Goldman: Recession? What recession?
I'm in a horrible rush, so have to keep my remarks on Goldman Sachs' second quarter results brief.
I could say "crikey" and leave it at that.
But I will translate. Just a few months after Wall Street and the City of London were in meltdown, Goldman has reported record net revenues for a three-month period of $13.8bn, which is a breathtaking 47% higher than those generated in the preceding three months and in the equivalent period of last year.
It's boom time again, especially in the trading of credit and currencies.
And oh how Goldman's 29,400 staff have been rewarded. Compensation for the three months was a handsome $6.65bn or $226,000 per employee.
That brings remuneration per employee for the first half of the year to a none-too-cheap $384,000.
And we're only halfway through the year.
The media and political reaction to Goldman's bounceback will be fascinating to observe.
It's true that the investment bank has consistently performed better than most of its rivals.
But when that cataclysmic storm broke over the financial system last autumn, Goldman - like the rest - had to turn to taxpayers for a crutch in the form of guarantees for its debt, access to central-bank liquidity and capital.
It has recently declared that it can stand on its own feet again without taxpayers to lean on.
But some may well ask whether taxpayers shouldn't have demanded a bit more for their succour, given that Goldman is once again the world's pre-eminent money-making machine.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~04~RS~)
Comments
Sign in or register to comment.
$226,000 per employee! Where can I get an application form? Just how has this happened is a more appropriate question than "how have they done it?" What value has been created and has any wealth been injured in the process?
Complain about this comment
Ha Ha Ha!!!
FILL YOUR Boots folks, everyone else is !!!
Complain about this comment
Unbelievable! This may give false optimism to many companies that still in an awful mess. Worse still, people may actually believe Brown had something to do with it!
Complain about this comment
One has to ask how have they made this profit? What tangible fact has created it. I bet they won't say - I bet they don't know!
Complain about this comment
Hmmm, but at the expense of which other banks. Our part nationalised banks have just made large writedowns on bad loans. If one party does exceptionally well out of a deal, it stands to reason that the other party has fared less well.
What is disturbing about GS, is the large number of ex staffers working in highly placed position in central banks, regulator offices and Government Treasury departments in all sorts of countries around the world. I am not suggesting for one moment that they are retaining allegiances to their former employer, but ....
Complain about this comment
It's main competitors have 'left' the playing field. The Accounting Board in the US has weakened regulation and recommends banks can mark toxic debt to the banks own models and interest rates are low thanks to government intervention so trading opportunities are greater than ever before. Also, they will not lend at rates any where near base rate so the profits are being made from businesses and individuals. How lovely for them and how disgusting. The company will abuse the system for as long as they are allowed.
Do not be surprised by the profit. If it can't do it now it never could. Problem is the bonuses whilst the taxpayer sees job losses rise. Moral hazard as a term is out of favour but it just may return now.
Shame on them and the Obama administration for caring more about banks than small and medium business and savers. Don't forget the people who need a loan to get by who can't get one without paying huge interest rates.
Complain about this comment
Perhaps Gordon can now borrow from Goldman
Complain about this comment
Surely we need to realise that Bankers can never trusted to self control greed.
Are these bankers any better than those who brought down the world economy or are they just lucky enough to be being renumerated during a different time.
Bring in strict regulation now.
p.s. where are the prosecutions against the wrong doers who created the crisis we are still in and as taxpayers we will still be paying off the debt their actions caused for decades
Complain about this comment
It will keep happening as in reality these bankers don't take any risk (as they know govs will back them) and just take the rewards.
Any other sector and these bankers would be unemployed (eg. MG rover, Woolworths)
I say 80% tax on pay and profits of all bankers/banks that get state guarantees - if they don't want to pay the tax they can take the risk and know that they will not be backed by gov if they get into trouble. Do you think they'd have many customers and such big profits w/o gov guarantees? - I doubt it!
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Heard a rumour that repackaging of CDO's enabled the company to make an "instant profit" , how relaible are these numbers ? , are the auditors up to the task , fully understand the technicalities of the business ?
Complain about this comment
It is outragous they get a bail out when they are in trouble then a year later earn these sort of sums. There is only upside for them and only downside for the taxpayer. The world is going mad. Break up these organisations and protect only the banking arms. The investment banks can sink if they fail and the bankers can survive on their bonuses for the rest of their lives.
Im no socialist, but a year after going bust it is simply not right
Complain about this comment
No amount of planning beats dumb luck. Last man standing, although proped up by taxpayers. It is about attitude and responsibility. When the servant rescues the master, the servant anticipates reward and the master praises himself for making such good hiring decisions. Both are disaapointed in the end. A part of the process leading to the financial crisis was the reestablishment of the ruling class and those pervasive attitudes....divine right and all that. Marx was wrong about socialism and probably right about captialism.
Complain about this comment
Anyone calling for 'strong regulation' now would have screamed blue murder had Gordon Brown introduced such a thing at the time he made his 'light touch regulation' boast a few year years ago.
And anyone who denies this is a liar.
Complain about this comment
Complain about this comment
Ever get the feeling you're being cheated?
Complain about this comment
If this report is correct then Goldman employees will be receiving the equivalent of the collective salaries of 325,000 people - earning $20,000/year. Quite apart from the moral implications of concentrating such a lot of money in the pockets of so few this will do nothing to offer the stimulation to the manufacturing and service industries that we are told is essential if the wounds, that banks (like Goldmans) inflicted on the economy, are ever to heal.
In terms of long-term recovery of the Global Economy as a whole Goldman Sachs would have done better to open their windows and throw $6.6bn into the streets below. In fact fiscally this would be the more responsible response to such unprecedented profit.
Instead, as we see reported daily, the salaries and pensions of the many are under greater and greater threat. Millions worldwide will be 'downsized' out of work altogether.
In any context these bonuses are obscene. In the current context it is borderline criminal.
Complain about this comment
I'm assuming these profits were made in trading of commodities, equities, currencies etc in which case good luck to them. I heard someone on this morning's Today programme commenting that GS have very good risk analyses in which case they are making fairly safe bets and winning.
I wish I had their skill! Having lost money on equities in the past I now stick to cash although I did sell my house towards the top of the market, correctly realising that the boom could not continue indefinitely. Still I will never be in their league. Money is made when prices go up and down so it's in traders interests that prices fluctuate. In order to be on the winning side you have to know what you're doing. This is where I fall down!
I don't think we'd all mind so much if having made oodles of cash people stopped being greedy and left the city so someone else can have a go. As my old dad used to say: "Enough is as good as a feast".
Complain about this comment
Is this any huge surprise? GS has always out performed their peers, due to a variety of factors (mainly, the fact that they still operate in large part like the trust they use to be and their great remuneration and graduate recruitment programs).
GS is uniquely well suited to surviving this crisis frankly...and the fact that they can afford to hire the best of the best plays a huge part in that. They're notorious for firing whoever slacks, but that also means they tend to work incredibly hard and be hugely clever.
People love to complain about bankers making money, the facts are the GS is incredibly good at making cash.
Complain about this comment
Wow what a surprise? Did they perhaps over-provision in the preceding periods? No auditor or reviewer is going to say that by writing off 100% of the value of an investment that they are being overly prudent with the climate at the time - now are they just reversing some of those provisions (eg having written down a perfectly good mortgage to zero value and then saying, oh look - they are still paying - well that is pure profit/revenue now...)
Complain about this comment
The missing piece of the puzzle. As we all know individuals lost 20-30% of value from individual retirement accounts. No one has suggested that maybe some of these "profits" should go back to the individuals who their current or previous employees betrayed. It seems that efforts to make the system whole again does not include the individuals. I would think that somewhere in this process someone may want to look out for the average guy. Quaint idea and of course not chartable on the economist calculations, but maybe something that would resonate with the people....you remember the people...the ones that the bills will be forwarded to.
Complain about this comment
Also, for more information, check out this article. It explains where the cash came from, and it's good news all around :
http://www.cnbc.com/id/31894821
Complain about this comment
re 14.
I deny it.
I am no liar.
What I MAY rail against is the law put in place, but that is the same stance now as I would have had then.
Complain about this comment
they were basically bankrolled by the US taxpayer...so when bust the taxpayer pays when they make a profit they keep it.... no moral hazard. why didnt the US government (and in similar circumstances the UK government) demand that in order to receive taxpayer funds you dont just pay it back but you pay 50% of future profits....forever......!
Complain about this comment
I would have at least liked to be kissed..........
Complain about this comment
Easy to make profits when you are a quasi branch of the US government. That was the whole reason for AIG bailout - to support Goldman - a present from the former head of Goldman..........Hank Paulson.
The pillage of the serfs continues.
Complain about this comment
It seems that far too many debts have been labeled wrongly as toxic. Lets just wait a little longer. There may be far more sheep than goats!
Complain about this comment
Brown of course will do nothing - except of course accept the PAYE and spend it instantly to try to ingratiate himself with voters to attempt to stay in power - pathetic; not one wise man amongst them. We are of course heading for a depression. As one of the above has already said there is no value creation here just gambling. We are at the whim of the banks and that is that
Complain about this comment
Of all I hear- this surprises me little. Goldman are simply a money making machine- their ability to screw pounds from pennies knows no bounds.
It wouldn't surprise me if they're offering new insruance products, collateral guarantees, currency portfolio share swapping instruments and collateral credit obligations to all and sundry. And then re-insuring their profit against 'loss' just for good measure.
You have to admire their gall, all at a time when unemployment is rising, the housing market is stagnant, we have record low interest rates, an energy crisis is brewing and there is a risk of a deflationary environment developing.
If we've learnt nothing then we should know this. It is all a pack of cards which can fall as quickly as can be (re) built. Poor old Lehman Bro's- if only...
Complain about this comment
Is it worth asking how much of this is made from trades with AIG, i.e., how much of these profits are funded by the US taxpayer?
Complain about this comment
Interesting reading:
Inside The Great American Bubble Machine
Matt Taibbi on Goldman Sachs
Try searching for this article could explain a few things.
Complain about this comment
Golly, good old Goldman's grabbed the gold.
It won't last.
Any profits bagged will lose value unles they are made to work, and they can't be made to work unless money is being churned through the system and re-distributed; and THAT will only continue to happen as long as there continue to be ups and downs, and small differentials in price worth exploiting.
Personally, I think that everything will dip uniformly, and the only way out of the dip will be via good old graft and hard work inventing and making stuff - something these Goldman types will know nothing about.
Complain about this comment
I don't think they "had to" turn to the US government - they were ordered to take TARP money along with all the other top US banks so that there would not be a sitgma attached to receiving it.
And AFAIK they have had no support from UK Taxpayers at all.
Complain about this comment
Oh great! - Suddenly all 'Bankers' are dogs dirt again. - Trouble is, this tars everyone who works in a 'Bank', including Doris who works as a part time cashier in your local Retail Bank and who would love to see a £500 bonus for reasonably meeting/exceeding her targets.
Bonuses where merited are appropriate as they can incentivise good performance. But they should be fair, commensurate and have a ceiling - As a retail 'Banker' myself I agree that these proposed bonuses at face value are obscene and expect the backlash to (unfairly) be felt by anyone working in a Bank.
I appreciate that profits/bonuses are taxed - so to that extent the Government gets a cut. But I would prefer to see a system where bonuses, where paid, are more tapered and then only paid in share options which can be realised over the space of 3 years, subject to a clawback provision. (Actually, similar to how my more meagre 2008 bonus will be paid).
There is also a case dare I say it for a windfall tax!
Complain about this comment
With the collapse of Lehmans, Bear Stearns and the rescue of Merrill Lynch amongst others last autumn the number of banks able to put big deals together shrunk considerably. It also led to a move to quality that often happens during periods of uncertainty.
This allowed those left with a strong balance sheet able to
1) Pick up more business and clients.
2) Be able to charge those clients more as there is less competition.
To be honest if they hadn't made shed loads of money most people would be surprised. The market has moved from a competitive market to an effective complicit Oligopoly that has pushed up prices and commissions.
Its basic economics.
Complain about this comment
I drafted this for the previous post but kind of missed the boat the way blogs work but still relevent.
The city as an entity is not capable of learning anything at all ever, it has not the capacity for judgement or reason, it is a machine. It is not the fault of the machine Robert, how can it be?
It is a machine that was historically a great servant to society (in the round), a melting pot for investment and re-investment to generate wealth and innovative new technologies to free us from endless hours of mundane toil in the fields or factories just to meet our basic needs.
That same entity is now becoming a parasite run by shysters with no greater purpose in mind than self enrichment, enrichment not through the innovative development of mechanised efficient products and services to improve our lives but enrichment by manipulation of atomic level indentations on computer hard drives in such a way that they end up with more indentations on their hard drives than others, often without a product being invented or a service being provided or a commodity being delivered to the docks.
It has become that way because we have reached a tipping point in our development where the benefits from technology and mechanisation are now so great that it is no longer a matter of developing more of it, it is a matter of sharing it more fairly and managing what we have got to be more in harmony with our resources and our beautiful home (the Earth).
The dividend to humanity of technology, mechanisation and efficiency in food and energy production has not been felt by most people in the world, instead the huge dividend has been converted into atomic level indentations on computer hard drives and used to generate unbelievable wealth for a very few to shuffle between them upon the roulette table of global finance. The gap between rich and poor has never been greater.
The strange thing is those select few in the ranks of the super rich never seem to be particularly happy souls to me, I see far more happiness and contentment amongst the ranks of the modest and largely silent majority. So why do they do it to themselves and why do they do it to us and why do we let them?
I dont know the answers but I am interested in at least asking the right questions which along with others at the lobbygroup.org we hope to at least have a go at solving it.
Join the debate.
Jericoa
Complain about this comment
Hopefully these increasing signs of recovery can mean an end to elevated stress levels and an increasing sense of optimism for the future. If nothing else because our correspondent will have less to talk about...
Complain about this comment
Er......am I missing something? What's all the fuss about successful banking and bankers who know what they are doing? It wasn't GS who caused the crunch. And as for whopping "average" bonuses - how pointless an amateurish is it to talk about an "average" figure. It is clearly going to be several millions of dollars for the top execs and a few grand for those down the pecking order.
Well done GS. Keep up the BRILLIANT work!
Complain about this comment
Its not surprising they are making money out of debt, stock offerings and spreads on loans.
Governments are issuing a lot of bonds and central banks are buying a lot of old bonds using printed money. If you are a bond trader and one arm of government creates debt and sells it to you while another arm buys debt from you then you would need to be stupid not to make money. Question: why dont the central banks just buy the bonds straight from the treasury? Answer: because they want the banks to get rich so they look less stupid for bailing them out and the banks can save some capital. Side effect is that the banks take half the profit and pay it out as bonuses.
Also half the corporate world are having trouble rolling over their loans so naturally a lot of companies are trying to issue new bonds or do stock offerings. There are fewer banks doing this work so the banks that are still standing can really milk these real economy comnpanies and siphon off an even larger share of the overall wealth.
Finally, the big banks get to borrow money at near 0% from the central banks and lend it at much higher rates. So naturally they make a lot of money on the spread. Of course lending in a recession is dangerous and they might not get paid back but who cares because govt will just bail them out again if that happens and the bonuses will already be pocketed.
Government and central bank policy is for banks to make money so they can strengthen their balance sheets and start lending again. What actually happens is that the bankers take the profit handed to them and pay it out as bonuses because they are so clever. They are not that clever but the rest of us are really stupid to let them get away with it.
Complain about this comment
Who's conning who?
Complain about this comment
Goldman - like the other financial institutions that accepted TARP payments - had no choice in the matter. The US Fed insisted that all institutions sign up to the program in order to promote confidence and stability in the system.
GS (along with JPM and MS) reportedly insisted they did not require the TARP money. The Fed urged them to take it to prevent runs occurring on those firms that did take the money.
In repaying their TARP loan, GS took a hefty hit of $425m for 6 months of unnecessary finance. This cash represents a great return to the US taxpayer on their initial investment.
I can understand why these profits have generated such commotion as they came during a period when GS were borrowing from the US taxpayer. However, it should be taken into context that it was not a required loan and that GS were never 'on their knees'.
The 'scandalous' aspect will sell newspapers though, much more than the reality (which will sell copies of The Economist etc.)
Complain about this comment
They made a profit = good (as they will pay large amounts of taxes, and will mean at least one bank is solvant)
They pay their employees lots = good (they pay large amounts of taxes, and will spend large amounts of money - they employees of Jaguar need people to buy their cars not just rely on the govt to bail them out)
Lets hope all the banks release equally good figures, that will be good for the economy. (their net interest margin is so high it will be hard not to have massive operating profits)
Complain about this comment
You can't help but think this is Alice through the looking glass....
Complain about this comment
Instead of letting banks go into administration so that debts to the likes of Goldman Sachs would not be paid, governments transferred the debts to the taxpayer's account. No surprisingly this enabled them to make massive profits.
Complain about this comment
#38 Disnaymatter
'It wasn't GS who caused the crunch.'
Hmmm... not so sure about that. Goldman Sachs had significant sub-prime exposure and was heavily into CDOs. Two big causes of the crunch. While it managed to hedge its exposure better than some banks, many argue with sound logic that it was more by luck than judgement that GS avoided the fate of some of the other big Wall Street names. It certainly played a role in creating the crunch and the bubble that preceded it.
GS should have been smarter. The fact that GS and other investment banks are profiting now doesn't necessarily make them especially smart either (though they're clearly not stupid). Recessions are often fertile times for banks especially investment banks. And now there are fewer of them we can expect some impressive figures from GS et al.
If I were running a country I'd be putting a windfall tax on such profits and bonuses. The banks will squeal but they can hardly sustain any complaint. Without the public bailout they would clearly be in a big mess.
Complain about this comment
Well, guys, it's going to be a tad easier for a camel to squeeze through the eye of a needle than rich guys to have much of a future after death.
So - make hay, guys, while the sun shines.
Because.....
In the end.....
Complain about this comment
Come on, Robert. You should know that GS did not ask for, or need, any taxpayer support in the US (and certainly not here in the UK). They were forced to take TARP funds from the Treasury in the US along with all large institutions for fear that, if only those needing support received TARP, it would mark out too clearly those Banks which were in trouble and would, in turn, lead to their coming under greater pressure.
GS repaid the TARP at the earliest opportunity (along with nearly $500m of dividends - so a return to the taxpayer of about 7.5% annualised).
It's not their fault they the credit crunch occured any more than it's the BBCs. And it's not there fault they're bloody good at their business. In fact, wouldn't we all have been rather better off if all Bankers had been as clever and successful as GS? Then I wouldn't be a part owner of a couple of pathetic British Banks, and the children of our country wouldn't be facing huge tax bills for the next 20 years.
One final point - they don't pay out those bonuses through the year, so no-one's received the amounts "calculated" above. One or two bad quarters and the amounts can change substantially, and the "average" number is ridiculously misleading. Top boys get $hundreds if millions, others get $tens of millions, most get normal Bankers pay.
And I'd rather all Banks were making profits and paying taxes than making losses and absorbing taxpayers cash thank you very much.
Go GS!
Complain about this comment
Goldman Sachs is s major shareholder of one of the biggest financial entities in the USA namely the privately owned Federal Reserve so go figure.
Complain about this comment
I listened to a broker (from Hargreaves Lansdowne) on Radio 4 this morning saying pretty much the same as the guy from Smith Asset Management (quoted in Robert's piece) - that is, that Goldman should not be demonised - the guy from Hargreaves going so far as to say that Goldman had always been recognised for their ability to "get it right". They got it so right that they needed a $10bn bail out from the taxpayers - without which they would have probably been flushed away like so many other companies. The bubble that has so recently burst in such a spectacular fashion was blown up by over inflated egos as well as over inflated asset prices - and it looks like that bandwagon is starting to roll all over again. Have we learned nothing? If Goldman can turn their fortunes around that quickly, then I am inclined to think that the American taxpayer has been short changed. Buddy, can you spare a few billion...I just need it to tide me over the year end? Perhaps someone should also lend them a copy of the book just released by HSBC's Chief Exec (Stephen Green)..."Good Value: Reflections on Money, Morality and an Uncertain World",
Complain about this comment
ah they must be italian then :).
well there is always one.
Complain about this comment
High risk - high return ... and makes great sense if someone else will cover the downside risk without charging you a realistic market rate.
I said at the time, governments having much better credit ratings than banks at the time could've charged pretty much what they wanted for the debt bail outs.
The banks could've raised the cash, by liquidating assets, at a cost - they weren't insolvent.
But governments fell for it - avoiding the political repercussions of high repossessions, and even greater hits on house prices - and providing cheap funds to those who took the high risks, people who now profit from hose risks as the panic stops.
The removal of bail outs except at extremely high rates and removing limited liability from banking would do much to remove excessive risk taking.
Regulation to stop people doing something just encourages them to look for loopholes, making the price they pay if they take risks and things go wrong extremely high for them personally and their organisation would provide a less legislative more market based way to discourage such stupidity.
But when the entire economy was based on the financial services sector and the Emperor's new clothes speculative property bubble what do you expect.
House prices are still to high - but as they represent much of the personal wealth in the country,political expedience means realistic corrections are to be resisted.
Complain about this comment
We need to be a bit careful hear as we should look at how much of this has come from placing the enormous amounts of government paper in the market. Interesting that old Warren Buffet got it right again. The other small matter is of course that GS employ on the whole very able people- not like the second raters in many of the other banks- none of whom have the embedded core values of GS. Let's hope those profits lead to big tax payments in the UK as well as the US.
Complain about this comment
There's no denying that Goldman's are smart and much smarter than the average (dumb) investment banker of yesteryear.
I have admired their ability to keep churning out the cash but there is something at the back of my mind that doesn't settle easy. Maybe its some of the rumours and conspiracy theories doing the rounds as some have alluded to here?
A big question is that given the various bailouts to a number of counter-parties where we do know GS had positions would GS have survived without them. This is a very interesting question given the GS alumni connection that was at the top of the US administration.
If GS have played it right and their risk analysis showed that a scenario of bank bailouts would be the case as some players in the amrket acknowledged - then its quite possible that this has been one of the greatest wealth transfers from taxpayers to a private company in history.
I maybe wrong to surmise the above but I would like to know how these profits have been made and what contribution has come from the $1 trillion dollars that the US has recently borrowed (not forgetting the UK's debt rescue mountain).............no smoke without fire they say.......
Complain about this comment
Hmm... their trading volume is immense with penny profits made on each trade. I don't know the actual figure but one trillion electronic trades per hour surely gives them an unrivalled ability to control the market - thus screwing both investors and taxpayers all at once.
But, they wouldn't do that.
Right?
Complain about this comment
Profits, What Profits? These crooks are at it again. What they do is Declare Would be Projected Future earnings from Dodgy Investments/Loans as Profits now, Collect their Bonuses and by the time anyone realises there is no Profits, these crooks have moved on. Oh! and they have just been told they cannot be held accountable for any fraud they commit now because they are a Bank and too big to fail. Heads they win, Tails, the tax payer loses.
Complain about this comment
So perhaps they dont care about reputation? They are making this kind of money at other's expense at a time of greatest weakness. Be ethical and stop doing business with them.
Complain about this comment
So does this mean that Warren Buffet has made $1.5 billion?! Why isn't he running the country?
Complain about this comment
Oh what joy Goldman has made money, so all is well with the world.
Do not forget they employ some of the smartest people in the world. Please instantly forget that Enron used to have their PR machine make the same boast. Enron, who? - never heard of em.
Who could ever remember that through a complex series of machinations they recovered more than 100 cents on the $ of their exposure to AIG. Who would care that this was made possible by the US taxpayer, 10% of whome now receive food stamps.
Who is the US Comptroller of the Currency? Who cares, because that office is saying that Goldman has exposure to credit derivatives equal to 1,048% of its capital base. But there are no worries there because the accounting rules were changed so that there is no longer a need to value this stuff at its market value. A bit like if someone dies - just rip up the death certificate and wait for them to come back to life. Works every time!!
What is low latency trading? Who cares? Well Goldman cares so it must be very important. Goldman cares so much that it spent money developing source code and software to give it an edge in the low latency trading business. Someone is alleged to have stolen this source code and Goldman has run to the Feds with a terrible tale of woe. Apparently this source code could be used "to manipulate markets." In other words it could be used to facilitate criminal activity. What then are Goldman doing with such stuff? No-one knows, but most certainly they would never use it to "manipulate markets" and so the world can rest easy.
How do we know this? Because this is what Goldman has said in a New York court of law. Just to head of any communist conspiracy theories Goldman had their PR machine start to indicate that their lawyer was quite young (34 if you are interested) and may have become overcome with the exuberance of youth and over egged the pudding, so to speak. PR does not count for much in a court of law, sworn depositions have a slightly different impact.
Why doesn´t the BBC report any of this?
Complain about this comment
Goldman had mastered the art of skimming massive mounds of cash well before the credit crisis from every corner of the financial markets- oil, fees, stocks, currencies. The crisis was just a blip because it threatened their business for a few months but they were allowed to take taxpayers money to stay alive and are now back to business as usual.
The difference now is that they have picked up the remains of Bear, Lehman etc. so their cut is even bigger.
Unfortunately we've cultivated and supported an environment where bankers are known as masters of the universe and deserve to earn multi-million dollar salaries from private-profit activities and any losses will be taken by the lowly taxpayer, whom they probably laugh and sneer at as they buy new holiday homes and maseratis.
Goldman pays a pittance in tax because the majority of their holdings are offshore so their business produces no good to the overall economy or to main street.
The ironic part is that Goldmans profit rises and then the entire stock market rallies.
This is not a green shoot. It's another yellow weed in the one-sided and rotten financial and social system.
Complain about this comment
"It has recently declared that it can stand on its own feet again without taxpayers to lean on."
As you moved swiftly on, let me repeat the last link.
These people are incorrigible. They truly consider themselves 'The Masters of The Universe' (#5) (and others not), and unless one fully understands what sort of behaviours this entails, one haven't begun to grasp the nature of this problem, as reasoning with such people in terms of what's decent behaviour really doesn't make sense to those without conscience or empathy, and that's precisely what being good in these jobs requires, i.e. the absence of such restraining qualities.
Complain about this comment
If one thinks of the earnings structure we have a pyramid.
Hard graft proletariat at the bottom and languid aristocracy at the top. In htis case our rulers of the universe at the top of the pyramid will claim they work hard. This means about 12 to 15 hours work a day for a matter of 5-10 years after whcih their bonuses and bank balance lessen the motivation for getting out of bed every morning.
Meanwhile our proletariat continue their miserable existence earning pennies a day for the duration of their working lives living in abject misery.
What do our purveyors at the peak of the pyramid produce?
They get excited shuffling numbers around computer screens in climate controled offices while their counterparts on the streets or inthe fields sweat and freeze with the seasons.
The expecvtation in December with the crash was that the floor of the pyramid would implode. That this has not happened yet is a mere delay against the ultiomate fall of this parasittical 'profession'.
Complain about this comment
Just some more evidence to back up the questions I raised in #53. I forgot about the lead story today in the FT http://news.id.msn.com/business/article.aspx?cp-documentid=3454462 (reported on a number of media sites though FT is restricted access!).
The story about executives sellin gbig time once after the Lehman collapse and a second time after GS reported their first ever quarterly loss in December 2008.
These executive actions don't quite chime with the expectation of making a big profit in 2009 do they, rather the reverse - so what's changed?........mmmmmmmm
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Well,let them have their last meal.
It is not boom time Mr Peston, it is bang time. Not one single indicator supports the ridiculous optimism of this very silly bank. Those whom the Gods wish to destroy, they first of all make mad.
I will bet you fifty pounds of our increasingly worthless currency that the FTSE slumps to 3500 by year end. Those who were www.notbornyesterday.org already know this.
Complain about this comment
Comment #7 is bang on by allowing banksnot to mark to market they can sit on absolute garbage and pretend it is still an asset priced at par.
Government has gifted them near zero interst rate sand they have maxed out on margins everywhere.
This is not good new for the USA and Goldman is certainly no example to suggest all is over. With the Ex senior partner having protected them so well it wont be long till we see him return there.
President Obama should be ashamed that he has shown such ignorance and cost the US public so dearly and he hasn't even started yet.
Its not so much God Bless the United States of America now its God help the US Taxpayer.
And before Crash Brown thinks he's off the hook let us remember what a disaster he has truly shown to be. Undeniably he will go down as teh worst Prime Minister in living memory and of all time.
Complain about this comment
#45
Actually GS sold off much of their sub prime holdings profitably, ie they called the market correctly.
Complain about this comment
The American public and the British public have one thing in common......they're complete mugs.
The American government and the British government have one thing in common.....they're complete mugs.
If oil companies turned their billions of profit into vast bonuses for staff, there would be riots.
If energy companies turned their billions of profit into vast bonuses for staff.....there would be riots.
So what's the difference with banks?
Just where do the public think that bank profits ultimately come from?
If you're one of the vast majority of "peasants", you now face a future of austerity and denial of access to wealth.
If you work in the City, your future is rosy, despite the Citys' abysmal recent record.
Fair? Justice? Or chronic, politically dangerous elitism?
Complain about this comment
This is absolutely disgusting. Yet another fine social and economic injustice our dishonest government has engineered. Shocking.
Perhaps we should not criticise this government though, because all governments would do the same - create fake money and look to be prosperous from it. It just seems a little early for Goldman Sachs to announce fictitious (arbitrary) profits in the face of such pessimism. I can only guess that those greedy bankers are already missing their bonuses. Big shame for our country that such corruption can exist and remain completely unchecked. This kind of thing makes me feel ashamed to be British.
Time to emigrate I think. Have these people no shame?!?!
Complain about this comment
Simply proves the small investor view - when the market is good the banks get the lions share and the small investor gets a very small bit of the success (much less than the market tells you you get), when the markets are bad the banks do well and the small investor makes the losses, and when the markets are really bad the banks get bailed out and small investor gets the tax bill. Heads they win, tails they win, bankers are just risk takers with other peoples money - never their own. This is clearly an industry that needs to have salary caps applied and/or be taxed much heavier than others - as success is clearly far too easily attainable and generously rewarded for a lucky few.
Complain about this comment
It's just so sad to read all these comments - just pure stupid socialism. "greed", "dishonest", "parasite".
Government. Government and central banks are the only to blame for this crisis, and most of crises in the past.
Read at least this recent article - http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6619963.ece
Or better "Meltdown" by Thomas Woods.
Time to emigrate? Right, try China then.
Complain about this comment
Also interesting will be the 'stance' taken by the newspapers
http://moralorder.mediumisthemess.com/blog suggests this will be an issue
Especially of interest will be the views of the more business orientated ones
Complain about this comment
Nice to see socialism working.
Pity they can't do it for the rest of us.
Complain about this comment
Feutche wrote ..It's just so sad to read all these comments - just pure stupid socialism. "greed", "dishonest", "parasite".
Give me stupid socialism over the unfair corrupt Capitalist world we currently share. Better still, give me a Socialism that works for the people, that rewards hard work but does not lead to this obscene imbalance between rich & poor .
What is really sad is millions of people starving in the world whilst these exploiters make their millions!
Complain about this comment
[70. At 7:54pm on 14 Jul 2009, feutche wrote:
It's just so sad to read all these comments - just pure stupid socialism. "greed", "dishonest", "parasite".]
I think you're looking from extremes of socialism/capitalism etc. The real extreme you're missing in this article is the extreme greed involved. This half-year bonus is ten times what the average person earns in a year. If someone has the cheek to try and justify this when there are (poorly paid) people working hard to keep our society going, then I think we should laugh them out of here. Quite frankly, trying to justify this is like trying to prove that lead does not sink. Ridiculous.
Complain about this comment
$3.44bn in 90 days!
What a remarkable resurection? $3.44bn in just three months, only some months after they had to be bailed out by the tax payer. But then they had not only received cash but grandiose monetary instruments that allowed them to re-valuate rubbish and garbage.
Not only are they making serious profits; they have also repaid the $10bn of tax payers' money already: good boys!
Incidentally the same good boys, Goldman managers, sold $691m of their own shares between 09/2008 and 04/2009 - into a falling market. Compare this to $435 being sold by Goldman managers between 09/2007 and 04/2008, when shares were almost three times higher... which makes it a +300% increase in volume; so does that mean they do not believe in the generous offer of balance sheet cosmetics, ultra low interest rates and cash floods being sustainable and sufficiant to make holding on to Goldman shares worthwhile?
I believe they are right!
Carpe diem!
Complain about this comment
The reason that their recent profit stinks is this: In September Goldman was on the verge of going bust - this is not rumour but fact. They, like Barclays amongst others, were saved by the Goldman alumni in the administration saving AIG and using it as a conduit to channel huge sums of money into these banks. As is now common record Goldman was a huge beneficiary. 100% pay off on their CDO contracts with AIG while making similar sums through their hedges. Ie they were paid out twice!
Was this done to save the system? Sure it was and it worked but like so many things was done in completely the wrong way, rewarding those that did not deserve it.
On the premise that Goldman was worth saving, which it was on the basis of its position as a/the major primary dealer in the bond market alone (with all the issuance that is now taking place), the administration could and should have insisted on an (majority) equity stake. Goldman at that juncture would have had no option but to accept. The result would be a large and ongoing revenue stream for the taxpayer and much smaller bonuses.
However, somewhere in the negotiations Goldman managed to persuade alot of ex-Goldman officials that the present structure was best.
I thought the recent comment from a former federal reserve member summed it up perfectly. When asked who Tim Geithner worked for he said "Goldman Sachs".
Complain about this comment
murraythemug (#68) "Have these people no shame?!?!"
No. Not the psychopaths amongst them. That's the whole point of #60. It's precisely what they're so good at. That sort of response gets in the way of their being good at what they do, so only those without shame/conscience get on. Seriously.
Complain about this comment
The improved results of q2 show that nearly all the revenue gains have come in the FICC segment (Fixed Income, Currencies & commodities) & the rest from equities trading & investment in ICBC (Industrial & Commercial Bank of China).
In the FICC segment, GS states that "credit products" have showed record growth. A detailed break-up of FICC earnings, when published, will produce a clearer picture. However, if one looks at the spiraling prices of oil in the last quarter, in spite of no dramatic demand-supply mismatch; one can hazard a guess that GS is playing the role of an unregulated index speculator again (as explained by Matt Taibbi in the Rolling Stone while referring to 2008 oil price crisis)in commodities.
World over, speculation in the commodity markets is driving the hapless consumer nuts as prices of basic commodities , such as oil, spiral upwards in a short span of time thereby heating the economy even when the physical demand-supply balance is unchanged.
Its always the pennies from the pockets of millions of such helpless consumers that determine the billions in bonuses of "smart executives" of manipulative investment banks like Goldman.
There's nothing else to do than to watch this happen quarter after quarter.
Complain about this comment
Hmmm,
Not Convinced, I wonder if this has anything to do with that program a Russian was arrested for on July 4th. The DJ has been acting very strangely of late.
Complain about this comment
[78. At 8:53pm on 14 Jul 2009, saltydistressed wrote:
The improved results of q2 show that nearly all the revenue gains have come in the FICC segment (Fixed Income, Currencies & commodities) & the rest from equities trading & investment in ICBC (Industrial & Commercial Bank of China). ]
Thank you for such a good explanation. Post is spot on.
Complain about this comment
> 73. At 8:13pm on 14 Jul 2009, AnneElk wrote: give me a Socialism that works
Sorry, there's no such thing. It just doesn't, and it's proven in theory and practice.
Complain about this comment
Please stop using this ridiculously sensationalist and misleading "Average Compensation" figure!! I work at GS and I and a huge number of others there get paid nothing like that sort of money... You're surely clever enough to know that the huge amounts of money partners and top dogs of the firm receive make averages like this completely meaningless, it basically just stirring up feelings of anger when the reality couldn't be further from the truth.....Disappointing and amateur reporting from someone in your position to say the least.
Complain about this comment
and this is just the money the banking mafia reports. come eer, back in the ally...got some toxic assets....you intrest-id..just let the ink dry........bada-bing...
Complain about this comment
I think we're missing a word throughout this: UNDESERVED
Complain about this comment
I think it is important to get one thing straight. GS was not "bailed out" by the taxpayer. They made a profit every year - last year was bad but they did not need, nor want government help. They were asked to take that money by the treasury to ensure investors and other banks and repaid the debt as soon as they were allowed. It was a confidence insurance by the US treasury. Not saying everything is perfect there...but no serious commentator would ever say GS was "bailed out" by the government. I know it makes good reading but the "average compensation" is so misleading for the average employee at GS....but I understand why it is reportred that way.
Complain about this comment
Yes, that "average compensation", that doesn't make any sense at all.
But that's the only thing people see. They don't question anything, blaming "greed" and capitalism.
Look outside - it's not a capitalism. There's no free market. It's government and regulations.
If it was real capitalism, real money, no regulations, but no backup from central bank, no help from taxpayers and government, if you lost - we're sorry - do you think there would be same figures?
Complain about this comment
RE Comment # 24
So you think that those who got taxpayer help should pay back 50% of profits forever? Isn't that about what everyone pays to the government anyway, whether or not they were bailed out by the taxpayer?
New York City is almost totally dependent on Wall Street profits to pay for schools, medical care and social benefits for the poor. So any good socialist should be cheering on Goldman Sachs! Nobody in the entire company even comes close to getting as much money from Goldman as the IRS does, or the State of New York does, or the City of New York does. In fact, I'll bet no employee even comes close to what London gets or Great Britain gets.
Complain about this comment
feutche (#86) "They don't question anything, blaming "greed" and capitalism. Look outside - it's not a capitalism. There's no free market. It's government and regulations. If it was real capitalism, real money, no regulations, but no backup from central bank, no help from taxpayers and government, if you lost - we're sorry - do you think there would be same figures?"
Ach so...Are you related to LibertarianKurt of The Austrian School ;-)
Complain about this comment
It is frightening how soon the lessons are forgotten
Why are governments not forcing major changes in the way that banks and financial institutions operate? - we need an entirely new way of looking at investements including investment in public services aka JK Galbraith - Younis
The bonus levels are obscene and entirely undeserved - these people are already extremely well paid and there are millions of people working just as hard if not harder with equally high levels of stress for a fraction of the money these people take home. Worldwide millions are starving, homeless or without even basic commodities such as water
I cannot find words adequate to express my disgust
Complain about this comment
It's not Socialism we need but, by now it must surely be obvious that it's NOT Capitalism we "need" either? (So I may not be able to own a new car every 2-3 years without Capitalism, well big deal, so what!!??)
As many posters here argue, what Goldmans have achieved is just solid proof that our so-called leaders have failed dismally to achieve anything worthwhile for society in the last 12 months, (when they had the opportunity to so.)
What Goldmans have done is the next best thing to an oil company polluting a vast highly sensitive environmental situation, so big they could not clean it up on their own, so got the taxpayer to pay for the clean up. And then having done that the Government weakly says, "carry on as you were, but try not to do it again." Pathetic, and you vote for useless numpties like this!
Maybe people should just appreciate there is no nice choice on the table about how we proceed from here on in?
If you've got any sense you will simply not borrow in the way you used to, at the max, pumped up house prices on the back of this action and in the end let it get so out of control all you could do was hope you could continue to "cover it."
The "Machine" has started to whisper, "an end to recession, consumers spending, house prices bottomed, etc." All the usual sort of stuff to encourage "credit stupidity" in......well, the stupid really. To make you take risks that are way beyond your ability to manage. (Even so-called clever institutions like Goldman's, funnily enough, struggle to control these, so what chance do you have?) Risks so great that The "Machine" has to try and make you want to pull the wool over, showing you nice adverts on telly about foreign holidays or even foreign house buying, trying to make you dream, to make you want to live the dream. To the extent that it becomes an obsession, which you can no longer control and then Goldman's have "gotcha!" You borrow, you borrow way too much, you become a slave to debt for 25 years or more. It's fine for the first year, but then it starts to gnaw. "It" being the feeling we know all to well of being trapped. Trapped, like a slave, shackled by debt.
Like I said Capitalism, who needs it?
(Reality is sometimes not all that great either, I hear you say. Sure, but at least your "dream" won't turn into the inevitable nightmare and best of all you're still in control.)
Complain about this comment
I echo those bloggers here who point out that the US Government 'forced' some banks to take funds even though they did not need them e.g. GS and JPMC, so as to take the 'stigma' away from those mismanaged US banks that certainly did require a bail-out.
Whatever, I am sure that the public perception of these latest GS results will be that greed is good ... again.
If it helps to nuture some green shoots in the public conciousness then that would be useful but I suspect it is a false dawn.
Complain about this comment
Without the $13 billion that was funnelled into their coffers via AIG they would have been toast.
Now if being paid 100% for worthless or near worthless CDO's is not your idea of a bailout.......then that's your call.
The funds were used to stabilise and recapitalise the bank. That capital has been employed admittedly very successfully and yielded huge profits, but it came from the taxpayer and provided the platform to generate the profits that are paying these bonuses.
Complain about this comment
The article 'The Great American Bubble Machine' tells the story how Goldman Sachs' leadership and partners recklessly enrich themselves and empoverish tax payers. It is a well researched article and helps to explain many of the reasons why there is so little appetite in Washington to close down tax havens. Rep Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee, sums up the behaviour of Goldman Sachs: "With the right hand out begging for bailout money," he said, "the left is hiding it offshore." You can find the article here:
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine/print
Complain about this comment
> 90. At 10:32pm on 14 Jul 2009, spareusthelies wrote: You borrow, you borrow way too much, .... Like I said Capitalism, who needs it?
That's not a capitalism. Not at all. That's credit bubble inflated by government regulations (cheap credit and fractional-reserve banking system)
> 88. At 10:04pm on 14 Jul 2009, JadedJean wrote:
Ach so...Are you related to LibertarianKurt of The Austrian School ;-)
well looks like it's obvious :)
Complain about this comment
Look on the bright side; the US tax authorities will be getting their hands on a whole lot of cash from Goldman Sachs and its staff from now on. No doubt others will follow generating yet more cash for their government with it.
This is in stark contrast to the UK where wealth in the form of individuals and corporations are upping sticks thanks to a looming 50% tax rate.
Complain about this comment
THE BUBBLE RE-FORMS!!!
Goldman-Sachs can't "make" money, it creates no wealth. Every dollar of its profit is a dollar less in someone elses account.
Here we go again then....
Complain about this comment
re: #95
Sadly you are wrong. Goldman Sachs paid only 14 million US Dollars in taxes in 2008, but paid 10 billion US Dollars in bonuses for themselves in 2008, according to the article 'The Great American Bubble Machine' (see my comment #93 )
How is this possible you may ask? Good question, it seems like a foolish tax system to me.
Complain about this comment
What did we expect. The public were fooled by these crimminals. The banks have made huge amounts profiteering from zero or near zero cost money. It would have been astonishing if they hadn't made money.
All of this of course fits into the crimminal mandate of both the UK and US governments whose plan it is to use the banking system to impoverish and control the very people who have been foolish enough to place them in power.
The people should have been bailed out, not accessories to crimmal activity.
So what happens next. Thet's get this clear, thet's not mis-lead people. The economic situation will get much much worse then it did before. (no i'm not being a harbinger of doom). The facts will speak for themselves. When the banks ask for more again, which they will; the government should consider those that put them there instead of discrimminatory crimminal networks that it is so determined to support.
Complain about this comment
#93 invisiblehandadvisor, JJ et al
Re. The article 'The Great American Bubble Machine'
This story (all but) aligns itself (dontcha just love that phrase!) to the glossary of the 'Protocols of Zion' document...oh well! somebody had to mention the 'unmentionable' at some point in this discussion.
Like I have commented previously, maybe Bernie Ecclestone (et al) have a point, albeit made in a rather ham-fisted way...there just can't be any other explanation....can there?
Please note: I do not expound the anhilation of the 'cognitivists', just a better understanding of their behaviour and the impact that they have on society at large.
Complain about this comment
Why does any of the G8 nations not employ the same people that populate GS? They could do well to recruit that type of clearly spectacular financial skills! A company on crutches a few months ago with a prominently displayed disability badge doesn't seem right now walking taller than anyone else and no longer needing the special parking bays .......
Complain about this comment
Does this take into account running costs of the bank ? I bet you $3.44bn it doesn't !! Figures announced are most likely to be revenue and income, and profit is only made when running costs have been taken into account. Citibank used the same trick 3 months ago, and their shares tripled. This is false economics by the banks, and once Wall Street or FTSE figure it out, wait for the second crash...around October/November time...
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Isn't the Goldman result just another piece of evidence that capitalism has derailed? Is it justifiable in terms of moral that anybody can pocket profits this size, when the rest of the world is on the brinck of collapse. Aren't Goldman Sachs simply exploiting less clever people, and taking advantage of an entirely unsettled world?
As I see it, the financial environments wherein companies like Goldman Sachs can make massive profits ceased to exist last year. However not to cause paralysis of the companies that creates fundamental values, governments decided to inject massive sums of money. Believe you me, Goldman and any other large bank or financial institute is in this very moment using every given taxpayer penny (cent in this case) to improve their balance sheets and comfort their own employees. Hence no other businesses really has been saved by any government money at all. It's so sad....
Complain about this comment
Peston: "The media and political reaction to Goldman's bounceback will be fascinating to observe."
What utter tosh as demonstrated in the rest of your highly disinformative blog.Why don`t you tell us what the tractor production figures are like for July?
Complain about this comment
The dropping of the mark to market regulations has allowed this surprising turnaround in fortunes.
All of the banks have assets on their books they cannot and do not want to value. The true net worth of these institutions would frighten investors if it were revealed. Even the U.S government could not construct a plan to purchase these so-called toxic assets because it could find no rule by which to realistically value them.
A round of high inflation will clearly resolve the 'over-valued' asset situation by realigning their values to cost. This is surely what all the banks are waiting for and with money supply growing ever quicker, is surely the next economic shocker awaiting around the corner.
Complain about this comment
Having worked with some of Goldman Sachs "employees" in NYC a few years ago, I commented on their bonuses and was told that most of these people, who were employeed full-time with benefits, were not entitled to the bonuses. I was told by someone who was more than a little bitter that there was a tier system in place in which the majority of the "employees" were not considered "employees." If it is true that G.S. can put such a strong spin on what an "employee" is, just image how their accountants could spin their financial records.
Complain about this comment
They sacrifice their personal life, constantly. In Asia IT we had to work 10-12 hours per day, we had lunch brought in at our desk and we were on call at night. Any major release was done on a Saturday. I ended up doing compliance training on Sunday afternoon: it was mandatory and I couldn't find any other time for it. I was a contractor, with no bonus. My colleagues were employees however and obviously working so hard because of the bonus at the end of the year.
Complain about this comment
Smart people, churning money, making money, adding no value to the economy whatsoever. That's my guess anyway.
Complain about this comment
Easy - capital lent to GS by us a diddley squat, capital lent back to us at a massive premium. Shame about the rest of the economy.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
They make money by stealing from world pension savings. Whole business is utterly immoral.
Complain about this comment
Joseph Stiglitz is of the opinion that there is nothing private enterprise about Goldman Sachs at all. Its all state subsidised, he points out.
Who is profiting from all the QE? Goldman Sachs.
Who is underwriting the disclosed and undisclosed debt? Tax-payers.
A personal gripe. Doesn't the term 'compensation' just reek with cynicism given that what they do is gambling. 'Winnings' would be a more appropriate term.
Complain about this comment
Your readers may be interested to know that GS have been accused through various media articles of using specially designed algorithm based software by which they can manipulated the markets. One financial commentator stated that they can make up $100 million dollars a day. Your readers may or may not be aware that last week a certain Russian gentleman (former GS employee) was arrested and accused of stealing this software. The official in charge of the case said the following in court: "The bank (Goldman) has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate the market in unfair ways." We all may be asking the question what is GS doing with this software that can "manipulate the market in unfair ways"?
Complain about this comment
BankSlickerminustheR (#99) "Please note: I do not expound the anhilation of the 'cognitivists', just a better understanding of their behaviour and the impact that they have on society at large."
That's how I see it. This is an emergent epidemiological/statistical/legislative issue. There are others in other groups, but at a lower prevalence. The demographics (those of NYC (#5) are striking are they not?), and concentration of activity by location/profession can be misleading. It's basically group competition, and if one thinks about this, we have been induced to not only accept this, but actually encourage/reinforce it by enshrining 'that's just business' as as a human right in the liberal-democracies and especially the foisted upon the electorate Lisbon Treaty's ECHR which essentially disempowers Parliament from doing anything about it by centalising power in the EU :-(
Complain about this comment
Seems like most of Goldman's profits have come from a massive bet that the market was oversold back in February, enabling them to make a big profit suring the recent suckers' rally.
If they had got it wrong GS would have just had to be bailed out again by the government. As it was, they got lucky and are now pocketing the gains in the form of bonuses.
In other words it was a bet where heads they win, tails the tax-payer loses. Just more of the same nonsense that got us into this mess.
As in all things, follow the money. The average Joe has lost a large proportion of his savings and pension in the last couple of years. Where has the money ended up? With the Goldman Sachs staff of course.
The system is set up so GS will always win, and the bloke on the street will always lose. Governments are in on the act too. Why do we allow this state of affairs to continue?
Complain about this comment
either prices are going or OR for every huge winner there are corresponding losers.
If prices are going up we are paying more.
Or where are all the huge losers?
Complain about this comment
I've bitten my tongue so many times reading your articles, but this is right up there with some of the most irritating.
There is a clear attempt in the article above to mislead the reader through your use of the phrase 'the taxpayer'. There is little doubt to me that you are trying to imply that GS has received monies from the UK. This is of course totally untrue, other than indirectly, perhaps as a result of the settlement of derivatives contracts legitmately entered into and for which they were owed money by the RBS's of this world. Furthermore, you fail to mention that Goldmans became a clearing bank and did receive money from the US government, but has already paid it back, with interest. Otherwise it is extremely unlikely that they would be paying bonuses of this nature.
I would also suggest that post 113 is above, with it's claim that goldmans have designed a piece of software with which they are able to manipulate the market might be a little bit libelous.
Complain about this comment
Can people not accept a simple and obvious concept? When the banks do well capitalism itself succeeds meaning there is more credit available, meaning business increases, meaning there are more jobs, meaning existing jobs are better paid, meaning everyone benefits. Whether you disagree with capitalism or not this is the way 20th and 21st century capitalism has worked. So is it not fair to congratulate this bank on turning itself around, where so many have failed? In addition is it not worth noting that the banking disaster can be attributed to the failings of a select few american banks bringing down most of the industry. Almost all banks had to take out loans because of this, but Goldman Sachs I hardly remember being the worst. Also with regard to the big bonuses and wage packets is it not possible to ask this question - when such large profits have been made why is it people have been paid so little as opposed to so much?
Complain about this comment
A financial system that thrieves on financial disaster by those who create real value, surely cant be in the interest of anybody (besides people like Goldman Sachs)
Complain about this comment
kris (#118) "So is it not fair to congratulate this bank on turning itself around, where so many have failed?"
Read 'Faust' - better still, look into what happened in the USSR after Lenin's death in Germany in the 1930s; who was trying to purge what in the 1930s, and what was Germany and the USSR fighting even after June 1941? More important, was was the outcome? What was the uprising in China in summer 1989 really about and why did Iran say it didn't fear invasion by armies after 1979, but it did the invasion of Western immorality?
What is this chap banging on about here?
Complain about this comment
davidlebus (#117) "There is a clear attempt in the article above to mislead the reader through your use of the phrase 'the taxpayer'. There is little doubt to me that you are trying to imply that GS has received monies from the UK."
Does the USA not have taxpayers?
Complain about this comment
This part of a Charlie Gasparino article on GS spells out why there should be no celebration of their profits, it's quite shocking really
How the Wall Street giant used your money to make $3.4 billion in profits.
They will never admit to this at Goldman Sachs (they dont really fess up to much over there at the Big G) but in the fall of 2008, just after the Lehman Brothers bankruptcy gave the world a lesson in systemic risk, Goldman, the worlds greatest risk taker, was finished too.
Thats right, it was toast. Finished. Kaput. Until, that is, the firm that was built on wheeling and dealing in some of the most esoteric investments the world of high finance had ever seen, needed a government bailout to stay afloat, which included $10 billion in cash from the Treasury Department (granted by its former CEO, then-Treasury Secretary Hank Paulson) and more importantly, full access to the Federal Reserves discount window to be a commercial bank.
Goldman Sachs, which was bailed out by the federal government, is now using the bailout to resume some of the same risk-taking activity that got it in trouble in the first place.
Goldman, of course, is a commercial bank like no other. You wont confuse Goldman with the ol Bailey Building & Loan. It has no customer depositswhich are what the access to the discount window was first set up to protectand you wont be getting a toaster or a debit card from Goldman Sachs anytime soon.
But being a bank has its rewards. With full access to the discount window, Goldman can now borrow cheaply and massively from the Fed in a pinch, and because of that access, it can borrow more cheaply in the credit markets. Its a loophole that has allowed Goldman to turn back the clock and once again resume much of its risk-taking activities, only this time its being financed by the American taxpayer.
There are, of course, many urban legends about Goldman and how it uses its clout in Washington and in the financial business (both Paulson and another former CEO, Robert Rubin held the Treasury secretary post) to advance its allegedly nefarious corporate agenda.
Recent reports have the firm gaming the energy markets, creating the dot-com bubble, and the subprime-debt crisis that took down Wall Street, and then for a time benefitting from its implosion when it shorted subprime-related investments, a trade that allowed the bank to profit from the downward spiral. (Hell, Im sure there are people who also believe Goldman was somehow behind the swine-flu epidemic to corner the market on drug stocks.)
Some of these stories have a basis in fact and some dontIll leave it up to the reader to figure this outbut what is true is equally disturbing: Goldman Sachs, which was bailed out by the federal government, is now using the bailout to resume the many of the same risk-taking activities that got it in trouble in the first place.
The question I have, of course, is why is the Obama administration, which has decried corporate greed whenever its politically feasible, allowed Goldman all the advantages of a bank, when it is really a big hedge fund?
The Treasury Department wont say and it's obvious why Goldman is doing what it is doing: Money, and lots of it. The firm announced Tuesday morning that net income for the second quarter was $3.44 billion, while its biggest rival, Morgan Stanley, is likely to announce a quarterly loss.
by Charlie Gasparino
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications.
Complain about this comment
Why don't the US Government insist that before GS give out huge bonuses to their staff they should start paying back to the Treasury the money they borrowed.
Complain about this comment
Totally meaningless to quote an average compensation figure. The bonus pot is not shared out equally. The vast majority of it goes to a handfull of people. The great majority of GS staff may pick up a few thousand pounds early next year, provided the first half year's profits aren't wiped out in the second half of the year.
Complain about this comment
Profits were earned on currency speculation in Fall 2008. Remember RBS made a "profit" then despite failing in every other category of business?
Those engaged in currency speculation in late October- December 2008 were odds on to succeed. Just whose money was used neeeds to be asked. If it was the state then the state should be able to claw back everything not properly belonging to the likes of Goldman, etc. Will need someone with courage to face down this "windfall". Brown isn't up to it. Is Obama?
Complain about this comment
There are probably a few basic questions that need to be asked:-
1. In generating profits has Goldman Sachs taken risks which could have adversely impacted on the FSA's statutory objective of maintaining financial stability?
2. Are the awards being paid to the bankers consistent with the principles conceived with the (then) new FSA's training and competence regime in 2001?
3. Has Goldman profited from work for the Government?
4. Has Goldman's activities adversely affected the employment prospects of those who it does not employ?
5. Has Goldman's profited from a monopolistic situation?
6. Has Goldman's profited from a cartel?
7. Has Goldman's profited from the funds it received from the Goverment? But bear in mind that it has repaid that money.
8. Is it a principle at stake (greed isn't good) - or something else?
Complain about this comment
Perhaps the Wall Street Banks and others would like to first pay back the $37 billion that they received as counterparties from AIG.
After all AIG was handed the money in the first by the Federal Reverse.
Rewards for performance!
I don't think so - taking taxpayer's money is more like it!
Complain about this comment
126 I think you and many others on here would just like GS and other Evil Banks to just withdraw from the Inv Banking Market and close down.
Everyone complained when banks required funding from Govts to prevent them failing, you complain about the likes of RBS and Lloyds being a drain on the taxpayer for the foreseeable future.
The only way state supported Banks can repay Govts is by making profits, now GS has you lot are up in arms again.
Peston is off on his unbalanced trail again, GS didn't need a bailout they were forced to take it. As for the discounted funds via commercial bank status, without the likes of GS to act as a funnell the NY markets would have ceased to function after Lehmans disappered.
The avg comp figure is pointless, RP knows that, but quotes it because he knows it will get you lot chomping at the bit, and forget about what's going on in the UK. Highest unemployment since 1971 - isn't this news???
You lot are so contradictory, you must be fun to live with???
Get a Life!
Complain about this comment
# 39 Tom_Edinburgh
# 78 Saltydistressed
# 122 Celeden
# 126 TerryNo.2
- and others...
restore your faith in blogging/commenting.
I hope people in power and influence read these.
Sounds like Goldman Sachs were obviously very big players messing around with the huge and unnecessary oil price spike in Summer 2008. If GS were instrumental in engineering that wobble, and all sorts of other games, we're doooooomed.
They -and JP Morgan etc. need to be broken up and their influence diluted, very quickly.
As an aside, how much have our Government and its agencies paid G.S. in the past 12 months, and for what. Presumably all the money/bonds being 'printed' is passing through their hands, at juicy commission levels.
Donkeys led by hyenas.
Regards
Complain about this comment
EVIL-DOOERS AND AXES OF EVIL
armagediontimes (#58) "Do not forget they employ some of the smartest people in the world. Please instantly forget that Enron used to have their PR machine make the same boast."
As I've said before, a critical mass of intelligence ('g') is a necessary but not sufficient attribute for social stability. The other factor is 'conscientiousness'. Alas, the latter appears not to be as highly valued as it once was these days, in fact, one might even say that in liberal-democracies it's now negatively selected (it use dto be what interviews were about, they had the paper qualification data beforehand after all). Ironically, this is highly prized amongst the 'evil-dooers' abroad. These tend to be theocracies or socialist states which place great store by duty to others, fidelity, honesty, and other extremely weird stuff which radical evil-dooers get up to.
Complain about this comment
#128. Actually, you miss my point - by quite a wide margin.
I have not problem with profits.
I have no problem with some people earning lots of money.
We all know an average remuneration figure is pointless. I tend not to use it myself but it seems to be the only measure that is available on the trend of compensation generally. If someone were to post a copy of the payroll printout on the internet, perhaps we'd get a better idea. In the absence of that, average comp. is the standard measure when intepreting financial statements.
The focus is HOW Goldman has made it's money. If you can answer the questions I posed rather than heap abuse that'll be great.
Complain about this comment
Who cares the Governments are in with the banks the banks run the world as the Rothschild who set the gold standards twice a day year in year out so Governments can set all the laws they want but not to over money the most useless thing in the world, but it has the most power over people because there is no such thing as credit crunch were is the money? the pound shillings and soon to be got ride of pence ready to bring in the new USA currency run by the private bank the Federal Reserve which is not an bank at all but a private club for the very very rich, and this is why the world has so many poor and sick. All Western banks are incestuous and answer to their master the FS it should be shut down but that will not happen as no country will fight the USA yet.
Complain about this comment
They've made $3 billion? So now they'll be able to pay 4 people.
Goldman - now I know that name from the 1970s. Oscar Goldman was
the man behind the Six Million Dollar Man. He must have sold him in the
early 80s and made a lot of money. Amazing.
The strange thing is that it's all so surreal that comments like the one
above might as well be true.
Complain about this comment
@121, 127 etc etc etc
Goldmans HAVE PAID BACK the money they received from TARP, all $10bn; the results yesterday revealed they effectively paid $486m of interest on it.
Complain about this comment
131 That's not abuse, it's the only way some people pay attention - to have the position spelt out.
As you have requested, my view of your points:
1 GS Profits are global, so can't see what if any proft was generated from London, where the FSA remit exists. Real answer is how does the FSA define activities that do not maintain stability, I doubt that they know themselves. So would be very surprised if anyone here can constructively answer that.
2 I personally don't know this policy that well. But if I'm honest I think that this policy like a lot of regulation in the past and present is really window dressing. Particurly if it is not enforced. Are the bonuses huge? In reality yes, if the firm is structured as is, which I know more on, then unfortunately that's the way it is. As a Listed company it can form it's own pay structure. Only Directors Remuneration is generally up for approval by shareholders general compensation would require an egm for discussion.
3 Would hope so, if it is contracted to provide services to anyone you would expect it to profit from that work. This is why businesses, and banks are businesses, exist.
4 Impossible question to answer, GS is a business not a charity. I would suspect that Billions more people do not work for GS than do, can it affect everyone? If you're alluding to practices that undermine other sound businesses, hard to say, but again if they are where are the regulators?
5 Monopoly? They're trading across global exchanges, with regulated reporting processes to provide transparency, so hard to see anything less monopolistic.
6 Cartel? See above, unless you include Govts that are asking them to buy up their newly issued Treasury Stock.
7 You would hope so, as again they are in business, however any profit they have made has to be offset against the penal rate they were required to pay for TARP funds they did not need.
8 Sorry but this is wholly contradictory, define greed against sustainable profits to maintain and develop a business. Where is the correct level? Maybe if BL had been greedy like GS we may still have a British Car Industry, and manufacturing and Fin Svs could be better balanced in the UK economy. And to be more focused on the last quarter, all markets have been highly volatile and undervalued if a market participant can't make money then when can they?
Thank Heaven RBS and Lloyds don't make money like GS. They might be able to repay the UK Govt!
Complain about this comment
131 As for your arguement for using avg comp as it's all you have?
Hmmm, I rarely see this avg quoted for other Banks, usually only GS as they make so much money in relation to their no. of employees. They don't have Branch Networks full of staff like JPM, BoAML, Citi, RBS, Barclays.
And as for using a number you know is invalid in the absence of valid numbers, well I have seen similiar use of information from the BNP. And I doubt anyone on here would like to be grouped with them???
Complain about this comment
Fifty minutes for post 135 to be moderated, suppose it is lunchtime.
Complain about this comment
the problem is the fundamental untruth that is not discussed.
the bank bailouts transfer money from the humble tax payer to the super rich and political classes; the very group that got us into the mess we are in.
by allowing the banks to survive and not take their punishment, the working classes have been saddled with debt for a lifetime and more.
ignoring accounting practices, goldman's money is direct from the US Tax payer via AIG. if AIG had been allowed to go bankrupt, Goldman's would have gone with it as although they made the right calls they made them with someone who could not afford to pay.
we humble tax payers would then not be burdened with the debt.
it is enough to make you weep.
Complain about this comment
" And oh how Goldman's 29,400 staff have been rewarded. Compensation for the three months was a handsome $6.65bn or $226,000 per employee. "
Gutter tabloid journalism.
You need to decide whether you work for the Sun or the BBC Peston.
I hold the BBC business editor to higher standards than this.
Complain about this comment
138 Are you a US Taxpayer then?
As the UK govt didn't provide any support to AIG.
If you are then a valid point, and you wouldn't then be able to represent UK taxpayers opinion on RBS, Lloyds, HBOS or NR.
If you're not a US taxpayer, you're original comment is irelevant.
Only asking to provide clarity to your point.
Complain about this comment
138 Whilst we're on the subject of AIG.
Why do you think the US bailed out AIG?
To support their friends at GS and others?
Or did it have more to do with the fact that they were counterparty to so many institutions, the impact would have been too big to imagine? Also that the US Regulators were asleep on their watch, and didn't realise AIG was building up such huge amounts of risk until too late?
Conspiracy theorists love the alumni version, think the Govt incomptence theory is much more probable.
Complain about this comment
islider,
knowing where I pay my tax does not provide any further clarity to my point.
I am not seeking to speak on anyone's behalf merely to represent my views on the situation being discussed.
Complain about this comment
#135 islider55
I am not quite sure if you would maintain that there is a level playing field for all market participants. There is clearly no such thing: insider information, influence on shaping future policies, extensive network of well placed 'friends', private trading systems, gigantic amounts of funds (cheaply provided by the discount window of the Federal Reserve) to influence market prices (up or down), all benefit Goldman Sachs. This is not an open, transparent, fair market, but the US financial system is currently set up in a way that unfairly favours Goldman Sachs. Not too difficult to make money under such circumstances.
If they made 10.9 billion US dollars for themselves in compensation (bonuses) in 2008, but pay only 14 million US dollars in tax, something is very wrong with the tax enforcement in the US. The 10.9 billion US dollars must have been engineered somewhere. But apparently by moving money aroung the world through a few jurisdictions, having a few stopp-overs in tax havens on the way, removes any tax obligation on 'global' profits and all of a sudden there are billions of US dollars in profits which can be payed out in 'compensation', but no taxable profits.
Complain about this comment
#141 islider55 wrote:
"Conspiracy theorists love the alumni version, think the Govt incomptence theory is much more probable."
The problem is: the US Government (when it comes to finances) all too often is staffed by Goldman Sachs alumni. Are these alumni incompetent all of a sudden when they are in Government, and competent when they can make money for themselves at Goldman Sachs? How interesting.
Complain about this comment
143 Not really sure what parts of my post in 135 you are questioning.
I did not say they were playing on a level playing field. But if the Regulator/Govt are happy with that, what do you expect?
I said they were not a Monopoly or a Cartel.
From reading your post it sounds like you were agreeing with me, that market participants should and do make money on trading.
On the tax question, sounds fairly illegal how you have put it. Is this reported anywhere or is this another urban myth?
As if this is common knowledge, then it just goes back to the same door again and again, the Govt, IRS and Regulators not being up to the job.
Complain about this comment
142 You shouldn't describe yourself as a taxpayer then. Merely an observer, seing as you can't back up your claims of being a US taxpayer.
I'm not a US taxpayer, but I don't describe myself as one.
Clarity - What a lot of people keep complaining about a lack of in the City.
Maybe you should Practice what you Preach.
Complain about this comment
#135
Thanks for tyour reply. Here are some follow-up points:
1. G-S MUST know what profits are generated from London. Without that information neither the IRS or HMRC will be over them like a bad rash. They need to be able to assess their profits for tax purposes. It is usually the case that global investment banks are, in effect, managed from the US; however this is not a position that any of them will maintain since it could seriously undermine their taxation strategy. At the very least, G-S will have employed a top tier accounting firm to have reviewed their transfer pricing policy to make sure that profits are accurately attributable to a particular jurisdiction.
The FSA has a statutory objective of maintaining confidence in the financial system. It's remit is therefore to ensure that excessive risks are not taken which could undermine that objective.
2. I too think that the FSA's stance on linking remuneration with adherence to regulatory principles is perhaps window dressing. However that was the stated position of the FSA at the time of N2 - the transfer of powers from the former regulatory bodies to the FSA in 2001 - and this has recently re-surfaced as a major issue. Thwe question is: have excessive risks been taken and rewards distributed on that basis. Have the FSA dropped the ball again?
3. What I had in mind then I made the point about profiting from work from Government was that if G-S were subsisting on Government funds and made profits as a result, such profits should be repaid to Government as a kind of dividend.
4. The point about G-S undertaking activities which may or may not have affected employment is that it would be obscene for a bank supported by Government that profited by imflicting misery on others. However there may be absolutely no evidence to support this.
5. You miss my point about a monopoly. What we do know is that the number of investment banks has reduced. I have also heard that commissions have gone up. The question is whether G-S is thus abusing a dominant position. This kind of question affects every large business in every business sector in every jurisdiction and, in the UK, is an issue for the Competition Commission to address. It is thus irrelevant simply to dismiss this concern by saying that they are a global power house operating across multiple exchnages.
6. The point about a cartel is whether the profits are being generated by high fees caused by all remaining investment banks increasing their fees on a nod and wink basis. Perhaps. Perhaps not. It's a valid question all the same.
7. Whilst it might be admirable that G-S has profited from the fund it received from Government, what has the Government received in return?
8. Is greed good? It must depend on how the money is raised by being greedy. The point is, will we be seeing a further decimation of pensions, restricted credit, a damaged currency and economy due to excessive risk taking by short-termist bankers. That is a matter for the Bank of England and FSA to manage.
Complain about this comment
#147 Sorry, typo in the first paragraph. What I meant to say was that without a tax-compliant assessment of profits in the US and UK, the IRS and HMRC will be all over G-S like a bad rash. It's impossible for G-S to avoid this.
Complain about this comment
I find it quite impossible to believe that Goldman Sachs have genuinely achieved net revenues of $13.8bn in three months trading in credits and currencies, no matter how big or powerful that bank might be.
To a financial simpleton such as myself that sounds like nothing more than financial engineering on a grand scale.
If this is a true reflection of the way that Goldman goes about its business then all I can say is that when the traders working there are sat looking at their computer screens they must all be engaged in a variation of that TV game show, name that tune. Only the name of their game show has been changed to, we can always exceed peoples bonus expectations regardless of what is actually going on in the finacial markets.
Complain about this comment
islider55 (#141) "Conspiracy theorists love the alumni version, think the Govt incomptence theory is much more probable."
First of all, conspiracies do happen (to quote Michael Meacher). Secondly, a conspiracy has to be an illegal act. Third, we used to talk about hypotheses or conjectiures when describing how events come about, now people try to discredit rational analysis of continent events by calling them 'conspiracy theories' so their favoured people are not implicated. Remember that 9/11 did include conspiracy (non USA citizens were accused in absentia), as did 7/7 (British Muslim males were accused in absentia). Were they responsible? Who knows for sure, there was no trial, they were all dead.
In the end, forensic analysis describes contingent events as aprt of teh evidence collating process, placing people in those contingencies. If those people are available and confess to involvement, they are charged and sometimes convicted, if not, all sorts of speculation occurs (cf. JFK's shooting), all of which is rational. The same thing happens in research all the time. It's healthy. If there is sufficient (circumstantial) evidence to indict individuals, they are, and sometimes the case goes to court. Clearly the NYC investment banks were involved in the 'Credit Crisis', and they were bailed out by taxpayers. They did make profits on those public loans above the interest rate they paid for them. Were they involved in anything illegal? By all accounts to date, no. Therefore there wasn't a conspiracy as far as we know. Was/is their behaviour venal/predatory. Yes, without doubt. Can anyone do anything about that? No.
Politically, some nations consider Wall Street capitalism evil - evil enough to commit acts of war over. Take note. Sometimes acts of war are subtle.
Complain about this comment
150 I did not say conspiracy theorists are wrong, very often they are proved to be wholly correct and after a shamefully long period.
I agree with your examples you have provided.
However the poignant part of your post is that you have only focused on the alumni conspiracy point.
Your welcome to your view, however my post stated that I thought that Govt incompetence was more probable.
Conspiracy theorists who completely ignore any other possibility, show their blinkers are well and truly on.
The World is Flat!
Complain about this comment
144 A very valid viewpoint.
I have two points on it:
1 You have to bear in mind that there is some element of Political Influence when the Poachers have turned Gamekeepers, so they may not be able to do things how they would if they were fully in charge of policy.
2 Horses for Courses. Does being a Greedy Investment Banker make you a competentent Fed Boy? Abuse of position at an Inv Bank may not be the right skillset to form Fiscal Policy?
An example might be Myners here in the UK, Did well as a Greedy Inv Banker - useless as Brown's Whipping Boy.
So yes the alumni could be incomptent in the wrong ivory tower.
Complain about this comment
Goldman's made this money because there is a huge spread in the market at the moment because there are so few participants in said market and it's therefore not as efficient as it was previously.
Complain about this comment
147 sorry if replies weren't as expected, however the original questions were open to interpretation.
1 I'm not GS, and as I said I don't know what profit was made or declared or hidden where. Hence FSA position. If you're just referring to GS regulated business in the UK, then my first answer stands.
The FSA do not have a coherent policy, nor ever had one, on market stability. How many successful prosecutions for market abuse have there been under the FSA.
Let's not pretend they're up to the job.
2 Good Point, I think as no one could see it in the bad times until it was too late, it would be pretty hard to tell now. Again I haven't seen any coherent policy put in place to measure or tackle this since 2007. So the FSA is still toothless, even if it wanted to bite someone, which it doesn't.
3 From the moral high ground maybe, but these funds were released under contractual obligations. So if the US Govt have missed a trick more fool them. But they have had to pay a penal rate of interest for the TARP funds they didn't need, The Govt didn't say pay us 10% of what you can make on this bailout and if you make nothing pay us 10% of nothing. They wanted a fixed rate on want was lent, and they got it. Can't have it both ways.
4 Think without any actual evidence of such, this is a political red herring. Again if true where are the Regulators?
5 My original answer showed they are not a Monopoly due to exchange reporting rules. However as the question is now about Price fixing, I would actually suggest the opposite. I know through exeperience that some of my clients would not deal with US Inv Banks through Aug to Dec 08, wherever possible and saw a flight to quality(if you could call anything quality then) to Euro Inv Banks. This was due to the belief that they were not the best counterparty risk, I haven't seen this change much this year, so would think they wouldn't have been able to exert much influence at all.
6 Cartel Again See Above. Plus there may be an element of increases in fees that could be perceived as an agreement to set prices. Could also be argued that as there is less competition from a year ago,(Lehamns, Bears gone an others reducing operations) and they do not have to compete for the business anymore.
7 See 3, all contractual obligations. Again can be argued that they had to pay for Capital they didn't need, quite a drag on the bottom line if you do not employ Capital that you are paying for. If you give a tramp a bottle of vodka will they drink it now, or wait until Sat night?
8 Hmm we obviously have fundamentaly differnt views on this. One point, restricted credit was due to counterparty risk getting out of control. With Banks making profits again, counterparty risk will stabilise, liquidity will return to the markets and credit will begin to flow again.
Pensions decimated? As long as Pensions are invested in Assets that carry risk as every asset type does, including cash v inflation, then Pensions will be exposed to risk.
Again you can't have it both ways.
To summarise if the banks are so evil and parasitic shut them down and let's do without them.
But come on where were the Regulators, the Policymakers whilst all this was going on?
You can't really beleive such a onesided explanation for how we have got to here?
Complain about this comment
islider55 (#151) "Conspiracy theorists who completely ignore any other possibility, show their blinkers are well and truly on.
The World is Flat!"
I agree :-)
Complain about this comment
The news about Goldman Sachs paying 14 million US dollars in worldwide tax in 2008, and paying 10.9 billion US dollars in employee compensation (bonuses) to themselves can be found on Bloomberg, normally a reliable source of financial information:
http://www.bloomberg.com/apps/news?pid=20601110&sid=a6bQVsZS2_18
Complain about this comment
VENAL BUT LEGAL
What we have all got to take on board is the difference between what's venal and what's illegal. Through changes in legislation, on both sides of the Atlantic, we now have a system which effectively licences expropriation from the vulnerable on grounds of caveat emptor and a myth of equality/choice, where legislation once protected the unwitting/vulnerable. This is why I've repeatedly posted links to material on the politically incorrect Normal Distribution of intellience, how groups (both ethnic and sex) differ in mean ability, and how the distribution itself has very probably been dysgenically changing as a consequence of a) mass immigration and b) policies which shift the birth rate towards the left of the ability distribution where the 'fine print' is least comprehensible. At the same time, many more peole now live with the delusion that they're smart because of the 10x expansion of Higher Education over the last 30 years.
Complain about this comment
What was Nero doing when Rome burned? Surely the operative word here is fiddle!! Meanwhile the real generator of wealth aka Manufacturing gets hammered each day, as most of the real money generated in GS will go off-shore and not towards UK manufactured material goods.
Complain about this comment
36: Sadly a lot of self made Rich people, have missed the point about life.
Life isn't a destination (ie being a millionaire or owning a Mansion etc).
Life is a journey.
The experiences a person has on their journey is the real Value to life.
At the end of the day, success in life is not measured in rows of numbers in a Bank Account.
Ask most well adjusted people what they would do if they won the Lottery, and most would describe taking actions, doing things for people,changing their lifestyle, having more freedom to experience life etc.
In fact freedom is a key feature of what most people wish for.
A great shame the mismanagers have ruined so many Pension Schemes (and isn't the so called Midas of Wall Street now involved with RSA's pension scheme ?) reducing ordinary folks chances to have a bit of freedom in later life.
Sad Rich people are enslaved by their desire for the tokens that to them represent wealth, and many people work themselves into their graves pursuing said tokens. Why do you think so many wealthy people are receiving therapy ?
Perhaps if more people were happy with a smaller car, more modest house, less grandiose holidays etc the world would be a happier place.
The Psychiatrists and Doctors wouldn't like that !
Ah well, now to try and guess the Lottery numbers !
Complain about this comment
A more prudent company might have used these profits to boost reserves, especially so soonafter repaying the USG bailout. Perhaps thougfh, knowing such profits may not be repeated, GS are simply cashing in while they can.
Complain about this comment
Why do I get the sneaky feeling that 117 davielbus Im most irritated is a member of the GS Wall Street racketeers club or similar and about to receive his well earned bonus
By the way, Im Londoner, but can equally empathise and sympathise with the average Joe Public taxpayer in the USweve all been given a bum rap by our so called governments, who capitulate and grovel to their oligarchy banking masters, who it seems, always wind up in a win win situationeven when they loose they win While the good old trusty taxpayer foots the bill for their stuff ups and you feel irritated, please!
Complain about this comment
I don't know who else reads Annual Audited Financial Statements - hardley anyone, it would seem - but the information on remuneration is generally broken down as to Directors, Chairman, the highest paid Director and certain categories of staff. You will not see the amount paid to the best performing traders or investment bankers. Some investment bankers may well be called Managing Directors, but this is only as a title and not a statutory position. Information in interim financial statements is even more sparse.
As a result, when comparing a company with its peers and the trend of compensation in the company generally, it is common to take average remuneration. It isn't a fantastic measure; it's a means of interpreting the numbers, a ratio, an absolute number and what-have-you; it's the only available measure unless a company itself voluntarily gives out more. It's a bit daft to criticise the use of this measure since you're not meant to assume that a PA gets half a million a year; what you are meant to take from it is the scale. A median would be a better number, but without the payroll details you won't get it. Maybe that's something for the next Companies Act.
On the issue of where was the FSA, I have complained about this before. It is apparent that they were nowhere, along with the policy makers who creamed the tax-take while the sun shined.
#156 - I hadn't seen this before (the tax paid worldwide for G-S). This is clearly a consolidated number based on the aggregation of the accounts for all the G-S companies. It does go to show what ggood tax planning can do. The thing about compensation to bankers is usually they are so ostentatious with their wealth that it is taxed and spent in the home country. This is good news. In other cases, HMRC are currently looking at schemes whereby offshore trusts are used into which bonuses are paid and then loaned back to nominated individuals. The absence of interest does mean that there is a P11D charge, but there's no tax charge (of a soon-to-be 50%) on a bonus paid out via PAYE. The front page of the accounting journal Accountancy Age revealed this method quite recently in the case of the footballers. It is just a game, after all.
Complain about this comment
BOOM! and BUST! I SAY!
BOOM! and BUST!
Complain about this comment
Well of course they made a huge profit because most of the competition is in deep yohurt. What is completely incomprehensible is the fact that the US tax payer has got very little value back for its investment/bale out. It really does prove the point that most politicians have either no guts for taking on the banks, or worse their so close to the banks and don't wish to upset their chums. Its a sort of future insurance policy for when they get voted out of office! I am really this cynical I ask myself? Not really at my age I been through recessions and hyper inflation, deflation and depression. The big question still remains unanswered do these people really add real tangible value? I think in view of what history tells us the answer is a resounding NO! That brings me to the next part of the equation. If these overpaid individuals do not generate tangible value why are they paid so much? The excuse that the banks and industry and Local Authorities use " we have to attract the best" does not hold water. If these are the best, there is something definitely wrong with the selection process(old boys network) Until this is sorted out nothing will change. As for an incoming Tory government regulating the banks to the satisfaction of the taxpayer I won't hold my breath.
Complain about this comment
View these comments in RSS