The Guardian: Roasted vampire squid turns out to be dish of the day on Wall Street

[Omaha Steve]

http://www.guardian.co.uk/business/2009/jul/19/goldmansachs

Goldman Sachs's record-breaking profit has drawn a blaze of criticism, but insiders at the bank feel misunderstood, writes Andy Clark in New York

* Andrew Clark
* The Observer, Sunday 19 July 2009

It ought to have been a moment of triumph for Goldman Sachs, the most feared, revered and envied of Wall Street's investment banks. Long synonymous with power and wealth, the firm delivered the biggest, healthiest profit since it was established in a one-room Manhattan office by a German immigrant, Marcus Goldman, in 1869. But hunched over their computer screens from dawn until late at night, Goldman's elite bankers were unprepared for the ferocity of the looming backlash.

Over the three months to June, Goldman clocked up $3.44bn of profits, amounting to $38m a day or $1.58m an hour. Making money has suddenly become easier. Under Goldman's policy of dedicating half its revenue to staff pay, the firm's 29,400 employees can expect average take-home packages of between $700,000 and $900,000 for the year if the present level of prosperity continues.

Not everybody is impressed - far from it. In Congress, senators fulminated against the divide between two Americas: Wall Street trumpeting its return to prosperity while citizens on the high street lose jobs and homes. A leading US union, the Service Employees International Union, accused Goldman of emerging from the credit crunch "unrepentant and unreformed".

An article by writer Matt Taibbi in Rolling Stone magazine compared Goldman Sachs to a parasitic vampire squid squeezing the life out of humanity. The New York Times said that Goldman employees were known in New York as the "bandits of Broad Street".

The rightwing television host Bill O'Reilly referred to Goldman as "swine". And the Nobel Prize-winning economist Paul Krugman weighed in, declaring that what the bank does is "bad for America". "Goldman made profits by playing the rest of us for suckers," wrote Krugman, pointing out that the firm made a fortune in the run-up to the financial crisis by betting on a collapse in the sub-prime mortgage market.

In Westminster, 33 MPs have signed an early day motion demanding a 90% tax on bankers' bonuses that are worth more than 15% of salary. Across the English Channel, President Nicolas Sarkozy's top adviser, Henri Guaino, declared that the bank had posed a "gigantic" moral problem: "Goldman Sachs wouldn't exist had American taxpayers not come to its aid. To be drowning in dollars and bonus money today is utterly scandalous."

FULL story at link.

[On the Road]

1. I am Glad that the Financial Bailout

has led to increased outrage over increasing divide of wealth in the US and executive compensation, which has been out of control since Reagan took office and no one seemed to notice.

But I still want to know how Goldman made this money trading. If all they did was pump into the market in March, those trading profit were not only made honestly, but they were good for the economy. Whether it's in real estate, stocks, or some other market, someone has to be the one to catch the falling knife and buy at the bottom. Otherwise, everything keeps falling a recession turns into a depression.

It is possible that they used access to pre-trading data feeds to get an unfair advantage. We don't know yet if that was illegal. But it's not a foregone conclusion. It would have been about the same time Warren Buffet started making statements that ordinary investors should get back into the market. I didn't, and I wish I had listened to him.

[crickets]

2. "insiders at the bank feel misunderstood"

Aw, poor things. :eyes:

K&R

[Wednesdays]

3. K&R

:kick:

[Ghost Dog]

4. If GS is truly "unprepared for the ferocity of the looming backlash"

I would be surprised.

[DireStrike]

5. Indeed

All they have to do to prepare for the ferocious, looming backlash is not read their detractors' blogs.

[eppur_se_muova]

6. Why is everyone so down on Vampire Squid? They are beautiful, fascinating creatures.

And no, they are not parasites.



http://en.wikipedia.org/wiki/Vampire_Squid