Posts will probably be thin tonight because I lost a big chunk of the afternoon getting to and from and then doing a filming session for a French TV documentary on Goldman Sachs to be broadcast in the fall. The focus is whether the firm is too dangerous and powerful. They are interviewing some of the other logical suspects on this topic, such as Nomi Prins, John Carney, and Anat Admati. The session was fun even though it put me behind the eight ball.
One amusing tidbit: they were desperately pumping me to put them on to anyone credible who would say something positive, or even mixed, on camera about Goldman. They have been unable to find anyone independent of even moderate stature who will defend the firm.
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Yves,
Was anything said about the documentary being available outside of France ? Thanks.
If no official channel provides it, i’ll try to make available via other ways to nakedcapitalism followers ;)
“anyone credible who would say something positive, or even mixed, on camera about Goldman”
I’ll do it! I’ve always wanted to be on TV… ;-)
There’s a catch – you have to do it with a straight face.
The reason is Goldman Sachs does “Gods work”. That gods name is either Baal or Shiva.
You’re sure it’s not “shiv?”
OK, as someone willing to support difficult causes, I’ll say something positive about Goldman, although I am only of diminutive stature. That is that their risk managers did a good job in ensuring that their derivative contracts with AIG, triple A or not, were collateralised. Presumably, if most credit exposures had been adequately collateralised, the financial crisis would have been smaller, because it would have been harder to build up large exposures and contagion would have been limited.
Is that so? Then, why did GS pocket a huge portion of the AIG bailout? Yves? Yves?
If the counter-party exposure to AIG were sufficiently collateralized the bailout money would have been unnecessary to make GS whole. So, based on the actual events, RE’s positive spin on setting and achieving goals seems plausible.
Way to go GS.
Ok, I missed the error, my bad.
I think RE meant “were NOT collateralised. Presumably, if most credit exposures had been adequately collateralised, the financial crisis would have been smaller”. Otherwise the counter factual following ‘Presumably’ doesn’t make sense. If not, way to go steelhead.
Wait, weren’t we supposed to cheer for GS?
It didn’t: http://www.nytimes.com/2009/03/21/business/21goldman.html?adxnnl=1&ref=business&adxnnlx=1303848269-hrbSu/iaFskBNAaVrfHbWw
The bailout of AIG allowed it to pay off its counterparties in full, but Goldman already had its exposure largely covered by the collateral it had taken, so Goldman would not have lost much anyway. Other counterparties of AIG were not so well covered, so they have lost much more if not for the bailout.
Thanks a bunch Rebel. I learned something today. But, I still question the actual recoverable value of the collateral AIG posted (and so did GS).
“While Mr. Viniar acknowledged that Goldman’s relationship with A.I.G. raised what he called a complex set of issues, he was adamant that, because of the collateral Goldman held and hedging trades with third parties, it would not have been damaged directly if A.I.G. had been allowed to collapse.”
That is, in an “all in” free-for-all of an AIG collapse, lots of secondary explosions would take place and collateral that looked money-good on Monday could have been worthless by Friday. Still, my hat’s off – you were right, the vampire squid plays the game very, very well. Not good, but well. Thanks
“who would say something positive, or even mixed…”
How about… Compared to others doing similar work, they really don’t smell much of sulfur.
I’ll bet Glenn “give it your best shot” Hubbard (while snearing into the camera) would have something positive to say about Goldman Sachs. He used to be chief economic adviser to George Bush and now is Dean of the Columbia University Graduate School of Business, where he is also Russell L. Carson Professor of Finance and Economics.
So that should give him some credibility, at least for all those people who never saw Inside Job (which is the vast majority of Americans) or for all those Americans who still don’t understand that this country is a kleptocracy ruled over by people like Glenn Hubbard (again, this would be the vast majority of Americans)
Or I’ll bet those commenters who were defending Larry Summers on NC the other day would have something positive to say about Goldman, although I’m not so sure about their credibility.
GS appears to be dumping millions into a bizarre PR campaign. I’m a frequent viewer of Dylan Ratigan’s show on MSNBC, and I don’t own a teevee. So I view video from the convenience of a computer monitor. Before each video segment, the network serves up an ad. And I have been intrigued at the sheer volume of GS web ads that come across my monitors in recent months when I view MSNBC.
There may be cookies in my browser that are triggering a higher-than-average number of GS ads, but I’d sure love to know whether I’m an anomaly, or whether GS is dumping millions into propaganda to try and counteract the damage done to their reputation — as people like me (who never cared about finance in the past) start to wake up and in larger numbers say, “WTF??! Who *are* these people?!!”
I am amused by the GS ad storyline: ‘Without GS, no seed is planted. Without GS, no cow is milked. Without GS, no ignition key is turned — anywhere. Ever. Without GS, no commerce of any sort will ever occur…. Without GS, the World As We Know It Would Simply Fall Apart…’Truly, the deification of GS is a marvel to behold.
I’ve been intrigued at the amount of money, and the heavy-handedness of the GS ‘messaging’. Why do they feel the need to advertise now? And why the need to advertise so heavily to MSNBC online viewers? (And yes, those are rhetorical questions … ;-))
Perhaps for their next ad, GS might consider engaging Glenn Hubbard. Excellent idea. I’ll bet Senators Phil Gramm (R, Texas, retired), Sen Richard Shelby (R, Al, still serving), and other former – and current – members of the House and Senate Banking Committees** might also say good things about GS. Because it certainly appears that GS still has much of Congress, and large parts of the federal government bamboozled, into believing that ‘without GS, no seed is planted…’
** with the sterling exceptions of Rep Brad Miller, Sen Bernie Sanders, and Sen Carl Levin
I’ve noticed this campaign as well. Based on the ads I’ve seen, it seems geared to be a point-for-point refutation of Matt Taibbi’s reporting.
Okay, so I’m not completely nuts about the GS propaganda campaign via web ads ;-)
I hadn’t traced it to the Taibbi angle; I was thinking more along the lines of Levin’s committee hearing on Abacus last year. But I think you’re apt.
Funny I spend massive amounts of time on the Web and have not seen a single one of these Goldman ads. Wonder how they are targeting them.
If they really do hew closely to TeaLeaves’ description, they sound awful lot like the UNorth ads in Michael Clayton.
A tool like Glenn Hubbard doesn’t “rule” over anything, even his own delusions. He’s an accidental foot soldier, ignorantly following his impulses like a rat in a maze looking for cheese and deciding every now and then to gnaw through the walls instead of use the effort to actually figure out the correct path.
As for saying something nice about Goldman, they are “winning.” If you accept the premise that there are no rules other than your own satisfaction (which is their right until we forcibly stop them), then they were smarter and craftier and beat out all of their competitors. That’s what happened. “Nice” is a subjective word. I’m sure they enjoy the ego boost of knowing they are smarter, craftier and have a big lead in the game so far. Who are we to judge their preferences? We can judge their actions and we can force consequences upon them for these actions, but can we tell them they aren’t “nice” and have them care about that? Please…
One amusing tidbit: they were desperately pumping me to put them on to anyone credible who would say something positive, or even mixed, on camera about Goldman. They have been unable to find anyone independent of even moderate stature who will defend the firm.
A few things here:
1. If GS is really that bad (and I am of the view that they are), then why do people keep doing business with them? I really haven’t read a good answer to this.
2. Perhaps, given the public impression, it would be profesional suicide to say something about them on camera, regardless how “good” they are
3. I read an interesting interview with BRK’s Munger recently, where he stated that GS is probably one of the more ethical investment banks out there. No doubt he’s partly talking his book, but he may have a point–LEH and MS were hardly paragons of virtue, and I don’t think anybody could make a case that Fuld was any better than Blankfein.
Re your 1.
Because they will be open when other prime brokers / bank’s traders have gone early to hamptons to get drunk.
You forget to roll a future or a repo and its late on Friday, other brokers jerk you off, while gs screws you, but does it. They dont screw you so much that you go out of business, but as much as they can but still keep you around.
It’s like the plumber that comes in at 7pm on a Friday night, does his work before you have to leave for your social engagement; but charges you for the priviledge.
It’s not like their counterparties did not know what they were getting into.
hope this helps
Thanks for the reply.
Sorry if this sounds follow up sounds naive, but then why don’t the other bankers do the same (ie, stay late and stay sober for a couple of extra hours on the Fridays)?
I’ve never worked for an IB (although I have pored through their financial statements for years, that’s about teh most I’ve ever learned about them), but the entire industry seems to function in a very backwards sort of way–people basically pay them incredible fees to get screwed over. In essense, they overpay to get underserviced.
Economic theory would suggest that others would step in and sort of arbitrage the situation (yes, the large, well-established IBs now have government backing, but that was not always the case). Yet that hasn’t happened–some boutique firms come, but none of them ever gain a lot of market share. Why not?
Too much work?
I mean, you are already making quite a bit otherwise. In a good year it does not make your pay all that bigger. In a bad year …
Well established IBs always had backing of their respective govts. Not to the same extent as Fannie Freddie, but quite a bit of it. Did you really think the govt will let a foreign clique dominate their debt issueance? What if they are not amenable to “pursuation”?
You can’t understand the finance industry without considering it as a part of the govt, legislatures etc. Legislators write these incredible complex laws and claim to their constituents that they are doing good work, getting money from the “millionaires and billionaires” and spending it on socially useful programs. Exploiting the loopholes is what the finance industry does, and passes on most of the savings to the clients. The small bit it keeps is what drives those large pay numbers. Govt subsidy, (when the govt can print money) is that valuable. How else do you explain debt (total return swaps, repos) masquerading as derivatives (Yves must have brought up the favorable treatment derivatives receive in bankruptcy)?
Eliot Spitzer, writing for Slate, Monday April 25, 2011:
“I want to focus on the two most critical conclusions that jump out from these documents. The first has been remarked upon but bears repeating. The second, I do not believe has been discussed at all and is perhaps the more important.
First: The banks traded for their own interests directly against the interests of their clients. Goldman harnessed its proprietary trading power to go short on the subprime market. It held a $13 billion short position at one point. At the same time, it aggressively marketed the very securities it believed would founder. It knowingly sold junk to its clients so Goldman could prosper on the other side of the trade. Such is the conclusion of bipartisan investigators.
People I respect at Goldman tell me that there is another side to this story. If so, Goldman sure hasn’t told it. And the burden is on it to do so. After receiving public support worth tens of billions of dollars, and regulatory relief worth at least that much, if Goldman wants to repair a deeply damaged image, it should waive attorney-client privilege, let us see its internal documents, and have its top management answer the tough questions under oath…
to read full article
http://www.slate.com/id/2292070/
Thanks for the link. Carl Levin should hire Eliot Spitzer and give him the subpoena power he so richly deserves. And if he needed a little tech help, I bet Yves would be happy to send him her fee schedule. Here’s a vision for you NCers, Lloyd Blankfein in the dock, Spitzer asking quesitons, and Yves behind him, taking notes and whispering in his ear. Let the roasting begin!
As Chris Hedges, Chomsky, and others have recently pointed out: “Goldman Sachs, one of the financial firms most responsible for the evaporation of $17 trillion in wages, savings and wealth of small investors and shareholders, is giddily handing out $17.5 billion in compensation to its managers, including $12.6 million to its CEO, Lloyd Blankfein.”
They care about what Eliot Spitzer refers to above as “their deeply damage image” only to the extent that this might prevent them, in the future, from stealing billions more.
Patrick Bateman: There are no more barriers to cross. All I have in common with the uncontrollable and the insane, the vicious and the evil, all the mayhem I have caused and my utter indifference toward it I have now surpassed.
I am amused by the GS ad storyline: ‘Without GS, no seed is planted. Without GS, no cow is milked. Without GS, no ignition key is turned — anywhere. Ever. Without GS, no commerce of any sort will ever occur…. Without GS, the World As We Know It Would Simply Fall Apart…’Truly, the deification of GS is a marvel to behold.
Holy crap! Was that paraphrasing or did they really have the gall to put that hyperbole out as representation of their twisted egotistical narcissistic self image?
The more I hear, the more I wonder how we could have possibly gotten to the point where these kinds of things can be happening without shame, embarrassment or prosecution.
Oops. My post should have been a reply to readerOfTeaLeaves a ways above in the messages.