and simple.  If we were told the truth we would and should be angry as hell.  I guess I'm asking why aren't we ?

[Admiral Yi]

That's some damn fine progressive reporting.

[Martinus]

This is an interesting question though, to what extent we should recognise someone as a beneficiary of a bailout (and thus impose the restrictions that are attached to bailouts).

Say, a company A invests in dodgy securities. Then company B invests in derivatives issued by company A. Company A is too big to fall, so gets bailed out. This means that, indirectly, the bail out benefits company B as well.

I understand that this is similar to the situation with AIG and GS (with AIG being "A" and GS being "B"). Should then shareholders and managers of GS benefit from the profits that were possible only because AIG was bailed out (otherwise, the domino effect would have hit GS too).

[Martinus]

They have been engaging in a lot of speculations on currencies in Eastern Europe in February/March this year. The word on the market was that they were bringing down the local currencies to cash some fx options (to the degree there were talks about undertaking some governmental punitive actions against them). Could be the result of that.

I read earlier that investment banks have been making money on large bid/offer spreads on bonds and on IPO business (especially related to bank recapitalization).  The article said these sources of profit will not be sustained.

Yeah, which is their right. What I question is to what extent they should be allowed to actually influence FX rates by speculative selling/buying of large quantities of foreign currency on the eve of their bond/option pay out date, to jack up their profits.

[Neil]

The question is:  which would be more damaging to America:  Ballooning the national debt, or having virtually the entire financial industry blow up, taking their 401ks with them?

[Neil]

This is an interesting question though, to what extent we should recognise someone as a beneficiary of a bailout (and thus impose the restrictions that are attached to bailouts).

Say, a company A invests in dodgy securities. Then company B invests in derivatives issued by company A. Company A is too big to fall, so gets bailed out. This means that, indirectly, the bail out benefits company B as well.

I understand that this is similar to the situation with AIG and GS (with AIG being "A" and GS being "B"). Should then shareholders and managers of GS benefit from the profits that were possible only because AIG was bailed out (otherwise, the domino effect would have hit GS too).

Why not?  They allowed foreign governments to benefit, and they don't matter at all.

It wasn't Goldman-Sachs that got AIG bailed out, it was Europe.

[Admiral Yi]

Yeah, which is their right. What I question is to what extent they should be allowed to actually influence FX rates by speculative selling/buying of large quantities of foreign currency on the eve of their bond/option pay out date, to jack up their profits.

With a floating exchange rate their "right" to influence FX rates is unlimited. 

I'm not positive but I think what you described (making money by buying options then buying/selling in the spot market to move those options into the money) is impossible.

[Martinus]

Yeah, which is their right. What I question is to what extent they should be allowed to actually influence FX rates by speculative selling/buying of large quantities of foreign currency on the eve of their bond/option pay out date, to jack up their profits.

With a floating exchange rate their "right" to influence FX rates is unlimited. 

I'm not positive but I think what you described (making money by buying options then buying/selling in the spot market to move those options into the money) is impossible.

That's not how it worked.

Before financial crisis, banks offered a lot of hedging instruments against fx risk associated with, say, Polish zloty continuing to raise against US$. Now when these instruments became due, they flushed a lot of zlotys into the market, thus artificially reducing it value - which gave the banks big returns on the hedging instruments.