NYT: Eloquent Goldman Bashing
The whispers are rampant: Goldman Sachs earnings are gonna top $2 Billion in Q2.
On Tuesday, we will learn if they have pulled another rabbit out their hat — along with those $2B net. All the chatter has been about a surprise to the upside.
The NYT has an interesting article in Monday’s paper (online tonight) about Goldie. Its filled with some juicy quotes:
“On Wall Street, where money is the ultimate measure, Goldman is both revered and reviled. Its bankers and traders are sometimes referred to as the Bandits of Broad Street. An executive at a rival bank characterized Goldman traders as “orcs,” the warlike creatures of Middle Earth in J. R. R. Tolkien’s “The Lord of the Rings.”
Even mainstream America is taking notice. An article about Goldman in a recent issue of Rolling Stone, by Matt Taibbi, characterized Goldman as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Goldman dismissed the article as the ramblings of conspiracy theorists.”
Orcs? Vampire Squid?
When even the NYT gets into the spirit of eloquent Goldman bashing, you know you are seeing a new cultural zeitgeist take place.
Fun stuff . . .
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Source:
Goldman Sachs Likely to Post Huge Profits, Analysts Say
GRAHAM BOWLEY and JENNY ANDERSON
NYT, July 12, 2009
http://www.nytimes.com/2009/07/13/business/13goldman.html
July 12th, 2009 at 8:48 pm
yes, pray tell, all we Need to hear is that the Accusation, afoot, is, merely, “the ramblings of a conspiracy theorist..”.
Of course, their, GS’, greatest benefactor, The FedRes, meets In Private, on a regular basis, to decide the Cost Basis of Every transaction throughout the Economy, of the US–and by extension, thank you Petro $– the Rest of the World..
Them, and the Horse they rode in on..
July 12th, 2009 at 8:52 pm
“a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
That’s probably the greatest line I’ve ever seen written about a business topic. Brilliant ….
July 12th, 2009 at 9:02 pm
this excerpt from the article is more enlightening-
“In addition to the federal money it took last fall, it benefited from the government’s bailout of American International Group, receiving an almost $13 billion subsidy from taxpayers after losing money on counterparty exposure to the insurer and has $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation.”
subsidies from the taxpayer- and federally insured bonds- and plenty of play money to trade with before paying back the tarp- and most likely inside info from the highest levels of government-
I’ll 2nd hoffer’s last comment
July 12th, 2009 at 9:18 pm
Don’t forget how they were able to somehow release earnings that conveniently omitted Dec. 08. That was some trick!
July 12th, 2009 at 9:22 pm
I don’t care how much money they make at GS. What annoys me is that GS pushed very hard for bailouts of counterparties. The windfall profits have very little to do with skill or trading acuity.
July 12th, 2009 at 9:22 pm
If we are going to believe that Goldman is really the master of the universe, here is my scary thought: What if the reason earnings for December were not reported/skipped was that they had a profit, not a loss, a really big profit.
July 12th, 2009 at 9:27 pm
http://www.youtube.com/watch?v=zVZFlBJftgg&feature=related
July 12th, 2009 at 9:38 pm
“If we are going to believe that Goldman is really the master of the universe….”
My reaction would be to buy GS stock. I’m with everyone as far as the “evilness” of GS, but like Haliburton, I can just go buy some of the company and enjoy the ride.
What the NYT article inspires in me is an “anti-GS zeitgeist” trade. Will this escalate to the point that Obama has to throw them under the bus?
July 12th, 2009 at 9:53 pm
I’m too contrarian to jump aboard the lynch posse…
July 12th, 2009 at 9:56 pm
We may have finally found the last possible thing Goldman can manipulate…Goldman itself.
July 12th, 2009 at 10:03 pm
Karen, like the French say: You have raisins.
July 12th, 2009 at 10:16 pm
Hey Karen…read this excerpt from Taibbi in Rolling Stone and then see if you want to join the posse:
Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners – old people, for God’s sake – pretending the whole time that it wasn’t grade-D horseshit. But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling. Even worse, Goldman bragged about it in public. “The mortgage sector continues to be challenged,” David Viniar, the bank’s chief financial officer, boasted in 2007. “As a result, we took significant markdowns on our long inventory positions …. However, our risk bias in that market was to be short, and that net short position was profitable.” In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.
“That’s how audacious these assholes are,” says one hedge-fund manager. “At least with other banks, you could say that they were just dumb – they believed what they were selling, and it blew them up. Goldman knew what it was doing.” I ask the manager how it could be that selling something to customers that you’re actually betting against – particularly when you know more about the weaknesses of those products than the customer – doesn’t amount to securities fraud.
“It’s exactly securities fraud,” he says. “It’s the heart of securities fraud.”
July 12th, 2009 at 10:32 pm
SB-
Amen brother
July 12th, 2009 at 10:37 pm
With the revolving employment door that exists between GS and USG positions, how could there not be complicity? That’s not a conspiracy theory…it’s a fact.
July 12th, 2009 at 10:45 pm
SB, I subscribe to RS and have the article spread out on the table : )
July 12th, 2009 at 10:48 pm
The GS hate reminds me of the IBM hate that went around in the 80s and 90s..
July 12th, 2009 at 10:56 pm
Barry,
I’m surprised you haven’t commented on the GS trading software theft and the possibility of them using that software to frontrun the market. With the FBI involved in the case who knows where this could lead.
http://market-ticker.denninger.net/archives/1192-FLASH-Goldman-Code-Theft-BOMBSHELL.html
~~~
BR: I’m surprised so few people know how to ise the site’s Google search function
July 12th, 2009 at 10:57 pm
@karen: I would submit to you that GS is far more powerful than IBM ever was. Maybe the hate is justified?
July 12th, 2009 at 10:58 pm
i have to go to sunset.. argue in 15 or 20… : )
July 12th, 2009 at 11:04 pm
A lot of harm can be averted by limiting size of TBTF like GS. The perverse side of me likes to root for Slytherin sometimes.
July 12th, 2009 at 11:15 pm
> The GS hate reminds me of the IBM hate that went around in the 80s and 90s..
The IBM hate was richly deserved. In 1981 IBM essentially created the PC market* (including Dell, Gateway, Seagate and thousands of other manufacturers) with an open platform, where they explained in great technical detail how all the pieces fit together. This open platform led to creating a market, one that has served PC users well.
They then tried to close the platform off, reserving the benefits for themselves (Remember the PCjr? the ‘microChannel architecture’?). This was a complete disaster for them commercially, as the free market they helped create was able to provide better customer-centered engineering more cheaply (e.g. the Compaq 386 in 1986) . Having to compete in a fair marketplace, IBM eventually recovered from their hubris, at least to some degree. Since GS alumni make the rules for the markets in which GS competes, it will have no such good fortune.
* No disrespect to Apple, Comodore, Radio Shack and the dozens of vendors before 1981 (MITS, Sphere, …), but the IBM PC legitimized the market, and its ancestors are what we use today.
July 12th, 2009 at 11:17 pm
Goldman Sachs to earn $2B in Q2.
In a related story, the U.S. Treasury today announced a missing $2B, and the Federal Reserve swears they don’t have it….
July 12th, 2009 at 11:38 pm
I’m sure it will warm the cockles of the American heart to know that each of us contributed to this great success story.
The public will also be thrilled that our bailout money is being put to good use in growing the economy… of Asia:
Pandit Globality Piques Regulators Pressured at Home
http://www.bloomberg.com/apps/news?pid=20601208&sid=ay611KakOJ8Q
July 12th, 2009 at 11:47 pm
Off with their heads!
July 13th, 2009 at 2:47 am
I love the vampire squid analogy… but if you can’t beat them join em.
I put together some analysis for the upcoming earnings that you folks might be interested in:
http://www.nakedhedgefund.com/finance/stockanalysis/going-into-goldman-sachs-earnings/
July 13th, 2009 at 3:27 am
Barry the following is written in the hope that you will push this idea: rather than selling Treasury’s warrants in Goldman Sachs, it should exercise them, gift the common stocks (including voting rights) to the American people [1] and on their behalf contribute them to the Social Security and Medicare trust funds to help cure their $56 trillion fiscal exposures (75 year horizon).
In Elizabeth Warren’s latest Congressional Oversight Panel report (July 10, 2009; page 9) [2], she reports that Treasury has complete *discretion* as to “whether to hold or liquidate the warrants upon a bank’s redemption of the preferred shares.” Last week the House Finance Services Committee held a hearing on what to do with the repayments of TARP funds [3]. I think that it would be really cool if the repayments were used to exercise the warrants for common stock and contribute them to the federal entitlement trust funds.
If you think about it—and harnessing what Albert Einstein called the most powerful force in the universe (compounding), our only hope of curing the $56 trillion Social Security & Medicare fiscal deficit (75 year horizon that threatens to bankrupt America–without politicians committing political suicide by raising payroll taxes or Medicare premiums, or cutting benefits–is an *equity orientation* much like David Swensen’s Yale endowment fund. In other words what if Goldman Sach’s common stock were contributed to these federal entitlement trust funds–thereby having Wall Street work for Main Street?
Moreover in determining the proportion of profits that should go to Goldman Sach’s employee compensation versus shareholders’ common stock dividends, the American people (via their voting rights) would have a “say on pay.” How cool is that?
In sum, it is at Secretary Geithner’s discretion whether to exercise or liquidate Treasury’s Goldman Sachs warrants. With no public explanation, his policy is to sell them. With the kind of mega-profits that Goldman (err Government) Sachs is earning via the Fed’s quantitative easing policy (which Larry Kudlow glorifies, duh?), why not exercise the warrants and contribute Goldman Sach’s common stock to help cure the $56 trillion fiscal exposure of the federal entitlement trust funds before they bankrupt America?
Why such silo thinking at Treasury?
[1] Kristof, Nicholas D., “Escaping the Bust Bowl: America’s horror of ‘nationalization’ could be defused by handing out shares to all American households,” The New York Times, February 12, 2009.
[2] Congressional Oversight Panel, “TARP Repayments, including Repurchase of Stock Warrants,” July 10, 2009 http://cop.senate.gov/press/releases/release-071009-repayments.cfm .
[3] Golobay, Diana, “House Committee Considers TARP Reinvestment,” HousingWire.com, July 9, 2009, http://www.housingwire.com/2009/07/09/house-committee-considers-tarp-reinvestment/ .
July 13th, 2009 at 3:45 am
Time for a GS renaming contest here a la “Government Motors”…?
July 13th, 2009 at 6:47 am
“In essence, Goldman has managed to do again what it has always done so well: embrace risks that its rivals feared to take and, for the most part, manage those risks better than its rivals dreamed possible.”
It’s only risk-taking and risk management if the outcome is uncertain.
July 13th, 2009 at 7:25 am
Giant (vampire) Squid
July 13th, 2009 at 7:31 am
The only thing that will make me even madder is if they beat earnings and CNBC gushes about how great they are.
July 13th, 2009 at 8:05 am
Wait…now that the housing bubble they helped create has burst, Whitney says they’ll make a fortune helping states issue even more debt.
July 13th, 2009 at 8:06 am
“The only thing that will make me even madder is if they beat earnings and CNBC gushes about how great they are.”
Get ready to get really pissed off…
July 13th, 2009 at 8:30 am
[...] The whispers are rampant: Goldman Sachs earnings are gonna top $2 Billion in Q2. [...]
July 13th, 2009 at 8:34 am
One simple thing we could do is push the SEC to institute a rule where the bid and ask prices have to stand for 1 second.
This would shut down one avenue (certainly there are many others) by which HFPT frontrun pension, mutual fund and retail customers and would serve to take away the advantage of their server co-location in the exchanges.
July 13th, 2009 at 9:18 am
I’ve been bashing Goldman for awhile now. A republic of, by and for Goldman Sachs is no kind of republic I wish to be a part of. But it’s good to see the NYT finally come around to my view.
Goldman is digging its grave if it goes through with doling out bonuses in excess of those in the halcyon days of 2007. Yes, they are the most clever guys in the room, but perhaps too clever by half. So too were King Louis XVI’s courtiers the smartest guys in the room, at least until the guillotine sent their heads, along with his, rolling across the floor.
July 13th, 2009 at 9:29 am
If Goldman were held accountable, I might actually have a thread of hope that our country will pull through this without major disaster. As it stands, I’m thinking dollar crash, social unrest, and possibly another civil war, because the cronies and corporatists have their claws in too deep, and are too short sighted to let go, like a raccoon reaching for the shiny object in the hole.
July 13th, 2009 at 9:40 am
So what if they paid back the TARP. Wake me up when they’ve repaid the AIG subsidy and stopped relying on all the Fed/Treasury liquidity programs.
July 13th, 2009 at 9:48 am
[...] Barry Ritholtz is excited to read some eloquent Goldman Bashing in the pages of the venerable New York Times and says it represents the new zeitgeist. By “eloquent” he means this part: [...]
July 13th, 2009 at 10:22 am
Well here’s a little predictory newsflash:
GS was able to engineer kick ass Q2 numbers and surprise to the upside. Meredith Whitney upgrades them to a buy the day before earnings…
And the stock still tanks tomorrow and takes down all the financials with it.
Anyone else see some “priced in” in this? I think its written all over it.
July 13th, 2009 at 10:22 am
Good idea. Let’s buy their shares and join them. Then we’ll win just like they do! Equal partners in ‘market efficiency’. We can benefit from that dividend cash spewing machine with our hundreds or thousands of shares while the CEO can use his hundreds of thousands…plus options. That’ll make us square won’t it? Wooo boy, we’re gonna be as rich as the smartest guys in the room. Look out ma!
July 13th, 2009 at 10:40 am
We don’t now have a government with the stature to stand up to this stuff. It takes a great man – like either of the Roosevelts – to take a big stand.
We have nobody even close to that today. We have a bought, simpering Congress and a get-along President.
July 13th, 2009 at 10:51 am
[...] to profit in dire economic circumstances should make it popular with investors. Although, like Barry Ritholtz over at The Big Picture, we wonder if Goldman’s consistent ability to profit in the face of dire economic conditions [...]
July 13th, 2009 at 12:52 pm
[...] unique among its peers, Goldman has turned the crisis to its advantage.” (NYTimes also Big Picture, [...]
July 13th, 2009 at 1:43 pm
Anyone see Charlie G’s rant about GS and “how are they getting away with it?” on CNBC about 1:40pm eastern? Pretty good. Guess the video will be posted soon.
July 13th, 2009 at 1:54 pm
[...] to profit in dire economic circumstances should make it popular with investors. Although, like Barry Ritholtz over at The Big Picture, we wonder if Goldman’s consistent ability to profit in the face of dire economic conditions [...]
July 13th, 2009 at 2:11 pm
http://www.cnbc.com/id/15840232?video=1181161158&play=1
July 14th, 2009 at 11:17 am
[...] about this “follow the money” idea, which skeptics seem to be warming up to. Here is a direct quote from the NYT’s Barry Ritholtz’s recent post: “On Wall Street, where money is the [...]