(Ain't it the truth? Learn from the best.)
(On second thought, that's how Goldman's competitors see Goldman, probably.)
#1: The grass is greener on the other side because it's fertilized with bullshit.
— GS Elevator Gossip (@GSElevator) January 22, 2013
The company that never, ever loses any opportunity, being prepared for every contingency. (Well, almost.)
Even when the nuclear reactor buildings in Fukushima started blowing up, Goldman Sachs flew in at least four senior exectives from the US, who told its expats in Tokyo to stay put, or they would not have jobs at Goldman. Probably because there were great trades to make, probably on TEPCO (stock and bonds).
It looks Goldman Sachs started buying even before then-Prime Minister Noda said on November 14 that he would call an election, and ridden the Nikkei all the way, 20% up from the recent bottom.
Goldman Sachs Tokyo says they are bullish on Japan in 2013. (That is likely to mean they are ready to sell what they have to retail investors.)
From Bloomberg News (12/28/2012; emphasis is mine):
Goldman Sachs Buying Japan’s Exporters on Abe Policy Bets
Goldman Sachs Group Inc. (GS) is buying shares of Japanese exporters and banks as Prime Minister Shinzo Abe’s new government promises to do more to end deflation and weaken the yen.
The investment bank’s asset management unit in Japan is buying shares of the nation’s machinery and electronics exporters, financial firms and electricity producers, according to Hiroyuki Ito, Tokyo-based head of equity investment at Goldman Sachs Asset Management Co., which oversees about $716 billion globally. Goldman Sachs started increasing its holdings in October in anticipation that elections would be called, he said. The Liberal Democratic Party took power in a Dec. 16 poll.
...“Japan finally has a catalyst for the stock market to rise,” Ito said in a Dec. 26 interview. “The new government have an understanding of the impending danger and a sense of urgency about boosting the Japanese economy. We’re finally going to see an end to Japan’s deflation and a strong yen.”
Ito declined to discuss individual stocks.
The Goldman Sachs Japan Equity Fund Auto Reinvest Ushiwakamaru fund, managed by Ito and one of firm’s biggest Japan-based equity funds, has returned 11 percent in the past month, beating 86 percent of its peers, according to data compiled by Bloomberg. The fund’s biggest holdings are banks, carmakers, wholesalers and trading companies, the data show.
...“We’re bullish on Japanese stocks next year and the basis for that is the currency,” said Ito. “The yen’s strength has really hurt Japanese industry, but that trend has ended. The government has made its message very clear: they will be rigorous in boosting the economy.”
...Ito is also positive on Japan’s financial sector. Shares of banks and brokerages have surged in the past month on optimism reflation will boost the value of assets, increase loan demand and appetite for risk as people become more confident.
(Full article at the link)
Problem is that what Ito describes - BOJ reflates under Abe's command, assets value rises, people become more confident and want to take on more debt and more risk - hasn't happened in the US. 4 years after the financial collapse in 2008, people are still busy deleveraging, and banks are busy bidding up the stock market instead of making loans. Maybe Japan is unique and different, and may react to the money printing differently. (Never mind that it didn't react in the 1990s and most of the first decade of the 21st century.)
In contrast, Morgan Stanley Asia's chairman and chief economist Stephen Roach calls the so-called "Abenomics" delusional (emphasis is mine):
...Unfortunately, it appears that Japan has forgotten many of its own lessons – especially the BOJ’s disappointing experience with zero interest rates and QE in the early 2000’s. But it has also lost sight of the 1990’s – the first of its so-called lost decades – when the authorities did all they could to prolong the life of insolvent banks and many nonfinancial corporations. Zombie-like companies were kept on artificial life-support in the false hope that time alone would revive them. It was not until late in the decade, when the banking sector was reorganized and corporate restructuring was encouraged, that Japan made progress on the long, arduous road of balance-sheet repair and structural transformation.
US authorities have succumbed to the same Japanese-like temptations. From quantitative easing to record-high federal budget deficits to unprecedented bailouts, they have done everything in their power to mask the pain of balance-sheet repair and structural adjustment. As a result, America has created its own generation of zombies – in this case, zombie consumers.
Like Japan, America’s post-bubble healing has been limited – even in the face of the Fed’s outsize liquidity injections. Household debt stood at 112% of income in the third quarter of 2012 – down from record highs in 2006, but still nearly 40 percentage points above the 75% norm of the last three decades of the twentieth century. Similarly, the personal-saving rate, at just 3.5% in the four months ending in November 2012, was less than half the 7.9% average of 1970-99.
The same is true of Europe. The ECB’s über-aggressive actions have achieved little in the way of bringing about long-awaited structural transformation in the region. Crisis-torn peripheral European economies still suffer from unsustainable debt loads and serious productivity and competitiveness problems. And a fragmented European banking system remains one of the weakest links in the regional daisy chain.
Is this the “cure” that Abe really wants for Japan? The last thing that the Japanese economy needs at this point is backsliding on structural reforms. Yet, by forcing the BOJ to follow in the misdirected footsteps of the Fed and the ECB, that is precisely the risk that Abe and Japan are facing.
Massive liquidity injections carried out by the world’s major central banks – the Fed, the ECB, and the BOJ – are neither achieving traction in their respective real economies, nor facilitating balance-sheet repair and structural change. That leaves a huge sum of excess liquidity sloshing around in global asset markets. Where it goes, the next crisis is inevitably doomed to follow.
Let's see, strictly on past performance, I would bet with Goldman Sachs over Morgan Stanley, even though I agree with Mr. Roach.
My guess is that most Japanese would understand Goldman Sachs' view (or want to understand), and would not have a clue what Morgan Stanley's Roach is talking about (or do not want to know).
Oh boy. Goldman Sachs drives its employees just like TEPCO drives subcontractors on the troubled plant.
I'm sure there will be trades that Goldman cannot afford to miss...
From CNBC (3/28/2011):
At least four Goldman Sachs executives flew into Japan last week to speak with nervous ex-pat employees about radiation fears, according to a person familiar with the situation. They also conveyed another message: don't leave Japan and don't leave Tokyo.
Employees at the investment bank's Japan offices are worried about radiation levels affecting their families, the person said. Many were asking if they could temporarily relocate out of the country or perhaps move to a location in southern Japan, farther away from troubled nuclear power plants. The were told that they should not leave Tokyo, according to the person.
Several meetings were held last week between senior Goldman executives and Tokyo-based employees. At least one meeting was held in a large conference room on one of the five floors of the Mori Tower in Tokyo, which houses Goldman's offices in Japan. Senior executives attending the meeting included Michael Evans, the firm's head of emerging markets and Asia chairman, and Ed Forst, the co-head of Goldman's investment management division. Lloyd Blankfein was testifying in the insider-trading case against Raj Rajaratnam last week.
"The message was clear: no one is to leave. If you do leave, you can't come back and expect to still work for Goldman," the person said. [This emphasis is mine.]
The article continues at the link.
As the US Treasury Department froze $30 billion assets of the Gaddafis and the Libyan government, all I wanted to know was "Who are the bankers who have managed that assets?"
My guess was Goldman Sachs, and either Merrill Lynch or J.P.Morgan Chase. I got two right.
From Huffington Post's Marcus Baram (3/1/2011):
NEW YORK -- U.S. President Barack Obama's executive order freezing $30 billion in assets of Muammar Gaddafi, his family and the Libyan government could impact several U.S. banks and private equity firms, including Goldman Sachs, Citigroup, JPMorgan Chase and the Carlyle Group. The Obama administration described it as the largest seizure of foreign funds in U.S. history.
The oil-rich country's sovereign wealth fund, the Libyan Investment Authority, controls at least $70 billion in fixed assets and reserves. It has invested the bulk of its money in European banks and businesses, including Dutch-Belgian bank Fortis, Italian bank Unicredit, the Pearson publishing empire, Italian defense firm Finmeccanica SpA, an oil-production sharing agreement with BP and even a slice of the Italian soccer team Juventus.In the wake of the Bush administration's lifting of sanctions against Libya in 2004, following Gaddafi's agreement to give up weapons of mass destruction, American businesses and private equity firms also came flocking to the North African country to court government and LIA officials. As The Huffington Post reported last week, a broad coalition of U.S. oil companies, defense manufacturers and businesses lobbied the U.S. government to repair relations with the longtime international pariah and to take advantage of business opportunities in the country.
The secretive Libyan Investment Authority has reportedly invested hundreds of millions of dollars in Goldman Sachs Asset Management funds, including a loan fund designed to invest in new hedge funds set up by the Kuwait Investment Authority. Goldman Sachs already has a relationship with Libya -- in 2008, Goldman was the first U.S. bank to get a contract with the country following the removal of sanctions, when it was hired by Libya's central bank to provide information on its behalf to credit rating agencies. A spokesperson for Goldman Sachs did not return calls seeking comment.
The Libyan government, including LIA, has also banked with Citigroup, according to several sources familiar with the matter. A spokesperson for Citigroup declined to comment on the bank's interactions with the Treasury Department's Office of Foreign Assets Control, which is in charge of carrying out Obama's order regarding Libyan assets.
JPMorgan Chase reportedly handles much of the LIA's cash and some of the Libyan central bank's reserves. The summer after then-Secretary of State Condoleezza Rice visited Gaddafi in 2008, LIA gave "mandates to some of the international banks, including JPMorgan to manage their funds in the interbank money markets, according to Vanity Fair.
The LIA fund's general consultant has been Mercer Investment Consulting, a unit of Marsh & McClennan, the global risk consulting and advisory firm. A spokesperson for Marsh declined comment. The fund set up a $2 billion investment fund with the Qatar Investment Authority to invest in Libya, Qatar and Western markets, which could complicate the effort to freeze the LIA's assets.
Two years ago, the Carlyle Group's co-founder and managing director, David Rubenstein, and Blackstone chief executive Steven Schwarzman traveled to the Libyan capital of Tripoli to help celebrate the wedding of Mustafa Zarti, the deputy director of the LIA, in a massive tent set up on the outskirts of the city, reported the Financial Times. And when Gaddafi's son and longtime likely successor, Saif al-Islam, visited New York in November 2008, Schwarzman hosted a lunch for him at the Blackstone CEO's Park Avenue apartment. The younger Gaddafi was also honored on that trip by Carlyle's retired chairman, former defense secretary Frank Carlucci, who hosted a dinner for him in a private room at the City Club.
Thanks to the efforts of Rubenstein, who first traveled to Libya in 2006, the Carlyle Group received funds from the LIA. A spokesman for Carlyle declined comment. A spokesman for Blackstone told The Huffington Post, "We have no investments in Libya. They have no investments with us."
Who are they? Goldman Sachs. In your face, and people still refuse to see it.
Mish Shedlock linked a few articles in his blog post (2/13/2011) concerning the reach of the Vampire Squid sprawled on the face of mankind.
According to these articles,
An ex-Goldman is the leading contender for the next ECB president replacing Trichet.
Another ex-Goldman is the governor of Bank of Canada, the central bank of Canada.
Yet another Goldman becomes the SEC division head to oversee asset managers and hedge funds.
As I said a couple days ago, all we need now to complete the picture is for an ex-Goldman employee to run for president of the United States and for another ex-Goldman employee to replace Bernanke at the Fed.
Steve Jobs goes on a medical leave, and with 190 hedge funds owning AAPL, Goldman Sachs takes it on itself to support the stock so that the exodus does not become a rout.
From Zero Hedge:
Ta-tata-daaaaa: Captain Goldmanerica is here to save the day. Can't have 190 hedge funds checking out from hotel Applecornia, now can we.
From Goldman's Bill Shope, CFA though we are not sure what the F stands for... certainly not Facebook after today...
What's changed
On Monday morning, Apple released an internal email from Steve Jobs where he noted that the board had granted him medical leave from the company to focus on his health. Mr. Jobs will remain CEO and he will continue to be involved in major strategic decisions for the company. He also noted he hopes to be back at Apple full time as soon as possible. Meanwhile, Tim Cook, Apple’s Chief Operating Officer, will be responsible for day to day management of the company in Mr. Jobs’ absence.
Implications
While the stock is likely to face near-term pressure, we believe the longterm fundamentals remain intact and we would reiterate our Conviction Buy on any weakness. This is based on the following key points we detail in this note: 1) The management team remains strong, and we believe investors would embrace Tim Cook in any potential succession plan; 2) Apple’s $51 billion in cash and investments could be partially distributed to shareholders to stabilize the shares; 3) The multiple of 15.1X already represents a significant historical discount, and we see no direct risk to earnings from this move. As a result, we are reiterating our CL-Buy on Apple and our 12-month target price of $430.
Valuation
Our target price represents a 19X P/E multiple on our above-consensus CY2010 EPS estimate or a 19% discount to Apple’ five-year average multiple of 23X.
Key risks
The key risks to our target include: macro deterioration, increased platform competition, potential legal and regulatory restrictions, and uncertain management succession plans.
I wish the best for Mr. Jobs, who said "There's an old Wayne Gretzky quote I love. 'I skate to where the puck is going to be, not to where it's been.' That's what we try to do at Apple." I hope he comes back and comes back soon.
At first I thought it was nothing more than a "wag the dog" operation by the SEC to divert public attention from a much bigger mess (mortgage/foreclosure fraud), but it may get traction as more prominent hedge funds get subpoenaed.
First, it was these smallish three on Monday:
Diamondback Capital Management ($5.8 billion assets in management)
Level Global Investors
Loch Capital Management ($2 billion assets in management)
Then today, much bigger funds got ensnared:
Janus Capital Group Inc. ($161 billion assets in management)
Wellington Management ($598 billion assets in management)
SAC Capital Advisers
Citadel Asset Management
Why is the SEC going after hedge funds? Fines of few million dollars? Peanuts. Or is the SEC using these funds as bait to catch much bigger fish on Wall Street?
Now, Zero Hedge's Tyler Durden, citing FOX's Gasparino, says Goldman Sachs may get roped into the insider trading probe, via Diamondback. Now we are talkin'....
However, as soon as the investigation gets close enough to Goldman Sachs, it will be inexplicably shut down, if the past is any indication, and we are supposed to forget anything about insider trading. By that time, the foreclosure fraud, securitization fraud, and mortgage fraud will be all forgotten. Oh, so it IS a "wag the dog" operation after all...
and keep all the other monetary accommodations.
Zero Hedge has the article that contains detailed analysis, but here's my summary:
Goldman Sachs' chief economist Jan Hatzius, who said the Fed could easily double the balance sheet to $4 trillion back in August 2009, now says $4 trillion addition to the existing balance sheet is needed to completely fill the gap between the official fed funds rate and the Taylor-implied fund rate, which is minus 7%.
I can almost see your eyes rolling... "What the @#$% is the Taylor-implied fund rate?" I will get to that shortly, but on with the GS economist's take...
Of that gap, Hatzius thinks 4% is already filled by 1) already near zero fed funds rate; 2) QE1; 3) communication from the Fed that it is committed to the near zero fed funds rate. That leaves 3% to fill.
Unlike the NY Fed president Dudley who said $500 billion QE2 would be equal to 0.75% rate reduction, Hatzius thinks it would take $1 trillion to achieve the effect of 0.75% rate reduction. Thus, it would take $4 trillion to fill the 3% gap.
The Federal Reserve would not do $4 trillion QE2, says Hatzius, as it fears the "tail risks" of expanding the balance sheet, one of which is "substantial mark-to-market investment losses".
Ding ding ding ding... Maybe the NY Fed is suing Countrywide/Bank of America seriously, and for a very good reason.
So his prediction is the same as in 2009, that the Fed will eventually expand the balance sheet by $2 trillion. The question is how soon the Fed will converge with Goldman's assessment, he says. (I wonder if it is a rhetorical question..)
Now, "the Taylor-implied fund rate". You think it is some kind of economist gibberish (it is, actually) but the gibberish is taken very seriously at the Fed in crafting its monetary policies. And so you should be aware in order to front-run the Fed to protect your wealth.
First, who or what is "Taylor"? Taylor is the name of an economist at Stanford University who proposed the Taylor rule. The Taylor curve is derived from the rule, and indicates how the central bank should change the nominal interest rate in response to a given price inflation rate, and it looks like this (the chart was taken from the paper written by James Bullard, St. Louis Fed president):
It's that curved line. The red dotted line intersecting the Taylor curve is called "the Fisher relation" (Nominal Interest Rate= Real interest Rate + Expected Inflation Rate), and the two sections that these two lines intersect are "stable" points to the Fed which I circled in green and red. The Fed wants the green circle, and Japan is seemingly stuck around the red circle for two decades.
Since the official fed funds rate cannot be set below 0%, the Taylor curve flattens at about 1% price inflation and 0.1% fed funds rate and remains flat all the way into price deflation.
The Taylor-implied fund rate is basically a rate if the fed funds rate were allowed to go negative at a given price inflation rate. Bullard's paper has a chart that shows the Taylor curve, or rather "line" in this case, going straight through zero, instead of flattening out at zero. Since Bullard's chart didn't go below -3% on the Y-axis (nominal interest rate), I added a few lines and extended the Taylor "line". Surprise, surprise. At a price inflation rate of 1% (that's what we are at, supposedly), the fed funds rate should be -7%!
So, how can the Fed effectively achieve a negative fed funds rate? That's where the quantitative easing comes.
As mentioned above, NY Fed's Dudley thinks $500 billion QE will achieve effective rate reduction of 0.75%, while Goldman's Hatzius thinks $1 trillion will do the trick. So, to fill 3% gap that remains, the Fed needs $4 trillion.
That is, if Hatzius is right in $1 trillion per 0.75%. If $1 trillion only achieves 0.5% reduction, the Fed would need $5 trillion newly printed money. It also depends on whether Hatzius' estimate is correct that 4% of the 7% gap has already been filled. What if the estimate is incorrect? What if ZIRP didn't contribute, and QE1 only achieved 1% gap-fill? The Fed would have 6% to fill, and that would take $8 trillion.
Got food? Got shelter? Got ammo? Got gold and silver?
As long as the numbers add up or line up neatly on the chart, these economists at the Fed or at Goldman Sachs do not quite care what may or may not happen on Main Street. QE1 was all about propping up TBTF banks and inviting insiders to benefit (PIMCO comes to mind, who dumped Treasuries and agency MBS on the Fed). QE2 should be no different. Excess reserves that banks hold at the Fed hasn't escaped much into Main Street. Banks don't lend, people and businesses don't borrow from the bank - either they can't, due to destroyed credit thanks to the TBTF banks, or they don't want to.
As a non-economist without PhD, I find it scary that PhD economists seem to take this "Taylor rule" and "Fisher relation" pretty much as given. They look to me like "hypothesis" at best. What if they are wrong? What if the Taylor "line" below 0% nominal interest rate is not as steep as the above-zero line? The Fed would end up pumping way more money into the system than warranted, possibly triggering a massive inflation and massive devaluation of US dollar.
I also quite don't understand the Fed officials' confidence in a gradual approach ($100 billion per month QE). The response may not be linear but chaotic (in a mathematical sense). After several weeks, months of steady QE2, prices may jump out of the blue or US dollar crash 10% in a day, and the Fed may not have any control. "Tail risks" are not just for the Fed balance sheet.
If and when things blow up beyond their control, I already know what the Fed officials' excuse will be: "Who could have known? We meant well..."
From Kitco News:
"(Kitco News) - Goldman Sachs has raised its 12-month forecast for gold to $1,650 an ounce, citing expectations for further quantitative easing in the U.S. and prospects for long-term interest rates to continue falling.
"“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” said the Goldman report, authored by David Greely and Damien Courvalin. “Despite the rebound in net speculative length, it remains well below levels consistent with the current low U.S. real interest rate environment.”
"Goldman said the decline in U.S. real interest rates is likely to persist, and rates could push even lower in the near term should the Federal Reserve undertake quantitative easing measures. Thus, Goldman said it is raising its gold price forecasts to $1,400, $1,525 and $1,650 on a three-, six- and 12-month horizon. Goldman said its updated forecasts point to an average of $1,575 an ounce in 2011, which is $175 higher than it previously expected.
"“The return to quantitative easing will likely be a strong catalyst to drive gold prices higher, and we expect the gold price rally to continue until U.S. monetary policy begins to tighten,” Goldman said.
"The bank’s economics team expects the Fed to return to quantitative easing with purchases of U.S. Treasury securities of $1 trillion, which in turn should keep U.S. bond yields depressed. Furthermore, the bank said it expects the announcement at the Federal Open Market Committee’s Nov. 2-3 meeting.
"Goldman said the rally since August came as the yield on 10-year U.S. Treasury Inflation-Protected Securities plummeted, with the yield now closer to the 0.50% than the 1.0% imbedded in prior forecasts. It also cites stronger demand for the metal for gold exchange-traded funds and from central banks." [The article continues.]
According to Goldman, 10-year TIPS yield is inversely correlated to the increase in speculative long positions in gold futures. In other words, the lower the 10-year TIPS yield, the higher the speculative longs. (For more about Goldman's reasoning, see their August paper here. Their August target of $1,300 was to be for the next 6 months...)
You have to doubt your own eyes, your own sanity, when you encounter a paper that seems to agree with your investment or trade stance and that paper was written by Goldman Sachs, the firm known to bet against its own clients, and most recently, the firm who practically called a bottom on Euro in early June with the target of 1.15 when Euro was trading near 1.18 against US dollar.
I've read the paper below, which appeared on Zero Hedge on August 11, 2010. My first reaction was a dread: Oh no!!! Goldman Sachs is one of the bullion banks active in the COMEX along with the likes of J.P. Morgan Chase and Deutsche Bank. These bullion banks have been suspected and accused of shorting and naked shorting gold and silver to artificially suppress the price of gold and silver.
Now Goldman Sachs is bullish on gold?? Has it just called the top for gold?
The scary thing is that the paper makes sense to me. In summary, the two analysts who wrote the paper (David Greely and Damien Courvalin) say:
So Goldman Sachs revealed on Friday where the AIG bailout money went, upon a threat of subpoena from Senator Chuck Glasslay, Ranking Member of the Senate Finance Committee.
It was reported by MSM like USA Today and New York Times, but these articles don't tell us exactly who got the money. USA Today's article has a few well-known names like Royal Bank of Scotland and Barclays, and an unfamiliar name like DZ AG Deutsche Zantrake Genossenschaftz Bank.
But who are the other 29, and where are they located? Inquiring minds want to know.
NY Times article has a link to the site of the Senate Finance Committee, and the link to this "list" is buried in the announcement. So I went there, got the names of 32 entities who received US taxpayers' money via Goldman Sachs via AIG bailout, and looked up where they are located. I couldn't verify all of them (ones with ? marks), but you'll get the idea.
And here's the result. It is an international rescue operation. It includes big banks, re-insurers, pension funds, hedge funds or some kind of Special Purpose Companies across the world, though mostly in Europe. Most prominent are UK firms, followed by Dutch and Irish.
Strange buoyancy of Goldman Sachs' shares today had a very good reason. And here it is:
Goldman to Pay Record $550M SEC Settlement (7/15/2010 CBS News)
"Wall Street Firm Agrees to Reform Business Practice to Settle Charges Goldman Sacs Misled Investors"
Misled investors??? How about "swindled the US taxpayers"? How about "help crash the housing market and the economy"?
Of $550 million, $300 million will go to the SEC the regulator who doesn't regulate (busy watching porn). $250 million will go to the investors who lost money investing in the securities that Goldman peddled - i.e. fellow international bankers.
(Here's the SEC announcement on the deal.)
Goldman's investors are celebrating the "slap on the wrist" in the after-hours market by sending the stock up another $8. (During the regular session, GS shot up $6.)
Enron's top executives went to jail and the company went bankrupt for "accounting fraud" - setting up special purpose entities to hide losses. But that's what big Wall Street banks have been doing for all these years, and not one executive has gone to jail, not even on a trial.
This is not much different from AIG having had to post a cash collateral to Goldman Sachs, isn't it?
(It was Goldman Sachs, as now widely known, who arranged the derivatives deal on Greek sovereign debt so that Greece could join the euro zone.)
It's a shakedown, and the bankers, particularly the large, multinational ones, always win partly because they have the central banks to backstop them, and partly because they hold (still-)sovereign nations hostage by exposing them to a huge potential liability by the sheer size of their balance sheet. Therefore, the governments scramble to come up with the bailout plans so that these bankers don't lose. Just like the US government did by effectively nationalizing AIG, Fannie and Freddie, and having the Federal Reserve print so much digital money to provide liquidity.
I don't blame if Greeks start a new wave of protests and riots. In fact, I would be surprised if they didn't. They are literally being sold down the river by their own government. It's not that 'privatization' itself is bad; the private sector generally runs things more efficiently and profitably than the pubic sector does. However, it should be done for that very purpose - to run them better. Greece is going to sell ('privatize') the assets in order to pay the bankers and receive the promised bailout money, which is also to be used to pay the bankers.
Greece to Sell Assets to Help Pay Down Deficit
(David Jolly, 6/2/2010 New York Times)
"Greece announced Wednesday its plans for a big sale of state-owned assets, as the struggling government moved to shrink its huge budget deficit and fulfill the terms of an international rescue package.
"The government will sell 49 percent of the state railroad, list ports and airports on the stock market, and privatize the country’s casinos, the Finance Ministry said after a cabinet meeting in Athens. The government will also sell minority stakes in water utilities serving Athens and Thessaloniki, sell 39 percent of the post office, and combine its vast real estate assets into a holding company to be listed on the stock market.
"The sales are intended to help raise 3 billion euros, or about $3.7 billion, from 2011 to 2013. The government agreed to raise a billion euros a year over that time as a condition of the 110 billion euro aid program it received from the European Union." [The article continues.]
I am just wondering when Chinese and Japanese start demanding part of the US debt they hold be actually repaid.
Never say never...
Firedoglake.com has a list of Goldmanites within the Obama administration, including Elena Kagan.
For the full updated article click here, and here for the original article.
ALTMAN, ROGER.
BERKOWITZ, HOWARD P.
BIDEN, JOE.
BRAINARD, LAEL.
BUFFETT, WARREN.
CLINTON, HILLARY.
CRAIG, GREGORY. (revolving door)
DONILON, THOMAS.
DUDLEY, WILLIAM C.
EFFRON, BLAIR W.
ELMENDORF, DOUGLAS.
EMANUEL, RAHM.
FARRELL, DIANA.
FRIEDMAN, STEPHEN.
FROMAN, Michael.
FUDGE, ANNE.
FURMAN, JASON.
GALLOGLY, MARK.
GEITHNER, TIMOTHY.
GENSLER, GARY.
GEPHARDT, RICHARD (aka "DICK") A.
GREENSTONE, MICHAEL (revolving door to Hamilton Project)
HAMILTON PROJECT, THE
HORMATS, ROBERT.
KAGAN, ELENA.
KASHKARI, NEEL.
KORNBLUH, KAREN.
LEW, JACOB (AKA "JACK") J.
LIDDY, EDWARD MICHAEL.
LIPTON, DAVID A.
MINDICH, ERIC
MURPHY, PHILLIP.
NIEDERAUER, DUNCAN.
OBAMA, BARACK H.
ORSZAG, PETER.
PATTERSON, MARK.
PERRY, RICHARD.
RATTNER, STEVE.
REISCHAUER, ROBERT D.
RIVLIN, ALICE.
RUBIN, JAMES.
RUBIN, ROBERT.
SHAFRAN, STEVEN.
SPERLING, GENE.
STORCH, ADAM.
SUMMERS, LARRY.
THAIN, JOHN.
TYSON, LAURA D’ANDREA.
How do you like this statistical impossibility?
Goldman Sachs Has First Quarter With No Trading Loss
(5/10/2010 Bloomberg)
"May 10 (Bloomberg) -- Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.
"Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time." [The article continues.]
I am sure GS and the fellow Wall Street banks and their hedge fund friends have been playing it perfectly since last Thursday, raking in collective tens of billions.
Now that the EU has offered up to $1 trillion for them to take, they are all set, aren't they? Helicopter Ben will make sure of it by unlimited currency swaps. Oh happy days are back again.
(NOT)
My musings...
Is it a crime to take a short position on the structured financial securities that one is selling? Is it a crime if you tell the buyer that you are shorting?
Why can't you sell a "crappy" "shitty" security? There are tons of such securities which are eagerly snapped up by the investors today, even after the financial market crash we had. Junk bonds have been snapped up by investors betting on the price recovery. For that matter, people are still trading Washington Mutual and Lehman Brothers pinksheets.
If the German bank was stupid enough to buy the CDO without protection (CDS), the CDO that references to other CDOs which are based on the US subprime mortgages whose market the bank, being a foreign bank, couldn't have known well enough, shouldn't that be the German bank's problem, not Goldman's?
Why are we (or the Senators) concerned so much about the welfare of a big institution who bought the crappy CDO from Goldman?
If they are really concerned, not about a dumb international investor but about the wellbeing of the US financial markets and the housing market, instead of Goldman (or in addition to Goldman) they should haul the management of this black-box company that creates indices of asset-backed securities and supposedly prices various CDS and which happens to include the major broker-dealers including Goldman Sachs as equity partners - Markit. When this company concocted the ABX index in 2006, that was the beginning of the end.
More than anything else, this index has caused market dislocation and upheaval by enabling the short-sellers. But no, no one mentions Markit except for a very few writers. Here's one ("The Markit Group, A Black-Box Company that Devastated Markets" by Mark Mitchell, 11/17/2009 Deep Capture) well worth reading. And asking question: Why is the role played by this firm being ignored?
The head honcho arrives... Lloyd Blankfein, CEO of Goldman Sachs, all by himself.
Here comes the big shots...
David Viniar, GS's Executive Vice President and CFO,
Craig Broderick, Chief Risk Officer,
Chairman Levin is asking Mr. Viniar whether Goldman had a large short position in 2007. Mr.Viniar tries to answer by saying yes but the firm had a large long position to offset. Levin is not interested in net position, he just wants to know whether the short position was large or not.
(Sigh...)
Is taking a short position an immoral sin or something?
The match will be on tomorrow (Tuesday April 27, 2010), at 10:00 AM EST.
The government Vampire Squid is represented by the members of the Senate Permanent Subcommittee on Investigations (chairman Carl Levin (D-Michigan)).
Expect the trading on the US stock exchanges to be extremely thin, as most traders will likely be watching the show.
In February, the US government ganged up on Toyota over Toyota's sticking pedal recalls, which caused the then-world No.1 automaker's share price to plunge. Today, no one talks about Toyota.
Now it is ganging up on the top dog on Wall Street, as it tries to force the financial "reform" through the Senate. Shares of Goldman Sachs has lost 18% since April 16, when the SEC charges were leaked on New York Times ahead of the formal announcement.
The Senators will first beat up on 31-year-old Goldman trader "Fabulous" Fab Tourre, and then on to the showdown with the Vampire Squid incarnate Lloyd Blankfein. The last time he was on Capitol Hill, Mr. Blankfein was rather impatient with the Senators whose CPUs were clearly slower. Let's see how he does this time.
All for our entertainment, so that we can forget about the mountain of new taxes and regulations that are coming our way.
CNBC reports that Paolo Pellegrini, John Paulson's associate, testified to the government that he informed ACA Management (the one who assembled the Abacus CDO in question) that his firm would be shorting (betting against) it.
Testimony Could Undercut SEC Charge Against Goldman
(4/21/2010 CNBC)
"The government has testimony from a Paulson & Co. official that could contradict its own claims against Goldman Sachs, CNBC has learned.
"Paolo Pellegrini told the government that he informed ACA Management that Paulson intended to bet against, or short, a portfolio of mortgages ACA was assembling.
"If true, the testimony would go directly against government claims that ACA did not know Paulson was hoping the collateralized debt obligations would fail, and subvert charges that Goldman breached its duty by not informing ACA of Paulson's position.
"CNBC has examined documents in which a government official asked Pellegrini whether he informed ACA CDO manager Laura Schwartz about Paulson's position in the portfolio, named Abacus 2007-AC1.
""Did you tell her that you were interested in taking a short position in Abacus?" a government official asked Pellegrini, referring to the name of the CDO portfolio.
""Yes, that was the purpose of the meeting," Pellegrini responded." [The article continues.]
CNBC, a financial news network, is unabashedly pro-Wall Street, particularly Goldman Sachs. But if Pelligrini did tell ACA of his firm's intent, and the government didn't even mention that in the complaint, the SEC's case does look weak.
CNBC's Steve Liesman in the accompanying video to the article says Pellegrini told the government that he shared with ACA the outline of how his firm picked the underlying mortgage securities - with low FICO scores and high loan-to-value ratios.
If ACA (who assembled the CDO), the rating agencies (who slapped AAA-rating), and the investors (British and German, by the way) thought the CDO with that kind of profile was a good investment, they have zero sympathy from me.
I suppose the SEC could still say that Goldman Sachs didn't tell the investors that someone was taking the short side, even if Paulson's firm did tell ACA who assembled the CDO.
What I find much more troubling and what's hardly reported so far is the way CDS (credit default swaps) on debt securities are priced and indexed. But that will be another post.
So what is the point of the SEC's lawsuit against Goldman Sachs?
It has surely made this guy happy, among so many, that the justice is finally being done. Praised be the government.
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