The Governments Don't Rule The World, Goldman Sach Rules The World!!

... the governments don't rule the world, Goldman Sachs rules the world! Goldman Sachs doesn't care about this rescue package, neither does the big hedge funds!

Utter Lack Of Disclosure And Transparency

Interesting article from Bloomberg: Trading Eludes Dodd-Frank as No Investors See Inside Black Box

• Trading Eludes Dodd-Frank as No Investors See Inside Black Box
  By Bradley Keoun - Sep 13, 2010 7:00 AM GMT+0800
  
  It took a Congressional inquiry this year to force Goldman Sachs Group Inc. to disclose how much it made in the mortgage market -- and that was only for 2007.
  
  Goldman Sachs hasn’t revealed mortgage-trading revenue since then, leaving investors to guess how much it contributes to the fixed-income, currency and commodities division, or FICC, which also trades junk bonds, yen, oil and uranium, sells weather derivatives and operates power plants. The division brought in $23.3 billion last year, or 52 percent of the New York-based firm’s total, and by itself would rank 90th by revenue in the Standard & Poor’s 500 Index, just ahead of McDonald’s Corp., according to data compiled by Bloomberg.
  
  The Dodd-Frank Act, designed to prevent future financial crises, does little to improve investors’ ability to analyze results at the five biggest U.S. firms that trade securities, which together lost $38.6 billion as markets froze in the fourth quarter of 2008. Since taxpayers may have to bail out banks again, firms should be forced to disclose more, said Tanya Azarchs, former head of North American bank research at Standard & Poor’s.
  
  “The health of the banking system impinges on all areas of the economy,” said Azarchs, now a consultant in Briarcliff Manor, New York. “So their disclosure has to be top-notch.”
  
  Hoarding Information
  
  Wall Street firms’ tendency to hoard information about markets and how they make money has come under scrutiny after investors were caught by surprise in 2007, when confidence in everything except Treasury securities vanished and credit markets collapsed.
  
  Lawmakers and regulators are pushing firms to move derivatives trades onto clearinghouses, where prices can be monitored, while demanding fuller disclosure on consumer loans, including mortgages and credit cards. In July, Goldman Sachs agreed to pay $550 million to settle Securities and Exchange Commission accusations the firm gave incomplete information about a mortgage-linked investment sold in 2007 that caused buyers more than $1 billion in losses.
  
  More transparency might have provided clues about risk- taking that led to the credit markets seizing up and the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc. in 2008, said Peter Kovalski, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees about $6 billion, including shares of Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs.
  
  “If you saw large revenue from an outlier, that should raise a question,” Kovalski said. “You’d like to see all the businesses contributing and growing at the same rate. If you saw one doing well and all the others struggling, you’d have to ask whether they’re trying to squeeze out a little more revenue there to offset the overall slowdown.”
  
  Loss of Confidence
  
  Opacity also may have contributed to a loss of confidence in the banks, said Richard Bove, an analyst at Rochdale Securities in Lutz, Fla. Investors who had been given few details about how the firms made money in the years before the crisis suddenly grew concerned that mortgage-trading losses might lead to insolvencies.
  
  Bear Stearns and Lehman Brothers, which for most of the 2000s were the two biggest mortgage-bond underwriters, both imploded in 2008. Merrill Lynch & Co. had to sell itself to Charlotte, North Carolina-based Bank of America, and Citigroup got a $45 billion taxpayer bailout.
  
  “They’re going to resist it, but they’re going to have to disclose more,” said former SEC Chairman Harvey Pitt, now chief executive officer of Washington-based consulting firm Kalorama Partners LLC. “If there’s one thing we’ve learned from the financial crisis, it’s that a lack of transparency is absolutely devastating.”
  
  ‘Nobody Believes’
  
  Investment banks combine the results of trading categories to keep them secret from competitors and trading partners and to smooth out gains and losses from swings in individual markets, said Adam Hurwich, a former member of the Financial Accounting Standards Board’s Investors Technical Advisory Committee who’s now a partner at hedge fund Jupiter Advisors LLC in New York.
  
  The resulting opacity undermines confidence in the firms’ results, said Brad Hintz, a former Morgan Stanley treasurer and Lehman Brothers chief financial officer.
  
  “Nobody believes the brokerage firms right now,” said Hintz, now an analyst at Sanford C. Bernstein & Co. in New York. “When you’re mixing euros and yen and dollars together, and then on top of that you’re throwing in commodities, what I have is succotash, and it’s very difficult for us to analyze.”
  
  Goldman’s FICC
  
  The difficulty of analyzing the banks with the five biggest FICC divisions -- Goldman Sachs, Citigroup, JPMorgan, Bank of America and Morgan Stanley -- has taken on greater significance as those businesses have grown. The banks reported $79.9 billion in FICC revenue in 2009, more than double the amount in 2004, when breaking out the figure became standard practice. FICC accounted for 22 percent of the banks’ total revenue last year compared with 14 percent in 2004.
  
  Goldman Sachs’s FICC division is the biggest, based on 2009 revenue and the percentage of overall revenue. Citigroup got $21.5 billion of revenue from the business last year, or 27 percent of its total. JPMorgan got $17.6 billion, or 18 percent; Bank of America got $12.7 billion, or 11 percent; and Morgan Stanley got $5.02 billion, or 22 percent.
  
  Spokesmen for Goldman Sachs, Citigroup, Bank of America and Morgan Stanley declined to comment. Kristin Lemkau, a spokeswoman for New York-based JPMorgan, said the bank tries to “provide sufficient disclosure to allow investors to make informed decisions about our business.”
  
  Shirts, Pants, Belts
  
  U.S. accounting rules allow companies “quite a bit of latitude” in how much detail to disclose about business segments, said Regenia Cafini, a project manager at the Norwalk, Connecticut-based FASB, which sets bookkeeping standards.
  
  According to FASB Statement No. 131, published in 1997, companies are supposed to break out business segments whose “results are reviewed regularly” by the “chief operating decision maker,” typically the CEO or chief operating officer. While advised to report on businesses that account for more than 10 percent of total revenue or 10 percent of assets, companies are allowed to combine as many segments as they want, according to the document.
  
  A July proposal by FASB staff to be considered later this year would require companies to disaggregate income and expense items “so that the information is useful in understanding the activities of the entity and in assessing the amount, timing and uncertainty of future cash flows.”
  
  Absent that, “there really aren’t rules per se on defining a segment,” Cafini said. “It’s how the company sees itself. I’m a manufacturing company, and I make clothing. I could segment myself by shirts and pants and belts, and have three different segments, or I could lump them all together.”
  
  Analyst Estimates
  
  The opacity makes it harder for analysts to estimate earnings. On average over the past five years, JPMorgan has beaten quarterly earnings-per-share estimates by 40 percent, according to Bloomberg data. The figure is 21 percent for Goldman Sachs and 10 percent for Bank of America. Citigroup on average missed estimates by 6 percent. By comparison, the five members of the S&P 500 Index with the greatest revenue beat estimates by an average of 4.6 percent.
  
  More details on trading won’t necessarily lead to better earnings estimates because markets are constantly shifting, said Robert Albertson, a former Goldman Sachs banking-industry analyst who’s now head of investment strategy at brokerage Sandler O’Neill & Partners LP in New York. “You still wouldn’t know where the activity would be in the future,” he said.
  
  Directional Hints
  
  Goldman Sachs breaks out 12 revenue lines in its quarterly statements, among them FICC. Others include equities trading, asset management fees, securities services and investment- banking advisory. That’s about a fourth the number of revenue lines management sees: In an interview with Bloomberg Businessweek published in April, Goldman Sachs CFO David Viniar, 55, said, “I personally see the profit-and-loss statement of each of our 44 business units every single night.”
  
  Goldman Sachs’s FICC division has “five principal businesses,” the firm said in its annual report in March. They are commodities; credit products, which include corporate bonds and credit-derivatives; currencies; interest-rate products, which include government bonds; and mortgages.
  
  The firm gives directional hints about the performance of the businesses within FICC in press releases about its quarterly earnings. In a July statement about second-quarter results, Goldman Sachs said FICC revenue fell 35 percent from a year earlier to $4.4 billion because of “significantly lower results in credit products, interest rate products and currencies,” partially offset by “higher net revenues in mortgages, and, to a lesser extent, commodities.”
  
  ‘Eyes of Management’
  
  That’s not good enough for Lynn Turner, a former SEC chief accountant who’s now a Denver-based managing director at consulting firm LECG LLC. Simply saying gains in one trading area were offset by losses in another “doesn’t seem to quite be adequate to me,” he said.
  
  “Management has to provide the investor a view of the company through the eyes of management, so that the investor is really able to see what’s going on clearly with the business,” Turner said.
  
  Citigroup CEO Vikram Pandit, 53, speaking in May at the graduation ceremony at the Johns Hopkins Carey Business School in Baltimore, said that “markets cannot function without transparency” and that improved disclosure of bond prices would help “revive and sustain confidence in our financial system.”
  
  ‘Volatile and Opaque’
  
  Pandit’s plea for transparency in bond markets contrasts with the bank’s own disclosure about its fixed-income division, which includes mortgage-trading and securitization units that contributed to $25.7 billion of net losses from 2007 through 2009. In April, Moody’s Investors Service published a list of four “credit challenges” for the bank. Among them: “Citigroup has a large investment bank, which we view as inherently volatile and opaque.”
  
  The pronouncement came after New York-based Citigroup reported a 43 percent decline from a year earlier in first- quarter fixed-income and equities trading revenue to $6.59 billion, about a quarter of the bank’s total revenue.
  
  “Like its peers, Citigroup did not give clarity on how these revenues were generated,” Moody’s said.
  
  The banks do a better job of breaking out revenue when they’re losing money than when they’re making it, said Azarchs, the former S&P researcher.
  
  Merrill, Lehman
  
  In 2006, Merrill Lynch began reporting that its stock- trading results were bolstered by “record” revenue from gains on investments in private companies. The exact amount wasn’t disclosed until May 2007 -- two months after Merrill filed its annual report for 2006 -- when trading chief Dow Kim said at an investor conference that the firm had garnered $1.5 billion of private-equity revenue the prior year.
  
  Merrill started breaking out private-equity results on a quarterly basis as full-year revenue dropped to $400 million in 2007. The business had $2.1 billion of pretax losses in 2008.
  
  Lehman Brothers, while expanding in mortgage trading and mortgage-bond underwriting during the 2000s, didn’t detail how much it earned from the business. Investors and reporters deduced that it was a leader in the business by analyzing rankings produced by third-party data collectors, including Bloomberg LP, parent of Bloomberg News.
  
  ‘One Fine Day’
  
  The firm opened up in early 2007 as subprime-mortgage lenders, including New Century Financial Corp., lost their funding sources. On March 14 of that year, CFO Christopher O’Meara said on a conference call that the New York-based firm got less than 3 percent of its revenue from making subprime mortgages, packaging them into bonds and trading the securities.
  
  O’Meara didn’t detail Lehman’s revenue from other types of residential mortgages, including Alt-A, which are a level between subprime and the safest borrowers. Nor did he detail how much the firm made from commercial real estate and lending, which contributed to Lehman’s bankruptcy in September 2008.
  
  “One fine day you wake up and there’s a problem, and then they start to disclose it,” Azarchs said.
  
  Banks should break out the revenue they get from each of the categories within FICC, said Bove of Rochdale Securities. Within each segment, they should further break out how much comes from commissions, how much comes from buying and selling securities, and how much comes from simply recording changes in the value of investments held on the books, he said.
  
  ‘Worst Assumption Possible’
  
  More disclosure prior to the crisis might have helped prevent the panic that gripped markets in 2008 once mortgage losses began to emerge, Bove said. Lehman Brothers and Bear Stearns failed partly because trading partners backed away. In mid-September 2008, Bank of America cut Merrill Lynch’s trading lines in the days before it bought the securities firm, Merrill CEOJohn Thain told employees at the time. Citigroup in late 2008 had to borrow at least $9 billion from an emergency Federal Reserve credit facility set up after investors grew leery of its short-term debt.
  
  “Not having any idea as to what the size of the losses would be resulted in a total breakdown of confidence,” Bove said. “You had no basis on which to make an assumption, so you made the worst assumption possible.”
  
  In November 2007, after Merrill Lynch and Citigroup ousted their CEOs because of mortgage-trading losses, Goldman Sachs CEO Lloyd Blankfein, 55, gave an investor presentation showing that mortgage-trading was the smallest business within FICC, representing 7 percent of the division’s revenue since 1999.
  
  ‘Black Box’
  
  Credit-trading accounted for 34 percent of FICC, followed by interest rates at 25 percent, commodities at 20 percent and currencies at 14 percent, according to the presentation. At an investor conference in February this year, the firm provided an update: Mortgages accounted for an average of 3 percent of FICC revenue from 2007 through 2009.
  
  Investors got more detailed information on the mortgage unit in April, when the U.S. Senate Permanent Subcommittee on Investigations released more than 900 pages of Goldman Sachs e- mails and other documents obtained during its 18-month investigation of the financial crisis.
  
  Among them was a page headlined, “Quarterly Breakdown of Mortgage P/L.” P&L is shorthand for the profit-and-loss statements produced by each trading unit.
  
  The document showed results for the four quarters of 2007, with a final column showing $1.27 billion of fiscal year-to-date revenue through Oct. 26, 2007. Goldman Sachs’s fiscal 2007 ended on Nov. 30. The bottom of the page reads, “Confidential Treatment Requested by Goldman Sachs.”
  
  No details were given for the rest of FICC, which according to a December 2007 press release had $16.2 billion of total revenue that year, 13 percent more than the record set in 2006, “reflecting strong performance in all major businesses.”
  
  “That’s just one big black box,” said Mike Mayo, an analyst at Credit Agricole Securities USA in New York. “You can’t get around it.”
  

Chinese Media Slams Goldman Sachs By Calling It 'Black Hand'

Ooooolalala..... things not getting any better for Goldman Sachs!

• Goldman stung by backlash in China
  
  Public criticism of Goldman Sachs has come to China, where the investment bank has been lambasted in articles in state-controlled media.
  
  Parts of the media, apparently emboldened by congressional inquiries and public anger in the west, have openly slated Goldman, arguably the most successful foreign investment bank in China.
  
  “Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.
  
  The article was widely distributed through commercial news portals and the websites of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.
  
  Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.
  
  The report followed similar commentary and articles published in publications including the 21st Century Business Herald, one of the largest financial newspapers in the country, and New Century Weekly, a liberal magazine.
  
  The reports were highly critical of Goldman for designing and selling oil hedging contracts to state-owned Chinese companies that then lost billions of dollars when oil prices plunged, contrary to Goldman analysts’ predictions, in 2008 and 2009.
  
  Probably the most telling assertion in all of the articles is the complaint that Goldman has been too successful in China, that it has made too much money from underwriting initial public offerings, arranging deals and making its own private equity investments.
  
  Goldman saw a 2007 investment in a small pharmaceuticals export company of less than $5m rise to nearly $1bn at the company’s IPO, a gain of 20,000 per cent.
  
  The bank has a lead role in the IPO of Agricultural Bank of China.
  
  “Goldman has just been so successful in China, but this is one of the perils of success here,” said a senior banker at one rival in China.
  
  “Many of its domestic competitors and some in the government are very unhappy that they have been doing so well lately.”
  
  Chinese business reporters are rarely allowed to criticise powerful state enterprises, but foreign companies are often regarded as fair game.
  
  “We’ve a very strong track record in China and one we’re proud of, but we need to help people better understand our business,” Edward Naylor, a spokesman for Goldman, said.

If You Want To Lose Money, Here's A Great Tip

Ready?

Here is the tip...

if you want to lose money, just follow Goldman Sachs investment advices, because the chances are great that you would lose money.

Says who?

Well... here's the proof... it's according to them stats!

• Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who followed the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday.

Source: http://www.businessweek.com/news/2010-05-19/goldman-sachs-hands-clients-losses-in-top-trades-update1-.html

Clients who followed the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.

ps: Life is great or what....

Don't Blame It On The Sunshine, Don't Blame On The Moonlight, Just Blame It On Merrill

Here's an article to really, really, really cheer you up. Hey, it's really, really, really, really that good. Says me. :D

Blaming Merrill Might Set Goldman Sachs Free: Michael Lewis

• Commentary by Michael Lewis
  
  May 12 (Bloomberg) -- To: Lloyd Blankfein Re: Winning at Ethics, the Goldman Way
  
  I have reviewed no less than seven times your entire episode on Charlie Rose.
  
  Your artful simplicity, studied humility and former hairline all positively radiated against the set’s dark background.
  
  As one of my lesser colleagues on the desk marveled, “Lloyd seemed almost human: Why?” To which I replied, evenly: “because he finally read my last memo.”
  
  Of course there was no reason you should look to one of your own traders for advice. But now that you have, we must proceed quickly. American public opinion is volatile; our exposure to it is peaking, and it will be more difficult than usual to create the illusion for American mortals (or as we like to call them, “The Morts”) that our business is in their interest, much less that we share anything in common.
  
  This time, please, do not wait five months to internalize my new action items. They are:
  
  No. 1: Implicate the rest of Wall Street, as quickly as possible.
  
  It’s always unnatural to hear the name of Goldman Sachs in the same sentence as Deutsche Bank, much less Merrill Lynch. We must put aside our revulsion. The American people might enjoy seeing one firm being driven out of business by a criminal investigation. They’re less likely to allow for the destruction of every big Wall Street firm. They just forked over trillions to keep them afloat.
  
  Delicate Decency
  
  This job of putting our behavior in a new context -- comparing it not to some broad universal standard of “decency” but to Wall Street standards -- must be done delicately.
  
  For example I was once hauled before a second-grade teacher and simply shouted, “You ill-paid, third-rate moron! I did nothing worse than what every other kid was doing! It is illogical not to punish them, too!”
  
  The outburst did nothing to alleviate my situation, and probably made it more difficult than it needed to be for me to gain entry to Princeton. But the episode taught me one of the central tenets of the Goldman Way: far better to rig a system than to fight it.
  
  Helpful Walks
  
  Our public relations staff might quietly and helpfully walk even hostile reporters through some of the deals created by these other firms. Ditto our lawyers in their meetings with the Securities and Exchange Commission.
  
  No. 2: Continue to use Warren Buffett, but don’t forget to pay him.
  
  When Warren said that stuff the other day about wishing you had a twin brother so he could employ you both, he didn’t mean it as a sign of his undying admiration for you.
  
  Remember: He said almost exactly the same sort of things about John Gutfreund, after Gutfreund had given him a sweet deal to rescue Salomon Brothers from oblivion. The moment Warren was forced to choose between Gutfreund and his money, he chose his money.
  
  Don’t force him to make that choice. If you want more loud character references from Warren Buffett (you do) you must insure that he continues to think of you as profitable.
  
  I don’t know if there are ways Goldman Sachs might simply give money to Berkshire Hathaway for free, but we should explore the possibility.
  
  Hide the Props
  
  No. 3: Hide, and hide from, the prop group.
  
  If you must be seen in public with Goldman employees, make sure they are bankers and brokers, and not our proprietary traders. You did an excellent job on Charlie Rose of making it seem the prop group didn’t even exist.
  
  We were mere “market makers” who helped our customers “get the risk they wanted.”
  
  At the same time, but for different reasons, you should limit your private interaction with the prop traders, especially Jonathan Egol.
  
  The SEC’s complaint focused on one of Jonathan’s Abacus deals and yet failed even to mention Jonathan. Instead they fingered the French guy.
  
  At first I took it as just another sign of Mort stupidity. But now that the Justice Department has gotten involved, and is combing through all the Abacus deals, I wonder. Why is no one yet talking about Jonathan? Why is no one making noises about the deals structured for Jonathan -- and not John Paulson -- to short them? Is it possible that Jonathan has been helping them to understand our business? Just saying...
  
  Our French Problem
  
  No. 4: You need to address our French problem.
  
  In a matter of weeks Fabrice Tourre has gone from non- entity to a potential asset (a “rogue trader” who might have gone quietly so that the firm might survive) to a huge liability (hero on Wall Street, who somehow has managed to portray himself as both a religious martyr and a mere cog in our machine.)
  
  Going forward I suggest that our personnel department reexamine the French male’s ability to subordinate himself. In English there is no “I” in team. It turns out that the French use a different word: equipe.
  
  Our international people should have known this. At the very least they should have been queasy about hiring guys who look as if they’d rather be wearing espadrilles.
  
  ‘Things Like Ethics’
  
  No. 5: Be careful not to say or do anything now that will constrain our ability, after this crisis has passed, to do whatever we want.
  
  The other day, on your emergency conference call with our customers, you said that you wanted Goldman to be seen as a “leader in things like ethics.”
  
  I couldn’t have put it better myself. If in the future we fail to be a leader in ethics we can point to your statement as evidence that we never intended to be a leader in ethics, merely in “things like ethics.”
  
  To that end, I intend to compile a list of things like ethics, in which we might strive to be a leader, without risk to our profitability.

Hmmm... so it's not the fault of the cow-pitalist cow eh? :P

Matt Tiabbi: The Feds Vs Goldman

Back in July 2009, the following posting was posted Goldman Sachs: The Engineer Of Every Market Manipulation

In the light of Goldman's latest scandal, Matt Tiabbi has another brilliant piece out on the Rolling Stones: The Feds vs. Goldman

The government's case against Goldman Sachs barely begins to target the depths of Wall Street's criminal sleaze

• On the day the Securities and Exchange Commission filed suit against Goldman Sachs for securities fraud, shares in the company plunged 12.8 percent, closing at $160.70. The market, it seemed, was finally passing judgment on a decade of high-stakes Wall Street scammery that left America threatening Nigeria, Indonesia and Belarus on the list of the world's most corrupt economies.
  
  A few days later, Goldman announced its first-quarter numbers. Profits were up 91 percent, to a staggering $3.4 billion.
  
  Compensation and bonuses soared to $5.5 billion, up from $4.7 billion in the first quarter of 2009. Battered in the press, Goldman was raking up on the bottom line. So investors once again leapt into Goldman's arms, pushing the stock as high as $166.50, not far from where it was even before news of the SEC suit broke.
  
  Goldman isn't dead – far from it. But this new SEC suit officially places it at the center of a raging national discussion about the hopelessly fucked state of American business ethics. As a halting, first-step attempt at financial regulatory reform makes its way toward a vote in the Senate, the government has finally thrown open the door and let a few of the rottener skeletons tumble out.
  
  On the surface, the failure-to-disclose rap being leveled at Goldman feels like a niggling technicality, the Wall Street equivalent of a tax-evasion charge against Al Capone. The bank will try and – who knows – might even succeed in defending itself in a court of law against these charges. But in the court of public opinion it was doomed the instant the SEC decided to put this ghastly black comedy of a fraud case on the street for everyone to see. Just as Pittsburgh Steeler Ben Roethlisberger will never recover from the image of him (allegedly) waving his dick at a scared 20-year-old coed in the darkened hallway of a Georgia nightclub, Goldman may never bounce back from the SEC's brutal blow-by-blow account of how the bank conspired with a hedge-fund magnate to bend one gullible business partner after another over the edge of the subprime housing market.
  
  Here's the CliffsNotes version of the scandal: Back in 2007, Harvard-educated hedge-fund whiz John Paulson (no relation to then-Treasury secretary and former Goldman chief Hank Paulson) smartly decided the housing boom was a mirage. So he asked Goldman to put together a multibillion-dollar basket of crappy subprime investments that he could bet against. The bank gladly complied, taking a $15 million fee to do the deal and letting Paulson choose some of the toxic mortgages in the portfolio, which would come to be called Abacus.
  
  What Paulson jammed into Abacus was mortgages lent to borrowers with low credit ratings, and mortgages from states like Florida, Arizona, Nevada and California that had recently seen wild home-price spikes. In metaphorical terms, Paulson was choosing, as sexual partners for future visitors to the Goldman bordello, a gang of IV drug users, Haitians and hemophiliacs, then buying life-insurance policies on the whole orgy. Goldman then turned around and sold this poisonous stuff to its customers as good, healthy investments.
  
  Where Goldman broke the rules, according to the SEC, was in failing to disclose to its customers – in particular a German bank called IKB and a Dutch bank called ABN-AMRO – the full nature of Paulson's involvement with the deal. Neither investor knew that the portfolio they were buying into had essentially been put together by a financial arsonist who was rooting for it all to blow up.
  
  Goldman even kept its own collateral manager – a well-known and respectable company called ACA – in the dark. The bank hired the firm to approve the bad mortgages being selected by Paulson, but never bothered to tell ACA that Paulson was actually betting against the deal. ACA thought Paulson was long, when actually he was short. That led to the awful comedy of ACA staffers holding meeting after meeting with Goldman and Paulson, and continually coming away confused as to why their supposedly canny financial partners kept kicking any decent mortgage out of the deal. In one ACA internal e-mail, the company wonders aloud why Paulson excluded mortgages issued by Wells Fargo – a bank that traditionally created high-quality mortgages. "Did [they] give a reason why they kicked out all the Wells deals?" the quizzical e-mail reads.
  
  The climactic scene of this absurd vaudeville came on February 2nd, 2007, when Goldman vice president Fabrice Tourre – a French-born slimeball who would be the only Goldman individual named in the suit – showed up with Paulson & Co. at ACA's New York offices. At this meeting, both Paulson's people and Tourre presumably pretended, for the benefit of their sucker partner ACA, that they were putting together a deal they actually believed in. One has to imagine Tourre and the Paulson contingent overacting with Shatnerian intensity to convince the numbskull ACA guys that they really, really thought subprime mortgages lent out to exurban Floridians with shit credit scores were awesome investments. During the meeting, Tourre sent a damning e-mail to another Goldman staffer: "I am at this aca paulson meeting, this is surreal."
  
  Tourre would brag in other e-mails that while the housing market was about to blow up, his fabulous French self would be left standing in a pile of money when it was all over. "More and more leverage in the system," he wrote. "The whole building is about to collapse anytime now. . . . Only potential survivor, the fabulous Fab . . . standing in the middle of all these complex, highly leveraged, exotic trades he created!"
  
  These flighty Tourre e-mails boasting of cashing in on a disaster and chuckling over the "surreal" experience of power-lying right in the face of a business partner are Goldman's very own Ben Roethlisberger drunken dick-waving moment. It is hard to imagine any company from now on doing business with Goldman and not picturing its fruitcake executives text-boasting to each other about the pleasures of screwing over their own clients.
  
  Goldman has issued three denials with regard to the SEC charges. The first was a very curt "this is all bullshit" press release, issued on the day the complaint came out, in which it called the charges "completely unfounded in law."
  
  Then, after their PR people had a few minutes to think about things, Goldman issued a second release claiming that it lost $90 million on the deal, and therefore couldn't have been doing anything wrong. While this may be true – and we only have their word for it that it is – who the hell cares? What Goldman is being accused of is lying to its clients. How much money they did or didn't make is totally irrelevant. In fact, if Goldman really did lose money knowing what they knew about this deal, all that proves is that they're morons as well as sleazebags.
  
  The third press release paved the way for the inevitable deployment of the Dr. Richard Kimble/one-armed-man defense – i.e., that Fabrice Tourre did it all, acting alone. "Goldman Sachs would never condone one of its employees misleading anyone," the release insisted. "Were there ever to emerge credible evidence that such behavior indeed occurred here, we would be the first to condemn it and to take all appropriate actions."
  
  So within the space of a few days, Goldman issued three different explanations, which progressed from (a) we absolutely, positively didn't do it, to (b) if we did do it, we didn't make any money doing it, and finally on to (c) if somebody did it, it was only that French cat Tourre, and here's his head if you want it. These guys couldn't find the truth if it was sitting in their lap playing the ukulele, and that's the basic problem that the entire financial-services sector – an industry that requires trust and confidence to thrive – is struggling to overcome.
  
  Just under a year ago, when we published "The Great American Bubble Machine" [RS 1082/1083], accusing Goldman of betting against its clients at the end of the housing boom, virtually the entire smugtocracy of sneering Wall Street cognoscenti scoffed at the notion that the Street's leading investment bank could be guilty of such a thing. Attracting particular derision were the comments of one of my sources, a prominent hedge-fund chief, who said that when Goldman shorted the subprime-mortgage market at the same time it was selling subprime-backed products to its customers, the bait-and-switch maneuver constituted "the heart of securities fraud."
  
  CNBC's house blowhard, Charlie Gasparino, laughed at the "securities fraud" line, saying, "Try proving that one." The Atlantic's online Randian cyber-shill, Megan McArdle, said Rolling Stone had "absurdly" accused Goldman of committing a crime, arguing that "Goldman's customers for CDOs are not little grannies who think a bond coupon is what you use to buy denture glue." Former Wall Street Journal reporter Heidi Moore hilariously pointed out that Goldman wasn't the only one betting against the housing market, citing the short-selling success of – you guessed it – John Paulson as evidence that Goldman shouldn't be singled out.
  
  The truth is that what Goldman is alleged to have done in this SEC case is even worse than what all these assholes laughed at us for talking about last year.
  
  Prior to the "Bubble Machine" piece, I had heard rumors that Goldman had gone out and intentionally scared up toxic mortgages and swaps in order to get short of them with sucker bookies like AIG. But – and this seems funny in retrospect – I foolishly dismissed those tales as being too conspiratorial. I thought it was bad enough that Goldman was shorting the subprime market even as it was selling toxic subprime-backed securities to chumps on the open market. The notion that the bank would actually go out and create big balls of crap that would be designed to fail seemed too nuts even for my tastes.
  
  In the year since – and this, to me, is the main lesson from the SEC case against Goldman – the public has quickly come to accept that when it comes to the once-great institutions of modern Wall Street, literally no deal that makes money is too low to be contemplated.
  
  The nearly identical case involving a Merrill Lynch mortgage deal called Norma now making its way through the courts is just one example. There is more fraud out there, and everyone knows it: front-running, manipulation of the commodities markets, trading ahead of interest-rate moves, hidden losses, Enron-esque accounting, Ponzi schemes in the precious-metals markets, you name it. We gave these people nearly a trillion bailout dollars, and no one knows what service they actually provide beyond fraud, gross self-indulgence and the occasional transparently insincere public apology.
  
  The Goldman case emerges as a symbol of all this brokenness, of a climate in which all financial actors are now supposed to expect to be burned and cheated, even by their own bankers, as a matter of course. (As part of its defense, Goldman pointed out that IKB is a "sophisticated CDO market participant" – translation: too fucking bad for them if they trusted us.) It would be nice to think that the SEC suit is aimed at this twisted worldview as much as at the actual offense. Some observers believe the case against Goldman was timed to pressure Wall Street into acquiescing to Sen. Chris Dodd's loophole-ridden financial-reform bill, which probably won't do much to prevent cases like the Abacus fiasco. Or maybe it's just pure politics – Democrats dropping the proverbial horse's head in Goldman's bed to get their fig-leaf financial-reform effort passed in time for the midterm elections.
  
  Whatever the long-range motives, the immediate effect of the lawsuit is to put Wall Street's crazy fraud ethos on trial in the court of public opinion. For now, at the end of the first quarter, Goldman and most of the other big banks are still winning that case. But the second quarter might be a different story.

This article is also highlighted by Jesse: A Summary of the Goldman Sachs Fraud Case, and the Downfall of Icons

His views:

• This is fraud, pure and simple. Goldman did not stand by and allow ACA to make its picks. Goldman and Paulson aggressively influenced the selection process, vetoing the good mortgages, and manipulating ACA, setting them up to be the fall guy in what is clearly a premeditated fraud.
  
  The final defense being offered, after the smokescreens and misstatements of what happened have been pulled away, is that there can be no fraud when you are selling to a 'qualified investor' and making a market.
  
  Goldman was not making a market. They were actively creating inherently dangerous products, and then recommending and selling them to their customers, qualified investors or not. It was fraud, and Goldman is a disreputable firm, that has been shown to engage in fraud across many markets and countries and venues. This particular scam with ACA is small change compared to the setting up of AIG, and the foul bailout ripped from the public with the collusion of the NY Fed.
  
  Anyone who looked at their trading results, many standard deviations out of the norm, would have to know that there was some sort of fraud and market manipulation involved. It is the Bernie Madoff syndrome; the professionals all knew he was cheating somehow, but were more than willing to go along with it and turn a blind eye while it was to their advantage. And Goldman had the politicians in their pocket, and so they were powerful, not to be crossed. Almost as powerfully connected as the Fed's house bank, J. P. Morgan.
  
  Warren Buffet and Charlie Munger have come out recently in defense of Goldman, attempting to paint this fraud as the work of a single rogue trader. That of course is a part of the spin, the carefully thought out and premeditated fraud which had ACA and then Fabrice Tourree as the designated scapegoats.
  
  Warren holds quite a bit of Goldman Sachs stock. And all he and Charlie have shown is that once you strip away the trappings and the masks, the ornamentation and the legend, what you are left with is someone who is willing to lie down with pigs when the money is right. So the question is not what kind of man Warren Buffet is, but rather, what is his price.
  
  When the tide goes out, we indeed see who is naked, and who is not. And it is not a pretty picture.

I actually do agree with what Jesse is saying here about Warren and Charlie. And I did not think highly how Warren boasted that Berkshire makes an incredible US15.00 per second from their Goldman investment.

What Goldman Sachs did here is not right and it stinks to high hell.

Goldman Case: Do You Know Or Do You Not Know?

Huhu... US to Open Criminal Inquiry into Goldman Trading

One of the most interesting posting on Goldman Sachs case was highlighted on Zero Hedge.

The posting is called The Mainstream Media Doesn’t Know Sh*t About Securities Law or the Goldman Case

Do give it a read. :D

What Do You Expect After Greece Is Declared Junk?

What do you expect after S&P downgraded Greece's credit ratings were slashed to junk? (What took them so long to make this downgrade?)

Here is snippet from S&P:

------------------

Overview

• We have updated our assessment of the political, economic, and budgetary challenges that the Greek government faces in its efforts to place Greece's public debt burden onto a sustained downward trajectory.
• We are lowering our ratings on Greece to 'BB+/B' from 'BBB+/A-2' and assigning a negative outlook.
• The negative outlook reflects the possibility of a further downgrade if the Greek government's ability to implement its fiscal and structural reform program materially weakens in our view, undermined by domestic political opposition at home or by even weaker economic conditions than we currently assume.

....

Rationale

The downgrade results from Standard & Poor's updated assessment of the political, economic, and budgetary challenges that the Greek government faces in its efforts to put the public debt burden onto a sustained downward trajectory. We believe that the government's policy options are narrowing because of Greece's weakening economic growth prospects, at a time when pressures for stronger fiscal adjustment measures are rising. Moreover, in our view, medium-term financing risks related to the government's high debt burden are growing, despite the government's already sizable fiscal consolidation plans. Our updated assumptions about Greece's economic and fiscal prospects lead us to conclude that the sovereign's creditworthiness is no longer compatible with an investment-grade rating.

As a result of Greece's rising commercial borrowing costs, the authorities have requested extraordinary support from the Eurozone and the International Monetary Fund (IMF). We anticipate further information in the coming weeks from EU members regarding the terms and duration of support for Greece. We believe that a multiyear European Economic & Monetary Union (EMU)/IMF support program is likely, which should, in our opinion, significantly ease Greece's near-term liquidity challenges. Nevertheless, in our view, pressures for more aggressive and wide-ranging fiscal retrenchment are growing, in part because of recent increases in market interest rates. In our revised projections, we forecast Greece's net general government debt-to-GDP ratio reaching 124% of GDP in 2010 and 131% of GDP in 2011.

We continue to believe that the size and scope of the Greek government's fiscal consolidation program, and the government's political will to implement it, are the main drivers of our sovereign ratings on Greece. Sustained success in this regard could, in time, be reflected in lower market interest rates on Greece's debt. Early indications show that the government is likely to meet its 2010 deficit target. The authorities are also moving ahead with their
structural reform agenda, adopting tax reform in April, while proposals on pension reform are expected in May.

Nevertheless, we believe that the dynamics of this confidence crisis have raised uncertainties about both the government's administrative capacity to implement reforms quickly and its political resolve to embrace a fiscal austerity program of many years' duration. Based on our updated assessment, we estimate that the adjustment needed in Greece's primary fiscal balance relative to that of 2008 in order to stabilize the government debt burden amounts to at least 13% of GDP--a very high level compared with that which other sovereigns have been able to achieve. The government's resolve is likely, in our opinion, to be tested repeatedly by trade unions and other powerful domestic constituencies that will be adversely affected by the government's policies. At the same time, we expect official lender support to be highly conditional and revocable, and as such, we do not believe that it provides a floor under Greece's sovereign ratings.

As previously noted, the government's multiyear fiscal consolidation program is likely to be tightened further under the new EMU/IMF agreement. This, in our view, is likely to further depress Greece's medium-term economic growth prospects. Under our revised assumptions (see below), we expect real GDP to be nearly flat over 2009-2016, while the level of nominal GDP may not regain the 2008 level until 2017. Moreover, we find that Greece's fiscal challenges are increasing pressures on the banking and corporate sectors. In particular, we see continuing fiscal risks from contingent liabilities in the banking sector, which could in our view total at least 5%-6% of GDP in 2010-2011.

....

Outlook

The negative outlook reflects the possibility of a further downgrade if, in our view, the Greek government's ability to implement its fiscal and structural reform program is undermined by domestic political opposition or materially weakens for other reasons, including even weaker economic conditions than we currently assume.

We could revise the outlook to stable if we perceive that political support for government economic policies remains robust and Greece's economic growth prospects prove to be more benign than we currently anticipate.

---------------

On Bloomberg Businessweek: RBS Says Medium-Term Outlook for Euro Is ‘Extremely Challenging’

• April 27 (Bloomberg) -- The medium-term outlook for the euro remains “extremely challenging” because of risks the Greek debt crisis persists and extends to other countries in the region, according to Royal Bank of Scotland Group Plc.
  
  Regardless of how Greece “is resolved in the short term, investors will remain underweight euro for the foreseeable future and a short-covering rally on a short-term resolution would be limited,” Greg Gibbs, a currency strategist in Sydney, wrote today in a report. The euro is “defying gravity,” which is “at odds with European sovereign debt markets,” he said.

On the UK Telegraph, Ambrose Evans-Pritchard reports: ECB may have to turn to 'nuclear option' to prevent Southern European debt collapse

• “We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.
  
  “The ECB has been side-lined in the Greek crisis so far but do you allow a bond crash in your region if you are the lender-of-last resort? They may have to act as contagion spreads to larger countries such as Italy. We started to see the first glimpse of that today.”
  
  Mr Cailloux said the ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.
  
  This is prohibited in normal times under the EU Treaties but the bank can buy a wide range of assets under its “structural operations” mandate in times of systemic crisis, theoretically in unlimited quantities.
  
  Mr Cailloux added: “This feels like the banking crisis in late 2008 post-Lehman, though it has not yet spread to other asset classes. The ECB will have to act it if does.”
  
  Yields on 10-year Portuguese bonds spiked 48 basis points to 5.67pc, replicating the pattern seen as the Greek crisis started.
  
  Portugal’s public debt will be just 84pc of GDP by the end of this year, far lower than that of Greece, at 124pc. However, its private debt is much higher and data from the IMF shows that its external debt position is worse.
  
  Interest payments on foreign debt will be 8pc of GDP this year. Portugal’s net international investment position is minus 100pc of GDP, the worst in the eurozone.
  
  The interest rate on a €9.5bn (£8.2bn) issue of Italian notes jumped to 0.814pc, up from 0.568pc in March. The bid-to-cover ratio was wafer-thin, falling to 1.02. Italy has the world’s third biggest debt in absolute terms.
  
  The issue of the ECB buying bonds is a political minefield. Any such action would inevitably be viewed in Germany as a form of printing money to bail out Club Med debtors, and the start of a slippery slope towards in an “inflation union”.
  
  But the ECB may no longer have any choice. There is a growing view that nothing short of a monetary blitz — or “shock and awe” on the bonds markets — can halt the spiral under way.
  
  The markets are already looking beyond the €40bn to €45bn joint rescue for Greece by the IMF and the EU, questioning whether some form of debt restructuring or managed default can be avoided over the next year or two, or even whether the rescue plan can work at all in a country trapped in debt deflation with no way out through devaluation.
  
  Professor Willem Buiter, a former member of Britain’s Monetary Policy Committee and now global economist for Citigroup, said there may need to be a “voluntary restructuring” of debt.
  
  “It is quite likely that a haircut of, say, 20pc to 25pc will be imposed on creditors as parts of the deal,” he said.
  
  The bond markets are already “pricing in” a default of some kind in Greece, where rates on 2-year debt spiked close to 15pc in panic trading yesterday. The European Commission and the International Monetary Fund both insist that restructuring is out of the question but investors have become cynical after months of EU rhetoric and foot-dragging by Berlin.
  
  The ECB cannot lightly risk a second sovereign crisis erupting, with dangers of a spillover into Spain.
  
  The exposure of Spanish-based banks to Portuguese debt exceeds $80bn, according to the Bank for International Settlements. There were early signs of strain in the Spanish banking system yesterday.
  
  Banks were forced to pay a premium in the domestic “repo” market on fears of counterparty risk, although the Bank of Spain has so far won plaudits for ensuring that banks have large safety buffers.
  
  It is unclear why the markets are becoming skittish over Italian bonds. Public debt is 115pc of GDP but this is offset by very low household debt.
  
  Italian citizens are among the most frugal savers in the OECD club of rich states. Moreover, the government has weathered the financial crisis with a budget deficit in remarkable good health.

Portugal ratings were cut too.

• Portugal’s Rating
  
  Portugal’s long-term local and foreign currency sovereign issuer credit ratings were cut yesterday to A- from A+ at S&P, which cited “fiscal and economic structural” weakness and also gave the nation’s debt a negative outlook.
  
  “The downgrade was more aggressive than expected,” said Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York, referring to the reduction in Portugal’s debt rating. “If Portugal comes under attack, you get to Spain pretty quickly. ( source: here )

And of course with Greece debts no considered junk, I would ass-u-me that banks holding these Greek debts would soon need to replace those debt with capital.

And the markets tumbled. FTSE 100 suffers worst fall since November

How?

Have you check at the implications of last night events? Did you see what the charts are showing? Are you looking at the relevant charts?

Arrrghhhh... terrible way to start the morning eh?

Some light humour based on Goldman Sachs. (in case you need to ask, remember the movie 'A Few Good Men' starring Tom Cruise and Jack Nicholson?)

• "You want the truth? You can't handle the truth. Son, we live in a country with an investment gap. And that gap needs to be filled by men with money. Who's gonna do it? You? You, Middle Class Consumer? Goldman Sachs has a greater responsibility than you can possibly fathom. You weep for Lehman and you curse derivatives. You have that luxury. You have the luxury of not knowing what we know: that Lehman's death, while tragic, probably saved the financial system. And that Goldman's existence, while grotesque and incomprehensible to you, saves pension funds. You don't want the truth. Because deep down, in places you don't talk about at parties, you want us to fill that investment gap. You need us to fill that gap. "We use words like credit default swaps, collateralized debt obligation, and securitization? We use these words as the backbone of a life spent investing in something. You use 'em as a punchline. We have neither the time nor the inclination to explain ourselves to a commoner who rises and sleeps under the blanket of the very credit we provide, and then questions the manner in which we provide it! We'd rather you just said thank you and paid your taxes on time. Otherwise, we suggest you get an account and start trading. Either way, we don't give a damn what you think you're entitled to!" ( Source: here )

These F@#king Guys - Goldman Sachs

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
These F@#king Guys - Goldman Sachs
http://www.thedailyshow.com/
Daily Show Full Episodes Political Humor Tea Party

Bottome Line? Goldman Sachs Are Scums!

WHY ARE AMERICANS ALLOWING THIS TO HAPPEN?

Mentioned on CNBC:

"This makes the investor sit back and say, 'This is exactly why I'm not in the market. It's a good-old-boy network'" says one market pro of the Goldman Sachs charges.

ps: Goldman Sachs: The Engineer Of Every Market Manipulation

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

Goldman's role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar.

And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliché that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline the committee to save the world. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.

After the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers — one of Goldman's last real competitors — collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.

Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bank-holding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding — most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs — and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.

The collective message of all of this — the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage."

Fast-forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Goldman Sachs Charged With Fraud

The NY Times article U.S. Accuses Goldman Sachs of Fraud

• Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
• Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
• The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market....As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.
• According to the complaint, Goldman created Abacus 2007-AC1 in February 2007, at the request of John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst.
• .. the deck was stacked against the Abacus investors, the complaint contends, because the investment was filled with bonds chosen by Mr. Paulson as likely to default. Goldman told investors in Abacus marketing materials reviewed by The Times that the bonds would be chosen by an independent manager.
• Robert Khuzami, the director of the S.E.C.’s division of enforcement, said in a statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
• But when Goldman sold shares in Abacus to investors, the bank and Mr. Tourre only disclosed the ratings of those bonds and did not disclose that Mr. Paulson was on other side, betting those ratings were wrong.

From Jesse: http://jessescrossroadscafe.blogspot.com/2010/04/sec-formally-charges-goldman-sachs-with.html

• This is just the tip of the iceberg. The Wall Street Banks are knee deep in fraud.
  
  No one can obtain the kind of systematic returns that Goldman was producing without either cooking the books or engaging in some other frauds. That is the same 'tell' as the steady and outsized returns that Madoff is producing.
  
  Let's see if this goes any deeper, and if serious punishments and reforms result.
  
  The SEC can only enforce the Securities Laws, but cannot bring criminal charges. Certainly Goldman will be subject to civil lawsuits and discovery. But the real test of the Obama government will be any role that the Justice Department does or does not take in this. They could of course defer, using the show trials of the Financial Crisis Inquiry Commission as a rationale to take no action.
  
  This is blatant robbery, outright fraud, being conducted by an organization that is paying half the Congress and the Administration, and staffing key positions in the government with its employees.
  
  Meanwhile, the market manipulation continues...

On CNBC: http://www.cnbc.com/id/36595454

• Stocks skidded Friday, snapping a six-day winning streak, after the SEC shocked the market, charging Goldman Sachs with fraud over its handling of subprime mortgages.
  
  The market had already started in a sour mood as the latest batch of earnings were solid but fell short of the market's lofty expectations and consumer sentiment unexpectedly fell.
  
  "The market was going along pretty good. We were a little weak, that's for sure, but we had good news the other day from JPMorgan, great earnings today from Bank of America, and then for this to come out, really put a damper on the whole sector," Alan Valdez, vice president of Hilliard and Lyons, said on CNBC.
  

Don't These Goldman Sachs Bankers Feel Ashamed With Their Pay And Bonuses??

And this is what so WRONG with Wall Street and this is why Bennie Should Really Go! : Goldman Sachs bankers on course for $19bn pay and bonuses

• Remuneration after bumper year looks set to spark controversy
  
  Richard Wachman and Phillip Inman The Observer, Sunday 6 December 2009
  
  Goldman Sachs will ignite a storm of controversy in the new year when it reveals that its bankers are on course to collect pay and bonuses worth $19bn (£11.4bn), despite 2009 being the worst year for the US economy in 30 years.
  
  The news comes as banks in Britain find themselves in the firing line after it emerged that 5,000 bankers stand to collect more than £1m each, sparking criticism from ministers who accused financiers of being out of touch as millions are thrown out of work amid recession.
  
  City sources say that the pay and bonus pot at Goldman is based on projected figures from Thomson Financial, published on Friday, which show that the investment bank is expected to generate net income of around $45bn.
  
  Analysts predict that 43% of that figure will be set aside for compensation to be distributed to the bank's 31,700 employees, 6,000 of whom are in London. Remuneration as a proportion of net income is expected to be lower than the average of 46.7% in the 10 years to 2008, partly as a sop to US public opinion.
  
  Brad Hintz, investment banking analyst at Sanford Bernstein, says: "Everyone inside the firm is aware there is more than enough money available to make everyone happy."
  
  Goldman has enjoyed a bumper year thanks to booming debt markets, a recovery in the oil price and a rise in the value of equities since January, with some indices up by 20%. The bank trades off its own account as well as on behalf of clients.
  
  Goldman's three leading executives, chairman Lloyd Blankfein, president Gary Cohn and chief financial officer David Viniar, will receive multi-million dollar payouts after forgoing their bonuses last year when the bank made a loss in the fourth quarter. Average compensation for the rest of the workforce will come in at about $743,000. The bonus culture is under attack on both sides of the Atlantic as it is blamed for having encouraged bankers to make reckless decisions during the credit boom that contributed to the near collapse of the financial system in 2008.
  
  Bonus payments are an especially sensitive issue as banks such as Goldman took government money during the height of the crisis. The move was designed to prevent another banking collapse following the demise of Lehman Brothers and Bear Stearns.
  
  In June, Goldman repaid $10bn of Treasury funding in order to free itself from onerous pay caps being imposed by the Obama administration.
  
  But, in a sign that Goldman is sensitive to a public backlash, the bank is prepared to pay staff largely in shares rather than cash.
  
  In Britain, the Financial Services Authority is telling banks to adhere to the principles laid out at the recent G20 meeting that call for bonus payments to be deferred and subject to claw back in the event of failure two or three years down the line. The G20 also called for stock awards rather than cash.
  
  Other investment banks, such as Barclays Capital, Credit Suisse and JP Morgan, are expected to pay huge bonuses to staff after a year in which their fortunes revived as the banking sector stabilised.
  
  In London, the row rumbles on over planned bonuses worth £1.5bn for staff at the investment banking arm of Royal Bank of Scotland where the state owns a 70% stake after a taxpayer bailout. Ministers have demanded a veto.

Yeah, What's Wrong With Our Financial Worlds?

This passage from the above posting just says it all!

• What’s wrong with financial-industry compensation? In a nutshell, bank executives are lavishly rewarded if they deliver big short-term profits — but aren’t correspondingly punished if they later suffer even bigger losses. This encourages excessive risk-taking: some of the men most responsible for the current crisis walked away immensely rich from the bonuses they earned in the good years, even though the high-risk strategies that led to those bonuses eventually decimated their companies, taking down a large part of the financial system in the process.

Exactly!

With such a system it merely encourages EXCESSIVE RISK-TAKING!

What a freaking wonderful world for these bankers, no?

They take their excessive risks and when they fail, they get bail-out! And when they do make profit, look at how much money they wants to be compensated with????

Dear Lord, I do hope miracles do happen and may this year miracle, see these insanely greedy, gutless and shameless bankers get their due and just punishment!

Yeah Lloyd Blankfein Should Just Shut Up!

On CNN Money: Shut up, Lloyd Blankfein!

• Shut up, Lloyd Blankfein!
  
  The Goldman Sachs CEO is trying to portray the Wall Street titan as a paragon of virtue. But Blankfein should stop pretending that the bank is a charity.
  
  By Paul R. La Monica, CNNMoney.com editor at large
  Last Updated: November 18, 2009: 12:22 PM ET
  
  NEW YORK (CNNMoney.com) -- The public relations gurus who are advising Goldman Sachs Chief Executive Officer Lloyd Blankfein might want to give him some new advice. Shut up!
  
  Blankfein made a startling confession Tuesday. He apologized for Goldman's role in the financial crisis, saying that the bank "participated in things that were clearly wrong and have reason to regret."
  
  But it's tough to take Blankfein at his word. This mea culpa came a little more than a week after he made an embarrassing comment in an interview with the Financial Times, saying that he was just "doing God's work." Interesting. I don't believe there are any references to credit default swaps in the Bible, Torah, Koran or any other religious text.
  
  While Blankfein might have made the "God's work" comment in jest, it still goes to show that he needs to tread carefully if he really wants to prove to taxpayers that Goldman is not really the blood-sucking parasite that many are now making it out to be.
  
  Goldman is facing a populist backlash because it was one of the original nine firms to receive bailout funds last fall. But it is now all of a sudden generating gigantic profits again and putting away large wads of cash for employees in its bonus pool.
  
  Goldman has earned $8.4 billion in the first nine months of 2009. The company has already set aside $16.7 billion for compensation expenses, putting it on track to have a bonus pool of about $21 billion at year's end.
  
  So it's no wonder that Blankfein has turned the spin cycle on over the past few months to try and send the message that Goldman Sachs (GS, Fortune 500) is the Wall Street equivalent of Google, i.e. it won't do evil.
  
  On Tuesday, Goldman announced that it, along with investing legend Warren Buffett, is launching a $500 million program geared toward helping small businesses.
  
  That's certainly admirable even though it's fair to cynically point out that Buffett's Berkshire Hathaway (BRKA, Fortune 500) investment firm is Goldman's largest shareholder. So I don't think I am going out on a limb to guess that the idea for this largesse probably had its roots in Omaha as opposed to the corner offices on Broad Street.
  
  And if Blankfein is really sorry about the mistakes Goldman made, here's a thought: Instead of contributing a meager $500 million to help get small businesses back on track, maybe he could kick in $14 billion instead.
  
  That's the amount of money Goldman received from AIG (AIG, Fortune 500) (courtesy of the U.S. taxpayer-funded bailout of the insurer) because of the so-called counterparty risk.
  The small business program is Blankfein's latest attempt to try and prove that what's good for Goldman is good for America.
  
  Last month, Blankfein told Fortune managing editor Andy Serwer that the company contributes to the nation's growth. "Once the economy starts to turn, we get very involved," he said.
  
  Back in July, Goldman went out of its way to pat itself on the back for paying $1.1 billion to the government to redeem warrants that Uncle Sam got as part of last fall's $10 billion bailout of the firm.
  
  Goldman deemed the payment "full and fair," and in a statement Blankfein gushed that Goldman was "pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake."
  
  None of this is technically wrong. It's, of course, better for Goldman to be back in the black as opposed to bleeding red ink.
  
  But has Blankfein blanked out and mistaken himself for former Goldman chief (and soon to be former governor of the Garden State) Jon Corzine? It almost sounds as if Lloyd is running for public office. What's next? Kissing babies and train rides all across America?
  
  Blankfein shouldn't feel the need to constantly remind us of how Goldman is an important cog in the GDP growth machine and engage in excessive self-flagellation just because business is booming again.
  
  It's actually an encouraging sign that banks like Goldman, JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and U.S. Bancorp (USB, Fortune 500) -- to name a few -- are this strong only a few months after many thought the financial system was doomed.
  
  The notion that Goldman's good fortune is a problem is silly. Even though many average Americans are still struggling financially, it's misguided to suggest that everybody should be suffering and that the nation would have been better off if Wall Street went under. We shouldn't be demonizing success.
  
  And let's not forget that Goldman has paid back taxpayers not just for the warrants but the full $10 billion in TARP money. There's a big difference between Goldman and Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), which still don't seem to be healthy enough to return bailout funds.
  
  But Goldman Sachs is a bank. It's supposed to make money. It's supposed to take risks. Lloyd isn't exactly running the March of Dimes.
  
  Blankfein is fighting a battle he can't win. He can't come out and bluntly state that his company's return to prosperity should be applauded because it proves that his firm's employees are more competent than Goldman's rivals. That's why he should just keep quiet.
  
  The problem is that Blankfein is trying to dupe people into thinking that he's had his Ebenezer Scrooge moment and that Goldman is now more interested in serving the public than making a buck.
  
  Apologizing for the credit bubble and claiming that Goldman has the best interests of the people at heart just makes Blankfein look foolish, not sympathetic.
  
  Come on. We all know how Wall Street works. The fact that Goldman hotshots are set to make big bonuses this year isn't nearly as insulting as the fact that Blankfein wants us to believe that investment bankers and traders are really nothing more than highly compensated social workers.

Well said.

In an another article on Reuters, highlighted by TT, Goldman was exposed to AIG losses: government report

• NEW YORK (Reuters) - Goldman Sachs Group Inc could have suffered dramatic losses if the federal government had not intervened to prop up American International Group Inc, according to a government report.
  
  The report by the special inspector general for the government bailout program raises doubts about Goldman's previous claims that it was hedged against potential AIG losses.
  
  Last fall, as the financial services industry stood on the brink of collapse, the government stepped in with an unprecedented effort to rescue the system. AIG was among the companies that received billions of dollars from the U.S. Treasury's Troubled Asset Relief Program.
  
  If AIG had collapsed, it would have made it difficult for Goldman to liquidate its trading positions with AIG, even at discounts, the report said. It also would have put pressure on other counterparties that "might have made it difficult for Goldman Sachs to collect on the credit protection it had purchased against an AIG default."
  
  Finally, the report said, an AIG default would have forced Goldman Sachs to bear the risk of declines in the value of billions of dollars in collateralized debt obligations.
  
  A Goldman spokesman called the risks discussed in the report a "moot point."
  
  "Goldman Sachs has consistently said its exposure with AIG was collateralized and hedged and therefore we had no direct credit exposure," Goldman Spokesman Michael DuVally said. "Given the hedges, collateral, and government backing as a result of the bailout, the additional risks of declining market values in the event of an AIG default are a moot point."
  AIG has received pledges of up to $180 billion in taxpayer aid since last fall to help save it from collapse. It was revealed in March that Goldman received $12.9 billion in payments and collateral from AIG.
  
  David Viniar, Goldman's chief financial officer, in March told reporters that the Wall Street bank did nothing wrong when it accepted payments to close out trades with AIG.
  
  The full report can be viewed at: here

Me?

I think them guys on Wall Street should get a real job. Get a life!