Thursday, Jul 16, 2009
How did they do that? Free use of taxpayers money?
Telegraph: Just how did Goldman Sachs manage that?
''Conspiracy theories abound as to how Goldman Sachs has spun record profits from global turmoil.''
Posted by hpwatcher @ 11:30 AM (655 views) Add Comment
5 Comments
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1. icarus said...
This reads like a brief from the PR department of GS. There's not a lot of content but you just have to pick up on the idea that almost all trading on the GS proprietary desk was done on behalf of clients. Fee income for trading on behalf of clients was seroiusly reduced in the 70s and 80s and Wall Street investment banks shifted their focus to proprietary trading (on their own behalf). See:
http://us.ft.com/ftgateway/superpage.ft?news_id=fto091520081426410518
The bigger banks started to make most of their profits from such trading. In addition to trading on their own account GS and other investment banks made loans for gambling to the hedge funds, private equity groups, SIVs and conduits that the banks themselves created. Such 'prime brokerage' was another big earner for the investment banks, though it was a risky arrangement:-
http://www.ft.com/cms/s/0/4104413c-8a9c-11dd-a76a-0000779fd18c.html (if this link doesn't give full access then google 'collapse of Lehman leaves prime broker model in question')
In the first of the above references John Gapper refers to strong safeguards to stop inside information from investment banks' customers leaking to the proprietary trading desks of those banks. Yeah, right. In fact the centralisation of such information gave GS and other banks a massive competitive edge, an arrangement that was detailed in Philip Augar's book 'The Greed Merchants - How the Investment Banks Played the Free Market Game'.
All this is before we even start on about how GS etc. used derivatives and shadow banking to expand leverage and make big enough bets to shift markets in their favour.
Yes, maybe there is no need for conspiracy theories because GS were in a game where the biggest players had massive advantages. But one of those advantages became.........influence at the highest levels of US government.
2. hpwatcher said...
.........influence at the highest levels of US government.
Yeah. And lots of other governments too. I did read something about a certain Chancellor, selling off gold to force the price lower so GS could cover their shorting positions.
..............
3. sneaker said...
Washington is openly stuffed with ex-Goldman people.
When it's out in the open, there's no conspiracy.
Just use your goddam eyes.
4. Ndg said...
The fact that GS is able to access 'bets' made on the US exchanges, before they are made, gives them somewhat of an upper hand.
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