Comments on: Blankfein Defends Goldman Sachs Against Breakup Advocates

By: roger

roger — Thu, 12 Nov 2009 22:47:41 +0000

Can someone explain this borrowing from the fed to invest in treasuries. I just don’t see that in the numbers. Fed discount window borrowing is really tiny. And these are overnight loans, sure you can keep rolling them but discount window borrowing has come down from close to $100B last year to only $20B. So it clearly looks like banks have dramatically cut down on fed borrowing. Even $100B at the peak of the crisis is a tiny amount considering the size of the financial sector.
I couldn’t find any other section in the fed balance sheet where they are lending money to private institutions other than to AIG.
I really think the banks are just using their depositor money to invest in treasuries rather than borrowing from the fed.
Secondly investing in 10 year treasuries is not as safe as you guys think, a sharp rise in yields reduces value of treasuries. So interest rate risk is real factor when investing in treasuries, especially when your funding is short term.

Maybe I am missing something, can someone try to explain.

By: Bill

Bill — Thu, 12 Nov 2009 16:47:39 +0000

We need some Tea Parties down on Wall Street.

By: ella

ella — Thu, 12 Nov 2009 14:21:25 +0000

Of course. Concur on black box voting.

By: markets.aurelius

markets.aurelius — Wed, 11 Nov 2009 21:24:59 +0000

Go, Nemo! That is exactly the right track.

As is the front running. The Fed needs to look at that one. Starting with Bear.

By: anti_fascist_freedom_fighter

anti_fascist_freedom_fighter — Wed, 11 Nov 2009 20:43:34 +0000

Ella, my light, my guiding star, my angel…

Basically, what you are saying is, when GS is no longer one of the primary beneficiaries of our fascist system, then it will be OK. Fascism being defined as: “A philosophy or system of government that advocates or exercises a dictatorship of the extreme right, typically through the merging of state and business leadership, together with the ideology of belligerent nationalism.” American Heritage Dictionary of the English Language, American Heritage Publishing Company, NY NY, 1971.

If we lived in a democracy, each of your points would, conversely, operate to protect the citizens, not GS and all similar corporations. I also submit that electronic voting (corporate controlled voting) is the greatest single evil on the face of the planet today, which enables the elite to remain fearlessly fascist. The corporate form of ownership is the second greatest evil. Barry Manilow is the third greatest evil.

See the maps and discussion at Blackboxvoting.org.

By: anti_fascist_freedom_fighter

anti_fascist_freedom_fighter — Wed, 11 Nov 2009 20:28:39 +0000

And a hedge fund is just fancy Newspeak for a Ponzi Scheme. Only this Ponzi Scheme is bankrolled by the FED, which postpones the inevitable day of reckoning, while allowing GS to suddenly be worth $1 Trillion(according to Kwak) when a year ago it was broke.

Somebody show me some insight how GS is now worth $1 Trillion today. Mr. Kwak? Anyone? (/fading echo/: anyone?… anyone?… anyone?)

By: cougar_w

cougar_w — Wed, 11 Nov 2009 18:21:55 +0000

The problem is that TBTF institutions represent systemic risks, that lead in turn to automatic public support if things wobble.

Automatic support means you cannot lose on your bets regardless (privatized-profit-socialized-risk model), and that understanding contributes to risky investing for higher yields and this in turn increases system risk. Rinse and repeat, until global implosion. Reference the past 24 months if you want to know what that looks like.

Four Goldmans would be 1/4th as likely to present systemic risks, and during a crisis could be allowed to float or sink, as useful. At least, public support would not be automatically assumed.

Thus the four Goldmans would think twice about some of their risks, since they would be likely to absorb all the costs of failure, which at present is not even remotely the case.

So breaking up Goldman is about hamstringing moral hazard, or at least unwinding the privatized-profit-socialized-risk model.

cougar

By: hermanas

hermanas — Wed, 11 Nov 2009 16:35:15 +0000

I like that. Still trying to digest whether their extraodinary talent was making a better world or legitimizing fraud.

By: ella

ella — Wed, 11 Nov 2009 16:34:48 +0000

Let’s see how productive they are when HFT is eliminated, their influence in government is contained, when all derivatives and swaps are transparent and on a public exchange, when they stop borrowing at low rates from the FED, when they have no loan guarantees from the FED, when accounting rules require mark to market and eliminate SIV and other off the books vehicles and when there are no more dark markets.

I am sure that must have left something out.

By: Bubba

Bubba — Wed, 11 Nov 2009 16:22:32 +0000

Hey! Leave him alone. Blankfiend is doing God’s work!

By: Ted K

Ted K — Wed, 11 Nov 2009 16:05:34 +0000

F*#^ me. Ok nothing is simple in life. Just go to this Link and look for the Chris Dodd picture (The old dude with white hair) and press play. http://www.msnbc.msn.com/id/31510813/#33855467

By: Ted K

Ted K — Wed, 11 Nov 2009 16:00:17 +0000

I'm going off topic here, but it deals with finance reform, so I hope James will humor me here. I found a great video discussing finance reform on MSNBC's Morning Meeting with Dylan Ratigan. I am stupid about computers, but I am going to try to imbed the video here. It will either go swell or make my post look very retarded. Anyway if it works I hope people will watch the link. About 8 minutes. Visit msnbc.com for Breaking News, World News, and News about the Economy

By: Ze

Ze — Wed, 11 Nov 2009 15:26:09 +0000

Gs is a classical example of “too big”, but not only because of TBTF.

In a free market, an agent is “too big” if it can
a. Move the market with its actions, or
b. Predict the actions of other players

GS is in clear violation of condition b.
Being a broker, it has access to a considerable chunk of the order stream going into the market. This enables it to know – in advance – about the demand and supply curve, and trade accordingly.

Someone has to start lobbying for these buy-and-sell order streams to become public – this is the real meaning of transparency in today’s markets.

The ground for prop trading should be leveled.

By: pete muldoon

pete muldoon — Wed, 11 Nov 2009 15:20:02 +0000

nicely done, Nemo

By: number2son

number2son — Wed, 11 Nov 2009 13:59:58 +0000

Well, this recalls a bit of wisdom I was given in my youth by an old businessman – “don’t steal nickels and dimes, if you’re going to steal make sure it is a lot of money.”

Thus, when Blankfein lies, it is a big, big, big lie.