Comments on: A Bit of Goldman Schadenfreude http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html Sun, 22 Nov 2009 03:42:39 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50500 Anonymous Wed, 15 Jul 2009 05:54:41 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50500 I used to work at Goldman and still have many friends there.<br />the driving force behind many of the sales was simply a need for cash in a year when cash bonuses at the firm almost disappeared. You may not approve of people earning the amounts of money Goldman pays nwhen times are good, but if the cash stops it leaves a hole which needs to be filled.<br />It's also true that by any rational standard people who work at Goldman have too much of their nfuture income nand wealth invested in the firm, most totally by the possibility their jobs would disappear if the firm went under. It's also true that a process of intertia means that most people at Goldman leave far too much of their capital locked up in tthe firm and the events of last Autumn were a wake up call.<br />it is absurd for Peripheral Vision to talk about the gap between management and ownership. The investment banks more than any other institutions have enormous ownership by their employees. I used to work at Goldman and still have many friends there.
the driving force behind many of the sales was simply a need for cash in a year when cash bonuses at the firm almost disappeared. You may not approve of people earning the amounts of money Goldman pays nwhen times are good, but if the cash stops it leaves a hole which needs to be filled.
It's also true that by any rational standard people who work at Goldman have too much of their nfuture income nand wealth invested in the firm, most totally by the possibility their jobs would disappear if the firm went under. It's also true that a process of intertia means that most people at Goldman leave far too much of their capital locked up in tthe firm and the events of last Autumn were a wake up call.
it is absurd for Peripheral Vision to talk about the gap between management and ownership. The investment banks more than any other institutions have enormous ownership by their employees.

]]> By: Carlosjii http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50466 Carlosjii Tue, 14 Jul 2009 16:34:37 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50466 The inflation retarded the crisis for some time, but this broke out later, throwing millions out of employment [emphasis added]. At first inflation stimulated production because of the divergence between the internal and external values of the mark [devaluation — ed. note], but later it exercised an increasingly disadvantageous influence, disorganizing and limiting production… <br />It annihilated thrift; it made reform of the national budget impossible for years; it obstructed the solution of the Reparations question; it destroyed incalculable moral and intellectual values. It provoked a serious revolution in social classes, a few people accumulating wealth and forming a class of usurpers of national property, whilst millions of individuals were thrown into poverty. It was a distressing preoccupation and constant torment of innumerable families; it poisoned the German people by spreading among all classes the spirit of speculation [emphasis added] and by diverting them from proper and regular work, and it was the cause of incessant political and moral disturbance. <br /><br />About the German hyperinflation of 1919-1923. Professor Bresciani- Turroni in The Economics of Inflation (first published in 1931 and reprinted by Augustus M. Kelley, London, in 1968). As referenced in the article ‘The Financial Implications of Reflation’, THE GLOOM, BOOM & DOOM REPORT, ISSN 1017-1371 , A PUBLICATION OF MARC FABER LIMITED JUNE 23, 2003 <br /><br /><br />note by Carlosjii – the speculation that occurred here was in the stock market up to March 2000 and then the housing market. It is THIS product of the Federal Reserve – a moral decline into a spirit of speculation - and particularly Alan Greenspan that has been so destructive to America. The outlandish GS ‘profits’ ARE the usurping of the wealth of America which was the product of the industry and creativity of ‘The Greatest Generation’, those one and two generations before us – and we act largely as ineffectual observers and commentators on the decline and fall of the American Empire. The inflation retarded the crisis for some time, but this broke out later, throwing millions out of employment [emphasis added]. At first inflation stimulated production because of the divergence between the internal and external values of the mark [devaluation — ed. note], but later it exercised an increasingly disadvantageous influence, disorganizing and limiting production…
It annihilated thrift; it made reform of the national budget impossible for years; it obstructed the solution of the Reparations question; it destroyed incalculable moral and intellectual values. It provoked a serious revolution in social classes, a few people accumulating wealth and forming a class of usurpers of national property, whilst millions of individuals were thrown into poverty. It was a distressing preoccupation and constant torment of innumerable families; it poisoned the German people by spreading among all classes the spirit of speculation [emphasis added] and by diverting them from proper and regular work, and it was the cause of incessant political and moral disturbance.

About the German hyperinflation of 1919-1923. Professor Bresciani- Turroni in The Economics of Inflation (first published in 1931 and reprinted by Augustus M. Kelley, London, in 1968). As referenced in the article ‘The Financial Implications of Reflation’, THE GLOOM, BOOM & DOOM REPORT, ISSN 1017-1371 , A PUBLICATION OF MARC FABER LIMITED JUNE 23, 2003

note by Carlosjii – the speculation that occurred here was in the stock market up to March 2000 and then the housing market. It is THIS product of the Federal Reserve – a moral decline into a spirit of speculation – and particularly Alan Greenspan that has been so destructive to America. The outlandish GS ‘profits’ ARE the usurping of the wealth of America which was the product of the industry and creativity of ‘The Greatest Generation’, those one and two generations before us – and we act largely as ineffectual observers and commentators on the decline and fall of the American Empire.

]]> By: Peripheral Visionary http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50462 Peripheral Visionary Tue, 14 Jul 2009 15:56:16 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50462 I'm not sure how much of a story this is. They sold $700 million in stock, but compensation for this quarter alone will be several multiples of that.<br /><br />If anything, it simply reinforces the point that management and ownership are more separate than ever, and that management incentives are no longer in line with those of the stockholders. They have more incentive than ever to take risks with the firm in the interest of short-term gains. I'm not sure how much of a story this is. They sold $700 million in stock, but compensation for this quarter alone will be several multiples of that.

If anything, it simply reinforces the point that management and ownership are more separate than ever, and that management incentives are no longer in line with those of the stockholders. They have more incentive than ever to take risks with the firm in the interest of short-term gains.

]]> By: quantacide http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50457 quantacide Tue, 14 Jul 2009 13:27:53 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50457 The dillution argument makes sense, but I know if I had any non-locked shares in my at-the-time solvent, currently non-existing bank post-LEH, I would've dumped and diversified too. The dillution argument makes sense, but I know if I had any non-locked shares in my at-the-time solvent, currently non-existing bank post-LEH, I would've dumped and diversified too.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50454 Anonymous Tue, 14 Jul 2009 13:07:05 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50454 I would not be so quick to state that the sale of GS stock by certain partners was related to a lack of confidence in the future of the firm. Like many others at that time the partners may have been facing margin call on their other holdings and were required to raise cash. There was at least one story in the WSJ relating to this although I can not remember which executive it was. I would not be so quick to state that the sale of GS stock by certain partners was related to a lack of confidence in the future of the firm. Like many others at that time the partners may have been facing margin call on their other holdings and were required to raise cash. There was at least one story in the WSJ relating to this although I can not remember which executive it was.

]]> By: RTD http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50445 RTD Tue, 14 Jul 2009 11:45:01 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50445 http://www.bloomberg.com/apps/news?pid=20601103&sid=a9IV.uJ0d8Zk<br /><br />First paragraph:<br /><br />"Goldman Sachs Group Inc., which provided a $3 billion credit facility to CIT Group Inc. more than a year ago, said today that it has offset any exposure to the company with collateral and hedges."<br /><br />Last paragraph:<br /><br />"Goldman Sachs’s comments on its vulnerability to CIT Group echo comments made last year about exposure to American International Group Inc., the New York-based insurer that was bailed out by the Federal Reserve. Goldman Sachs, which also said it had no material exposure to AIG because of collateral and hedges, got $12.9 billion from the firm between the government rescue of the insurer in September and the end of 2008."<br /><br />Spot on!<br /><br />We are ultimately going to bail out CIT. Not because of concern (legitimate) over the impact a failed CIT will have on small businesses, but because Goldman will always be protected regardless of the political regime in power or the cost to the taxpayer. http://www.bloomberg.com/apps/news?pid=20601103&sid=a9IV.uJ0d8Zk

First paragraph:

"Goldman Sachs Group Inc., which provided a $3 billion credit facility to CIT Group Inc. more than a year ago, said today that it has offset any exposure to the company with collateral and hedges."

Last paragraph:

"Goldman Sachs’s comments on its vulnerability to CIT Group echo comments made last year about exposure to American International Group Inc., the New York-based insurer that was bailed out by the Federal Reserve. Goldman Sachs, which also said it had no material exposure to AIG because of collateral and hedges, got $12.9 billion from the firm between the government rescue of the insurer in September and the end of 2008."

Spot on!

We are ultimately going to bail out CIT. Not because of concern (legitimate) over the impact a failed CIT will have on small businesses, but because Goldman will always be protected regardless of the political regime in power or the cost to the taxpayer.

]]> By: Anonymous http://www.nakedcapitalism.com/2009/07/bit-of-goldman-schadenfreude.html#comment-50429 Anonymous Tue, 14 Jul 2009 08:22:19 +0000 http://www.nakedcapitalism.com/2009/07/a-bit-of-goldman-schadenfreude/#comment-50429 As Reggie Middleton points out in his blog, Goldman's Value at Risk is trending upward while their Risk adjusted return on capital is trending downward. Our tax money is backstopping Goldman's increasingly risky gambling habit. As Reggie Middleton points out in his blog, Goldman's Value at Risk is trending upward while their Risk adjusted return on capital is trending downward. Our tax money is backstopping Goldman's increasingly risky gambling habit.

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