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mdman

Goldman Sachs Says...

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Just how much free market entrepreneurship and innovation was involved in the recent GS profit and bonus bonanza?

Matt Taibbi has a nice breakdown here

Here's a short summary

1. AIG bailout/ theft - $12.9bn, or $20bn if you count the collateral calls prior to AIGs collapse (which personally I wouldn't)

2. TARP - paid off the $10bn (presumably interest-free), but has not paid off the warrants

3. Temporary Liquidity Guarantee Program - issued $28bn in FDIC-backed debt. Anyone can make money if they get a AAA asset at below market rates, to sell into the market at .... market rates. Profit and margins from this sweet deal not clear

4. The Fed alphabet soup

- TSLF, PDCF, TALF, STOMO, TDWP, PPIP (pending), CAP, TIP, CDFF, AMLF, MMIFF (not counting TARP and TLGP already mentioned earlier)

Not saying that GS profited from all of these, but it did from some. $2.2tn lent out by the Fed (with the Fed balance sheet again expanding). Bernanke refuses to reveal what crap has been unloaded on the Fed as collateral in exchange for this lending.

5. TARP (again) - paying off TARP meant issuing new bank stock - a bonanza for the underwriters. GS made $736m this quarter

Does any of this profit happen in a free market? No. Where has this money, going into banker bonus bank accounts now, come from? Taxpayers. The very same who are losing their jobs/ suffering wage cuts because of Wall St excess

These guys are thieves. They are a cancer on the free market. If the law wont prosecute and they don't return their ill-gotten gains, they deserve to be lynched

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I agree with your analysis.

It is ridiculous for GS to claim that they made all of their money in the "free market" and that it is OK for their employees to be paid exceptionally well this year.

To my mind, the collateral pass though of the bail out money from AIG to GS is all that has kept GS in the game. GS were a direct beneficiary of bail out money. If the Treasury were smarter, they would have extracted some of the value that this created for GS employees and shareholders as a condition for bailing out GS by bailing out AIG.

Without the AIG bailout, GS would probably have fallen too. This is the definition of systemic risk. GS was riddled with systemic risk and got bailed out for free.

Edited by LuckyOne

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Just how much free market entrepreneurship and innovation was involved in the recent GS profit and bonus bonanza?

Matt Taibbi has a nice breakdown here

Here's a short summary

1. AIG bailout/ theft - $12.9bn, or $20bn if you count the collateral calls prior to AIGs collapse (which personally I wouldn't)

2. TARP - paid off the $10bn (presumably interest-free), but has not paid off the warrants

3. Temporary Liquidity Guarantee Program - issued $28bn in FDIC-backed debt. Anyone can make money if they get a AAA asset at below market rates, to sell into the market at .... market rates. Profit and margins from this sweet deal not clear

4. The Fed alphabet soup

- TSLF, PDCF, TALF, STOMO, TDWP, PPIP (pending), CAP, TIP, CDFF, AMLF, MMIFF (not counting TARP and TLGP already mentioned earlier)

Not saying that GS profited from all of these, but it did from some. $2.2tn lent out by the Fed (with the Fed balance sheet again expanding). Bernanke refuses to reveal what crap has been unloaded on the Fed as collateral in exchange for this lending.

5. TARP (again) - paying off TARP meant issuing new bank stock - a bonanza for the underwriters. GS made $736m this quarter

Does any of this profit happen in a free market? No. Where has this money, going into banker bonus bank accounts now, come from? Taxpayers. The very same who are losing their jobs/ suffering wage cuts because of Wall St excess

These guys are thieves. They are a cancer on the free market. If the law wont prosecute and they don't return their ill-gotten gains, they deserve to be lynched

Excellent Post!

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As usual we are forgetting a minor point, i.e. GS didn't actually want to take any government money, it was forced to. The UK government tried pretty much the same thing with Barclays but Barclays managed to get them to sod off.

Why would governments want to force companies to take bail-out money they didn't need you ask? Well use your imagination and remind yourself why Lloyds was forced to take over HBOS.

I'm not a great fan of the banks, but then i'm not a great fan of uninformed drivel either.

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As usual we are forgetting a minor point, i.e. GS didn't actually want to take any government money, it was forced to. The UK government tried pretty much the same thing with Barclays but Barclays managed to get them to sod off.

Why would governments want to force companies to take bail-out money they didn't need you ask? Well use your imagination and remind yourself why Lloyds was forced to take over HBOS.

I'm not a great fan of the banks, but then i'm not a great fan of uninformed drivel either.

Not actually relevent to the OP (or in fact correct), but thanks for sharing.

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Totally relevant. The OP says that GS profited from government money. I am saying it didn't want it.

Did it not change from an Investment Bank to a Holding Bank just so it could take the money?

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Totally relevant. The OP says that GS profited from government money. I am saying it didn't want it.

Read the OP again.

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Did it not change from an Investment Bank to a Holding Bank just so it could take the money?

I didn't say it didn't take it, I said it didn't want it. If you listen to Monday or Tuesday's 'Wake up to money' on Radio 5 (still available) then it says more.

This article asks some good questions about GS I think.

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I didn't say it didn't take it, I said it didn't want it. If you listen to Monday or Tuesday's 'Wake up to money' on Radio 5 (still available) then it says more.

This article asks some good questions about GS I think.

If GS didn't want to take the money, it was because they had already figured out that they could get it indirectly via the AIG bailouts, and not pay warrants (which they seem to have chosen not to do, anyway).

They are scum.

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Totally relevant. The OP says that GS profited from government money. I am saying it didn't want it.

so they didn't want the $5.9BN that they received from the taxpayer via AIG, but they took it anyway - as a favour to who?

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In a truly free market GS and it's employees would all be liquidated.

They better hope it never actually happens.

What do you call several thousand Goldman Sachs bankers at the bottom of ocean..................

If only the UK and US public weren't so stupid they would be marching in the streets about what has gone on.

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I have made a decision to carry out a minor act of vandalism against a Goldman Sachs property in London. Sometime this month. Perhaps lob the contents of a tin of paint against the windows.

I'm prepared to be arrested for it, if need be. I shall do it, in broad daylight. Everyone else should consider a small act of civic disobedience against the banks, to ram home that theft coupled with excess bonuses are totally unacceptable.

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As usual we are forgetting a minor point, i.e. GS didn't actually want to take any government money, it was forced to. The UK government tried pretty much the same thing with Barclays but Barclays managed to get them to sod off.

Why would governments want to force companies to take bail-out money they didn't need you ask? Well use your imagination and remind yourself why Lloyds was forced to take over HBOS.

I'm not a great fan of the banks, but then i'm not a great fan of uninformed drivel either.

So where exactly is the uninformed drivel you refer to?

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Totally relevant. The OP says that GS profited from government money. I am saying it didn't want it.

RBS didn't realise/accept it was literally about to collapse until literally days before hand.

Remember, no bank wants to be seen to actually need it, it causes massive loss of confidence. Who was it that was 'forcing' GS to accept money? In the main, GS old boys in the treasury and the fed. The US is not the UK. They abhor the idea of government involvement in business and socialisation at all levels, they don't have a history of Nationalised Rail, Aerospace & Defence or Health Industrys. GS took the money because without it they WOULD have collapsed or because it suited them. If they could have obtained it through the market and wanted to, they would have. Sure, they'll put up a 'fight', market confidence is everything.

Barclays is a different matter. They needed the money, but they were able to raise it through other means (completely screwing their shareholders so they can keep paying big bonuses).

Edited by meedge

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Does any of this profit happen in a free market? No. Where has this money, going into banker bonus bank accounts now, come from? Taxpayers. The very same who are losing their jobs/ suffering wage cuts because of Wall St excess

These guys are thieves. They are a cancer on the free market. If the law wont prosecute and they don't return their ill-gotten gains, they deserve to be lynched

I don't really understand the point you are making.

You want GS prosecuted. What law did they break exactly?

The police generally won't prosecute on the basis that your moral threshold has been crossed unless that has changed in the last few days.

When were GS a charity or philanthropic organisation? In case you had not noticed they are an organisation whose raison d'etre is making money for its shareholders and employees. They do this very well.

You should be angry at your governments for facilitating the environment in which GS can exploit the ignorance of morons.

If the government left barrel loads of cash on the side of the street and people passing by filled their pockets, would you want the people prosecuted for exploiting the governments mistake even though they committed no crime of would you want the government held accountable for their mistake.

If governments hand out contracts to private companies who fail to complete their tasks on time or to budget we don't prosecute the contractor we ask the government how they let it get out of control.

More hysteria deflecting blame from those who are most culpable.

If you want to be angry ask yourself why the sh**head in charge in the UK or the Obamessiah consistently fail to understand the law of unintended consequences. Why are they so free and easy with taxpayers money. Why they refuse to accept any accountability for their actions. Why aren't the conditions on the taxpayers' largess more onerous.

I agree, GS should operate in a free market and stand or fall by their own hand, but if we allow our governments to interfere with our money then we have to accept the consequences.

Don't hate the player - hate the game.

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Don't hate the player - hate the game.

I dont see why you cant hate both. By your logic, all those outrageous expense claims our Mps made are ok because they are within the rules of the game. Bankers have a hand in government and help make sure the rules favour them. You cant condone bad behaviour because someone else says its ok.

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I don't really understand the point you are making.

You want GS prosecuted. What law did they break exactly?

The police generally won't prosecute on the basis that your moral threshold has been crossed unless that has changed in the last few days.

When were GS a charity or philanthropic organisation? In case you had not noticed they are an organisation whose raison d'etre is making money for its shareholders and employees. They do this very well.

You should be angry at your governments for facilitating the environment in which GS can exploit the ignorance of morons.

You are making no sense whatsoever.

P1 You should not be angry at people whose actions cross your moral threshold.

P2 You should be angry at governments whose actions cross your moral threshold.

Why?

Why should we hate Governments for ******ing things up but not greedy bankers for ******ing things up?

You try to make a distinction between the players and the game, but all the people are players.

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