Goldman Suchs

I've had enough with Goldman Sachs, I really have.  I've had it with their "We're above it all bull-sh*t.", I've had it with the moronic media lionizing them, I've had enough with their alumni who seem to become all too human once they leave the firm to take on huge important tasks that they end up sucking at.  I've had enough.  This weekend the New York Times had an article titled Goldman Insists It Would Have Lost Little if AIG Had Failed.  In this article David Viniar, Goldman's Chief Financial Officer spouts the party line that Goldman had it's AIG exposure "hedged".  How stupid does this guy think we are?  

Even the boobs at CNBC are starting to catch on that if you "hedged" yourself with Credit Default Swaps, you just switched your CDO risk-to AIG risk-to "another counterparty" risk.  It's all a game of hide the salami (as Richie likes to say!).  I know part of Mr. Viniar's job description is to bull-sh*t the media, his investors and the market at large....but come on!  In late 2007, when it first came to light that AIG's auditors were having serious problems with how AIG was accounting for losses in it's massive residential and Lord knows whatever else CDO risk book, Messieurs Blankfein, Cohn, Winkelried and Viniar had to have collectively crapped in their pants!  This would have been about the time that the "famous" risk management meeting Goldman always talks about took place.  You know, the one where they all realized that mortgage risk was bad and calmly reversed course and outsmarted everyone.  BULL-SH*T!!  Those guys must have been running around like the "Key-Stone Cops"!  And when that didn't work they went running to their mommy Hank Paulson last September.  The $13 billion that AIG listed as TARP funds that went to Goldman is only part of the story.  There's another few billion of AIG CDS that Goldman bought from unnamed counterparties.  When Blankfein went running to Paulson, Bernanke and Geithner he was probably asking for the whole enchilada in case AIG brought down any of his CDS counterparties.  Just a hunch.

Anyway, read the article if you want some of what George Carlin would call, "Real, old fashion American Bull-Sh*t."  Here's my favorite part;

In mid-November, Goldman also sold $5.6 billion in securities related to the swaps at full value to a government-backed vehicle that had been created to help unwind A.I.G.’s ill-fated trades.

Asked why Goldman accepted full value for the securities, which were valued on the open market at far less, Mr. Viniar said Goldman had a commercial contract with A.I.G. and was “not in a position to take a loss.”

Accepting a loss it was not required to take would have gone against Goldman’s duty to its shareholders, and, Mr. Viniar added, to taxpayers.

“Frankly, we also had taxpayer money at Goldman Sachs,” he said, referring to its participation in the Troubled Asset Relief Program, in which the government bought preferred shares in many large banks.

He said he did not know how large a role Goldman’s collateral calls played in A.I.G.’s near collapse, but he rejected the suggestion that his company might feel guilty about its demands.

“All we did is call for the collateral that was due to us under the contracts,” he said. “So I don’t think there’s any guilt whatsoever.”

It's all a mirage folks.  The days of three or four Wall Street firms having all the "smarts" is over.  Wall Street has about as much parity as the NFL now.  Once we all became free agents, going to the highest bidder (the good old days) the smart, the average and the dopes became pretty evenly spread out amongst The Street.  And for the record, I interviewed at Goldman Sachs once....and they rejected me.  Things were going well until the partners starting interviewing me.  When I interviewed with the MDs and VPs it was all, "How would you hedge this, or sell that?", type questions, which were great.  The partners asked me why I studied economics in college or why I left CIBC in 1998!  I think I answered those questions with a big, "Huh?"  This isn't why I'm angry with Goldman, just want to give full disclosure.

Anyway, as some of you may know, we have a great little cartoon on the blog, "Goldman Superheroes".  I haven't had the second installment illustrated yet but here's a little bit of dialog.  In this piece, Lloyd Blankfein realizes he has to tell the superheroes why Goldman is Goldman,

Blankfein:  We have a serious problem.  Before I give you the details, there is something I need to tell you about Goldman Sachs.  Have you ever wondered why we always come out ahead?

GS Superhero #2:   Because we are smarter?

GS Superhero#3    Because we work harder?

GS Superhero#1    Because we have access to every pertinent piece of non-public information in the world?

LB:  All true superheroes, but hard work, smarts and global nepotism aren’t enough.  If that were the case we would just be JPM Chase.

All:  {loud laughter!}

 

It's sad but true.  Don't believe me?  Does anyone remember a guy named John Youngdahl?  Mr. Youngdahl was an up and coming economist at Goldman Sachs in the 1990's and early 2000's.  In 2001, Youngdahl took highly confidential, non-public information concerning the United States Treasury Department's decision to discontinue the issuance of 30-year Treasury bonds and gave that information to "unnamed" Goldman Sachs traders.  These "unnamed" traders bought up $84 million 30-year bonds and $233.6 million of 30-year bond futures (these are the sums that they got caught red-handed buying.  Usually in these cases there's much much more.  Other desks on the floor could have gotten long a lot of duration as well, not to mention curve trades, swap spread trades, etc.) and made a killing when the announcement became public.  Mr. Youngdahl plead guilty to securities fraud, conspiracy, wire fraud and theft.  He was sent to jail for 3-years.  Goldman Sachs paid a whopping $9.3 million fine (about five minutes of revenue for the firm) and that was that.  No one else at Goldman was ever named or as far as we know even investigated.

 

What's really something about this is how Mr. Youngdahl obtained this information.  He got it from a consultant working at Treasury who Youngdahl recommended Treasury to hire!  That's espionage no?  An officer of Goldman Sachs plants a mole inside Treasury to get inside information, gets the information and then passes it on to members of the firm who could act on it illegally!  Do you think this was something that just happened between a rouge economist and a few rouge traders?  Riiiiight.  Can't you see the partner running government bond trading coming down to the floor and saying;

"Hi fellas.  I was looking at my risk reports today and it looks like we are trying to corner the long-bond.  Anything I should know about?" 

"Ahh, no boss, these long-bonds just feel real good this week." 

"Ok, well carry on and make money!"

 

Goldman Suchs.

 

 

 

Comments

[RPB]

I'd be laughing too because I would know that no one will investigate me. They would understand that I desperately need to make money to 'save' the system.

[eric]

I ruined my whole weekend RP. It's like they are laughing at us.

Banzai....perfect!

[RPB]

How does someone make a directional bet that the treasury market will move the most in one day in many decades? Eric, would you buy calls that far out of the money? What is the implied probability on the Gaussian prob curve that such a move occurs? Is that a 15 sigma?

The Goldman-Treasury turnstile is an abomination. How can someone so blatantly and openly slant the game in their favor without the SEC crying "TILT, TILT, TILT?"

[RPB]

Heard G. Sucks bot 126 calls on the 10 yr contract early last Wednesday morning. Is being omniscient a crime?

BTW, saw the blurb in Rolling Stone

[adf@afl.com]

Goldman = Dirty Scum.

[williambanzai7]

Eagerly awaiting next Goldman Super Hero installment

BAIL, BAIL, BAIL (the Men of Goldman Sachs)
(Beer, Beer, Beer (Charlie Mochs) Irish drinking song)
WilliamBanzai7

Sing along Laddies and Lassies: http://www.youtube.com/watch?v=U9G-Np1HB9M

1,2,3 Bail, Bail, Bail

A long time ago, way back in Wall Street bailout history,
When the best game in town was was schtupping AIG,
A long came a bank by the name of Goldmen Sachs,
And they invented a wonderful drink, and they made it out of subprime schlock.

Chorus:
Hey! they must have been bailout criminals, subprime sultans and/or PONZI kings,
And for them praise those busted bankers shall always sing;
Look at what they've done for us, they've filled Uncle Sam up with bailout beer,
Lord, bless those men of Goldman Sachs who invented...
Bailout Beer Beer Beer taxpayer Bail, Bail, Bail...

The Goldman pub, the Wall Street Inn, the AIG blackhole in the wall as well
One thing you can be sure of, it's Hank Paulsen's bailout beer they sell;
So all you busted bailed out bankers, at eleven o'clock you stop,
For five short seconds, remember the men of Goldman Sachs!

One... two... three... four... five...

Repeat Chorus

A busted hedge, a barrel of toxic asset slop, stir it around with a stick,
Just the type of lubrication to make your networth sink;
Another trillion dollars of TARP wallop will keep alive those bailout hacks,
It's only eighty cents halpenny a pint, but a trillion more in tax.

One... two... three... four... five...

Hey! they must have been bailout criminals, subprime sultans and/or PONZI kings,
And for them praise those busted bankers shall always sing;
Look at what they've done for us, they've filled Uncle Sam up with bailout beer,
Lord, bless those men of Goldman Sachs who invented...
Bailout Beer Beer Beer taxpayer Bail, Bail, Bail...

The men of Goldman Sox!