About Those Vaunted Goldman Traders

While I certainly can understand the talent and dedication and technology that goes in with big banks like Goldman, when I read that there were other banks that had perfect quarters, it really reinforces that this nice run had less to do with talent and more to do with massaging the situation to their advantage.

But Bank of America , Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.

No seriously. I can certainly understand that Goldman and JP Morgan probably have more smarter people in their employ than I will ever even bump into on the T near Harvard. But am I really supposed to believe that both Bank of America and Citigroup also have that many geniuses on their trading desks?

And to find four different banks in the same quarter all made money each and every day and did not have a down say amongst them?

Puhlease, pull the other one, it’s got bells.

“This is not about hitting home runs,” said Jaidev Iyer, who runs his own risk management consulting firm, J-Risk Advisors. “This is just, as we call it, milking the market and your captive client base.”

And that’s about it. They used their own customers orders to make money for themselves at the expense of their customers. It is a zero sum game, after all? So if the big banks came out ahead, someone took the other side of that trade and most likely it was their own clients and customers.

I am so glad the S.E.C. and the Treasury and the Federal Reserve are all watching this and doing nothing. It helps to show that the game is rigged for and by the benefit of the big boys against anyone else, and the government is just along for the ride. Don’t ever forget that yes, they are out to take your money and you should do everything you can to not allow that to happen.

Don’t get me wrong, while I think that any one firm may have the best traders in the world, I find it highly suspicious that four of the largest firms are also the best in the world. To paraphrase, there can be only one, best in the world. Not four.

I’m Calling BS On Goldman Sachs

Sorry, not buying that they did this in anyway that was legal.

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.

I am absolutely not buying that any company legally earned a positive net every day in a quarter. It didn’t happen. Not legally at least. No, I don’t have any proof. But seriously, is there anyone that can with any mathematical certainty this is possible?

Think about it. This means they did not have one down day. They came out ahead EVERY day without a loss. For three months running. No day with a loss? Give me a break, even the ultimate of traders has down days.

The lack of trading losses could add to the perception that Goldman Sachs has an unfair advantage in the markets, said one shareholder.

“It will reinforce the heads we win, tails you lose mentality that people think actually exists and promotes the concept of an unfair advantage,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas

Ya think Doug?

“This is the first time we have reported zero trading loss days in a quarter,” Samuel Robinson, a Goldman Sachs spokesman, said in an e-mail. “We believe it shows the strength of our customer franchise and risk management.”

Or you lied or made your money illegally. You really expect me to believe, that you did not have one single down day as traders? All of your traders are superhuman beings that do not lose their trades? Like I said, bullshit. Not in any legal and on the up and up market.

So Far The Market Likes It

So far the Street likes what it sees.

Stocks rocketed higher and bond prices fell Monday after investors were reassured by a nearly $1 trillion plan to avoid a European debt crisis.

The Dow Jones industrial average rose about 390 points. The Dow and broader stock indexes rose more than 3 percent. Markets also barreled higher in Europe.

At this point it’s up 414 and change. We’ll see whether this will last thru the day and how the market closes. If the Europeans were trying to goose the market, they’ve certainly done that and more. We’ll see whether it really fixes the underlying problems.

And The Americans Get Involved Saving The Euro

The Fed has decided it too wants in on saving the Euro.

The U.S. Federal Reserve will restart its emergency currency-swap tool by providing as many dollars as needed to European central banks to keep the continent’s sovereign-debt crisis from spreading.

The swaps with the European Central Bank, Bank of England and Swiss central bank will allow them to provide the “full allotment” of U.S. dollars as needed, the Fed said late yesterday in a statement in Washington.

Not sure if it’ll all help, but it’s obvious that everyone thinks there’s a problem in Europe. Of course they are again not fixing the underlying problems…

The Mother Of All Bailouts:European Edition

Well well well, not only did the EU get its act together, but they were able to get something out the door to help reassure people that the Euro is a good place to park your cash.

European Union finance ministers moved toward agreement on an unprecedented loan package worth at least $645 billion to prevent Greece’s fiscal woes from triggering a broader sovereign-debt crisis and shattering confidence in the euro.

Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments sketched out plans to make 440 billion euros ($570 billion) available, with 60 billion euros more from the EU’s budget

Of course they still have some arm twisting to do before they’ll have used all the bullets of government manipulation.

Government officials said they won’t push the independent ECB to, for example, buy government bonds. President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

I’m sure they’ll try their hardest to get some quantative easing going on from the ECB side.

Obama yesterday emphasized “the importance of the members of the European Union taking resolute steps to build confidence in the markets,” White House spokesman Bill Burton told reporters in Hampton, Virginia.

Of course they haven’t done anything about the underlying problems, just punted that issue down the road like the American administration. All they’ve done is put one hell of a bandaid on the patient hoping it won’t die as the head lies on the road. And it’s obvious that the public in Europe is enamored of bailouts there as they are here in the States.

Voters in Germany’s most populous state dealt Chancellor Angela Merkel a painful setback Sunday, erasing her government’s majority in the upper house of parliament and curbing its power after a stumbling start and criticism over the Greek debt crisis.
…”This is of course a warning shot for the governing parties, and the people should know that it has been heard,” said Foreign Minister Guido Westerwelle, the vice chancellor and leader of the Free Democrats, Merkel’s junior coalition partner. “We must make an effort to win back lost trust.”

Well, color me skeptical about any politician actually doing what they say. I think the thing to take away is that the pols of Europe are scared of the downside and are willing to do anything thing possible to save their asses without actually fixing the problems they have. In other words, they are acting like typical politicians and their countries will be the worse for it. But we’ll see.

Apple, The New Evil Empire?

I have to say, I’m glad that I haven’t been in too deep with the hype machine that is Apple. It seems they’ve finally pushed people too far and have gone well beyond anything that Microsoft would ever do.

US regulators are considering an inquiry into whether Apple violates antitrust law by requiring that its programing tools be used to write applications for the iPad and iPhone, a source familiar with the matter has now said.

I’m not saying Microsoft hasn’t used its market position, but can you imagine the uproar if it told all its third party developers that not only MUST you buy a Microsoft operating system to create your applications, but you must also only use tools that we allow you to use.

The uproar would be stupendous. You would have geeks rampaging through the streets. Er, ok, maybe not that far. But it really is ridiculous to absolutely mandate that you must create an application only using approved tools.

This is the problem when you have a cult of personality instead of a CEO.

Volatility? What Volatility

Nice spike in volatility.

Anything happen today that I missed?

Yahoo! says the Vix was only up 5.34 points. Oh wait, that’s a 30.57% rise today. Guess the market wasn’t liking that downgrade. But really, has the dowgrade for Greece already been baked into the market or was adding Portugal to the mix the part that really spooked the market. Guess we’ll find out…

Greece Needs Cash Now

Which is really what they’re saying now that they’ve activated their “lifeline”.

Prime Minister George Papandreou asked for the 45 billion euro ($60.5 billion) package put together by the European Union and International Monetary Fund to be activated after months of markets pushing Greek borrowing costs ever higher, undermining the country’s efforts to cut its 300 billion euro debt load.

“It is imperative that we ask for the activation of the mechanism,” Papandreou said on live national television and radio from the remote Aegean island of Kastellorizo.

As a side note, of course he made the announcement from a remote island, that way he can dodge the protesters.

My issue is that the IMF is funded by me. As I said previously on the issue, I am a bit concerned.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash.

I hope the technocrats at the IMF have at least given a heads up to Treasury and the President that this is an issue that may come up. Hey, it’s one thing for the US to save the sorry ass of GM, but how will the voters respond to knowing they’re also bailing out the sorry ass of the Greek government?

We Don’t Have No Inflation

Seriously, all you have to do is exclude the bad numbers and voila, you’ve got the number you want.

Wholesale prices rose more than expected last month as food prices surged by the most in 26 years. But excluding food and energy, prices were nearly flat.

Again and again, this is the problem with government statistics today. They are rigged. Of course there is no inflation when you remove all the bad parts. I’d like to know from the eggheads, since I need food to eat and energy to live in my house, why we get to exclude it?

It’s nothing more than a way to rig the game.

Greece Gets A Bailtout

Greece finally got it’s bailout. Thankfully I’m not directly on the hook for any of the cash.

Euro zone finance ministers unanimously approved a detailed 30 billion euro ($40.5 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed it had not requested that the plan be activated now.

Right. Does anyone really believe it wasn’t requested? I mean, why bother going through the process of creating a bailout if Greece didn’t want it. Everyone knows that’s a lie, so why bother repeating it?

“If the mechanism had to be activated, it would not be a violation of the no-bailout clause (in the European Union treaty) since the loans are repayable and contain no element of subsidy,” Eurogroup chairman Jean-Claude Juncker told a news conference in Brussels after the meeting.

And if they happen to forgive the loan? Does it then become a bailout an violate the no-bailout clause? I’m just askin…

The size of the International Monetary Fund’s contribution to any package was not disclosed but it would come on top of the euro zone amount.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash. Hopefully they’ll be able to stick the Europeans with the losses when they happen.

And losses will happen on this bailout. It’s painfully obvious to anyone with a working set of eyes that Greece is nowhere’s even close to getting their house in order. Yes I know, like the US should be talking… 😉