Goldman Does God’s Work, Only Not That Well
The observations above are troubling: Goldman’s trading is by no stretch of the imagination better than average. In fact, in 2008, the firm’s prop trading was on par with some of the worst performers on Wall Street. Which begs the question: just how has Goldman managed to transform itself into a behemoth that over the past 6 months has had only three trading days of losses? The answer is simple: with no Lehman and no Bear to curb its tentacular dominance of all aspects of the Fixed Income market, Goldman can now rely almost exclusively on its monopolist agency position vis-a-vis mutual, pension, and hedge funds who are desperate to maintain a good relationship and an open dialog with the firm which rewards its best clients with market moving information ahead of all others peasants.
via Exclusive: A Forensic Reconstruction Of Goldman’s 2008 Prop Trading | zero hedge.
Chairman and CEO of Goldman Sachs, Lloyd Blankfein, at the Clinton Global Intitive in New York on September 23 (Spencer Platt/Getty)
Tyler Durden over at Zero Hedge has done a very interesting analysis of Goldman’s charitable fund, which has lost money over the last two years. He claims that the fund’s performance is based on percentages of all of Goldman’s proprietary trading, and through his analysis of the fund’s trading records, he’s made some conclusions about the performance of Goldman’s prop trading overall during that period.
He concludes that contrary to popular belief, those boatloads of money Lloyd “God’s Work” Blankfein (I’m officially calling for the systematic insertion of that nickname into any reference to Blankfein from now on) and his crew have made this year have not come from the bank’s ingenious trading decisions. They’ve come from two basic sources: one, government subsidy, and two, depleted competition, which allows the bank to charge outrageous rates to clients for services they used to have to price against competition from Lehman and Bear.
I don’t know enough about the specifics of Goldman’s charitable fund to know whether or not Tyler’s analysis of Goldman’s trading performance is warranted or not. I do know that it squares with everything I’ve been told by people in the business.
Specifically, I’ve heard more than once from traders who tell me that Goldman makes all its money gouging its clients, who either don’t know any better or are reluctant to get on the wrong side of the bank, for obvious reasons. Also, the fact that not only Goldman but all the banks have made mountains of money this year by borrowing cheap from the government and lending dear to the rest of the world is also manifestly obvious (credit card interest rates went up more than 20 percent in the first six months of the year, despite vastly reduced borrowing costs for the banks issuing that credit).
All of which puts the whole “God’s work” business in perspective. There are a lot of people who think Goldman’s p.r. department must have spent the last three weeks doing bong hits and pounding big bags of Funnyuns, given that they let one spokesdork cite Jesus in a defense of greed and bonuses in a speech at St. Paul’s cathedral in London and then let “God’s Work” Blankfein spout his now-infamous bromide to a Sunday Times reporter a week later.
It got even worse when Goldman spokesman Lucas van Praag tried to defend Blankfein by saying his comments were jokesy aside or a “throwaway response,” like, “I’m living the dream.”
I mean, shit, talk about throwing gasoline on the fire! You are living the dream — at our expense! That’s the problem, you morons! I half-expected the Van Praag story to read as follows:
Blankfein didn’t mean to be taken seriously when he said the bank was doing “God’s work,” said the bank’s spokesman, Lucas van Praag.
It was “obviously ironic, a throwaway response,” said van Pragg. “Sort of like saying, ‘Life fucking rocks from up here, so suck on my yacht,’ when someone asks how you’re doing. Or stepping right on a homeless person’s crotch instead of stepping over or around him on your way to work.”
Van Pragg added that Blankfein’s comments were also “like pouring battery acid on a sleeping harbor seal, or using an Indian slum child’s eyes for martini olives,” or like “getting the mortgage department to do the wave during a foreclosure” and “cheering and chest-bumping while two shivering AIDS patients are hauled out of their homes in blankets by sheriff’s deputies. Just an aside, you know, something you do.”
Van Pragg said the Sunday Times knew this when it published Blankfein’s comments, but instead of providing proper context, decided “to ‘spin’ it in a cynical attempt to generate more interest in their story and, presumably, to see if their interpretation could be used to generate a reaction that could be used to ‘create’ news.”
The more I think about it, though, the more I think that this must be some sort of clever p.r. strategy. I’m actually almost desperate to believe that this is a conscious strategy on Goldman’s part because if this really is what it looks like — if these people really are that blind and stupid — then that makes their exalted, entrenched position as mega-oligarchs endlessly lording over us truly horrifying, in a the-universe-is-random, black-comedy sort of way. It’s like making it all the way to the end of The Wizard of Oz and finding out that the Wizard is a hospital patient on a Haldol drip pushing a mop down the corridor of a cranial injury ward.
That’s just too hard for me to accept, for the moment anyway. So I’m choosing to believe they’re doing this on purpose, for the following reasons:
1) At the very least, these asinine statements allow Goldman to put the press in a reactive position — they’re reacting to Goldman and Blankfein, as opposed to forcing Goldman and Blankfein to respond to this or that allegation.
2) Even as the media bashes him for the insensitivity and the bad optics of the “God’s work” comment, it’s still accepting the core premise Blankfein is putting forward — the notion that all Goldman is guilty of is being really good at making a lot of money.
The thing is, if it were true that these guys were just investment whizzes and had earned those bonuses, Blankfein’s statments might be crass, but they wouldn’t be criminal. If the reporters who jump on Goldman for their pseudo-religious self-congratulations don’t point out that the bonuses they’re paying themselves got sucked straight from the wallet of the taxpayer, they’re actually going to end up pushing the line that Goldman’s only “crime” is that they made a lot of money. Oh, and they happen to be insensitive, too.
I imagine Goldman can live with that, so long as no one looks too hard at how that money got made. Maybe that’s what this is all about. Or maybe they really are that dumb. How scary would that be!
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How anyone in their right mind would think GS is a good place to put their hard-earned money is beyond me. Greedy fuckers.
Matt, thanks as usual for keeping us updated on Evildoer Central[tm], but the Downs Syndrome joke does not gibe. My cousin has Downs and is decent, kind and conscientious. He would never countenance the f*ckery at GS.
GS has their own Wizard of Oz set up: a road paved with gold that leads to the city the color of greenbacks, and oh, the rewards for their good deeds!
Just like the wizard, Lloyd “God’s Work” Blankfein is the barker calling us to join his side show. Just a regular, blue collar guy, ya know? There are certainly enough folks who are willing to give up their own greenbacks to take part in this oddity know as Wall Street: the grand charade.
I think so many of these executives live in this amoral zone – that just happens to involve a house in the Hamptons and luxury vacations – where they can defend their actions and their company’s actions by simply saying, ‘market fluctuations’. That it’s, ‘out of our hands, the “American People” are the helm of this economic ship and we are just along for the ride’. You know, doublespeak like that. (Oh, Orwell, when will you cease to be relevant?)
Do you reach this outlook on life when you study calculus at an Ivy league school? When you climb the ladder at whatever brokerage house you kissed enough ass at as an intern to get into? When you make your first big deal and do lines of coke off a strippers ass in the champagne room at Score’s?
When do you become – to quote George Dubya Bush out of context – ‘a major league asshole’? That’s when someone has to swoop in with the anti-bullshit squad and…
do what? Fuck, I don’t know. Maybe Blankfein and Co. think they are doing god’s work because god himself hasn’t stopped them yet.
[...] his own inimitable way, Matt Taibbi goes another round with Goldman-Sachs: The more I think about it, though, the more I think that this must be some sort of clever p.r. [...]
You gotta read “Too Big To Fail.” These guys were all brilliant idiots who’d been given carte blanche to do whatever they wanted. It’s almost too maddening to read, but it’s very instructive at the same time.
Lloyd “God’s Work” Blankfein (I’m officially calling for the systematic insertion of that nickname into any reference to Blankfein from now on)
_____________________________
We would also have accepted “God’s Dork”.
The American Enterprise Institute has a Department of Theology, headed by that “divine doctor” of corporate theology, Dr. Michael Novak, Matt. Think about it. Why would AEI have a need for such a thing? You’re worst nightmares about the Wizard of Oz are right. Only you left out the part about the patient raping Dorothy when he went over the rainbow on a day pass that time.
If Goldman traders and investment managers were whizzes, well,
well,
maybe they wouldn’t have ended up with AIG exposure and a bunch of terrible paper holdings that required a
GOVERNMENT, TAXPAYER BAILOUT.
So, yep, Taibbi is right again. And, Tyler is on the prowl with statistics to back it up.
Goldman is around only because they got their tail saved by government money while all the rest of us trade and invest out here in a “market” that they swing that government dough around in.
Matt,
I do have an issue with the semantics of describing GS wealth acquisition. Reporters continue to say how great GS is at “making” money. So much of what they acquire is of dubious means. Wouldn’t it be more approriate to refer to their self-wealth creation to “obtaining”, “skimming”, “procuring”, “landing”, and in some cases “stealing”. The idea that they “earn” what they obtain doesn’t seem to relect the reality.
Why are any of us surprised anymore?! Last year our “elected officials” had the opportunity to stand up for the American people and chose instead to give a massive blood transfusion to predatory capitalism and to treat them as if they were doing God’s work. The events of the last thirteen months have taught us nothing but how few honest men there are in positions of power and prestige.
I’m offended Blankstein gets to walk around wearing an expression that’s like Smiley Face on crack, especially when, thanks to guys like him, the “nation’s economic crisis has catapulted the number of Americans who lack enough food to the highest level since the government has been keeping track, according to a new federal report, which shows that nearly 50 million people — including almost one child in four — struggled last year to get enough to eat.
At a time when rising poverty, widespread unemployment and other effects of the recession have been well documented, the report released Monday by the U.S. Department of Agriculture provides the government’s first detailed portrait of the toll that the faltering economy has taken on Americans’ access to food.
The magnitude of the increase in food shortages — and, in some cases, outright hunger — identified in the report startled even the nation’s leading anti-poverty advocates, who have grown accustomed to longer lines lately at food banks and soup kitchens. The findings also intensify pressure on the White House to fulfill a pledge to stamp out childhood hunger made by President Obama, who called the report “unsettling.”
The data show that dependable access to adequate food has especially deteriorated among families with children. In 2008, nearly 17 million children, or 22.5 percent, lived in households in which food at times was scarce — 4 million children more than the year before. And the number of youngsters who sometimes were outright hungry rose from nearly 700,000 to almost 1.1 million.
Among Americans of all ages, more than 16 percent — or 49 million people — sometimes ran short of nutritious food, compared with about 12 percent the year before. The deterioration in access to food during 2008 among both children and adults far eclipses that of any other single year in the report’s history.”
Read the whole thing here: http://tinyurl.com/ylx2ofd
and if you run into Blankstein, punch him in his smarmy kisser. For Jesus.
Fucker admitted his guilt! He apologized… “for the firm’s role in some of the activities leading to the financial crisis.”
So why isn’t he on the way to The Hague to be tried for crimes against humanity? What the hell am i missing??
In response to another comment. See in context »They should be in jail, not walking the streets of NY!!! They were part of the culture that created the current economic fiasco.
…only not THAT God.
More like Mammon. Which would then only be stating the obvious.
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