Bashing Goldman Sachs Is Simply a Game for Fools

Bashing Goldman Sachs Is Simply a Game for Fools
By Michael Lewis - Jul 27, 2009
Bloomberg Opinion
www.bloomberg.com

America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers. To that end we at Goldman Sachs would like to dispel several false and insidious rumors.

Rumor No. 1: Goldman Sachs controls the U.S. government.

Every time we hear the phrase the United States of Goldman Sachs we shake our heads in wonder. Every ninth-grader knows that the U.S. government consists of three branches. Goldman owns just one of these outright; the second we simply rent, and the third we have no interest in at all. (Note there isn't a single former Goldman employee on the Supreme Court.)

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Goldman Sachs... the Good, the Bad, and the Ugly

The "Vampire Squid" at 142 years
By Joel Stonington 9/21/2011

Goldman Sachs (GS), the most profitable investment bank in Wall Street history, went through a bit of a rough patch during the economic downturn. The firm posted its first quarterly loss since going public and handed over the largest fine ever collected by the Securities & Exchange Commission. From a purely economic angle, it appears that Goldman is now back on track, with $8.35 billion in profit last year. In the court of public opinion, however, Goldman Sachs is still on trial.

The company was called the greedy cause of the downturn for selling bad debt and then betting against it. Rolling Stone framed Goldman as a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. That's not to mention a 650-page Senate report that hangs over the firm.

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The Ever Increasing Parallels Between AIG And Greece 2/10/2010

The Ever Increasing Parallels Between AIG And Greece... And The CDS Puppetmaster Behind It All
Submitted by Tyler Durden on 02/08/2010

My comment...
Goldman Sachs & AIG (2008) and now Goldman Sachs & Greek currency swaps (2002-2005), which were used to hide the true extent of Greek government debt. What will be revealed next? Did Goldman Sachs create similar currency swaps for Italy and Spain? For more, Google: goldman sachs greece currency swap

Is the US Monetary System on the Verge of Collapse?

Is the US Monetary System on the Verge of Collapse?
By David Galland of Casey Research
John Mauldin's Investors Insight, Sept 13, 2011

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My comment...
Reading this "Outside the Box" piece on John Mauldin's website gave me a new appreciation for how close the US monetary system, and by extension the global financial system, is to a complete collapse. This is scary.

An Impeccable Disaster... by Paul Krugman 9/11/2011

An Impeccable Disaster
By PAUL KRUGMAN
Published: September 11, 2011

On Thursday Jean-Claude Trichet, the president of the European Central Bank or E.C.B. — Europe’s equivalent to Ben Bernanke — lost his sang-froid. In response to a question about whether the E.C.B. is becoming a “bad bank” thanks to its purchases of troubled nations’ debt, Mr. Trichet, his voice rising, insisted that his institution has performed “impeccably, impeccably!” as a guardian of price stability.

Indeed it has. And that’s why the euro is now at risk of collapse.

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My comment...
Paul Krugman sees the equivalent of bank runs in Spain and Italy as investors, fearing sovereign debt defaults, demand higher interest rates to hold Spanish & Italian government bonds. "We're not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer."

Big Bank Chart... by Barry Ritholtz 9/12/2011

Big Bank Chart
By Barry Ritholtz - September 12th, 2011

My comment...

Do you remember Washington Mutual, Wachovia, Merrill Lynch, Countrywide, Bear Stearns? They have all been absorbed by four too-big-to-fail banks: Citigroup, JPMorganChase, Bank of America and Wells Fargo. Don't forget those names because we will be bailing them out again.

Fed Policy - No Theory, No Evidence, No Transmission Mechanism

Fed Policy - No Theory, No Evidence, No Transmission Mechanism
John P. Hussman, Ph.D.
September 12, 2011
All rights reserved and actively enforced.

Undoubtedly, one of the main factors prompting a benign response to what is now virtually certain recession and virtually certain Greek default is the hope that the Fed will launch some new monetary intervention. While Wall Street appears to view the present weakness as a replay of 2010, it is strikingly clear that the evidence tells a different story, with a broad ensemble of data implying near-certainty of oncoming recession (see An Imminent Downturn ).

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My comment...
With $1.6 Trillion of excess bank reserves, and 10-year Treasuries yielding 1.9%, the Federal Reserve is simply an Emperor with no Clothes. We may still get QE3... but it will have zero effect, other than briefly stimulating the stock market. Whoopee!