Tag Archives: Goldman Sachs

Why Do You Trust Greece Now?

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As you may have heard, the Greeks are holding the EU hostage for some coin to pay off their debts. It’s been down to the wire now for, oh the past 20 years, or so it seems.

As one deadline after another has come and gone, leaders of the three parties in the coalition of Prime Minister Lucas Papademos postponed what was supposed to have been a crunch meeting on Tuesday until the following day.

Here’s the thing though. The Greeks lied before about their budget.

One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
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In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

The current Prime Minister Lucas Papademos, brought in to save the day for the EuroZone was Governor of the Bank of Greece while the lying was going on.

His reward for lying to the EuroZone ministers was a promotion to become Prime Minister.

Tell me again, since the people that did the lying are still in office now, why anyone in the world expects the behavior of the Greek government to change? They won’t. And yet the usual suspects will proclaim how shocked they are when it happens again.

It’s obvious that of all the poor choices available, they Greeks should leave the Euro and return to the Drachma. It is not a good choice, but it is, regrettably the only rational choice. Unless the Germans intend to keep Greece on life support forever.

Goldman Announces Trading Losses After FinReg Passes

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I find it awfully convenient that Goldman announces that they did poorly, for them, in their trading over the last quarter. I wonder if there was anything going on in the last quarter?

Losses on Goldman Sachs’s trading desks exceeded $100 million on three days during the period that ended on June 30, according to a filing today by the New York-based company with the U.S. Securities and Exchange Commission. The firm also disclosed that trading losses surpassed its value-at-risk estimate, a measure of potential losses, on two days.

Not only did they start losing money, but they did it while surpassing their VAR. Why, that’s pretty undisciplined for a firm that did not have a losing day the previous quarter. If I was a cynical suspicious type, I’d believe they’ve been rigging their books and now that the tide is going out against them, they want to make themselves look better.

There was that little ugliness that they’ve just finished up.

Goldman Sachs agreed last month to pay $550 million to settle a fraud lawsuit filed by the SEC over Goldman Sachs’s 2007 sale of a mortgage-linked investment.

And of course the Financial Reform bill was passed and signed into law. They were definitely a target in that and have already responded to the bill.

It’s just a funny coincidence that they all of a sudden start losing money and do so in such an undisciplined manner that it looks like they’re reporting to the SEC what they want the SEC to see. Of course this is how all public companies report, which is an issue in its own right, but it certainly does look like Goldman is making a mockery of the reporting rules and the SEC.

And no, I of course do not expect anything to happen as Goldman and the other big boys pony up a lot of cash to their lobbyists.

About Those Vaunted Goldman Traders

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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

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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.

Look Honey, Short Sellers Aren’t Evil After All

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In an article sure to not surprise the short sellers of the world, the NY Times shows the research that proves short sellers aren’t evil and actually know a thing or two about investing, which is how they make their money. And not “taking” down companies or manipulating the markets for the hell of it as people like Patrick Byrne want people to believe.

These concerns are largely unfounded, however, according to the new study, titled “How Are Shorts Informed? Short Sellers, News and Information Processing.” Its authors are Joseph E. Engelberg and Adam V. Reed, both finance professors at the University of North Carolina at Chapel Hill, and Matthew C. Ringgenberg, a Ph.D. student there. The study has been circulating since January as an academic working paper.

Their work suggests that the average short-seller has done well through astute research and analysis, not market manipulation.

The researchers analyzed a database containing all short sales involving stocks listed on the New York Stock Exchange from January 2005 to July 2007. The database showed the exact time and price at which each short sale was executed. That enabled the researchers to compare the timing of short sales with the publication of news articles about the companies whose stocks had been sold short.

It’s a good story. It shows that short sellers tend to, you know, actually research the companies that they short sell. They have a good idea of their targets and know what they’re doing.

Now that we have some proof that short selling isn’t evil, I won’t hold my breath waiting for the SEC to retract it’s short selling regulations. They get way too much cash from BOA and Goldman for that ever to happen.

Pssst… Wanna Buy Some Detroit Junk?

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Get this, the city of Detroit is trying to sell some bonds. I know, who isn’t. But here’s the kicker.

The city, which warned investors in its preliminary official statement of the possibility of filing for Chapter 9 bankruptcy protection, provided a June 30, 2008, financial statement, its most recent, to investors. A fiscal 2009 report is expected to be complete by May 31, said city spokesman

Because as we all know, nothing big has happened in the Detroit area in the past couple of years, right?

You’ve got to have your head on backwards to participate in this. I mean, this is madness. The city’s on the brink of bankruptcy and people are buying the bonds with no financials. Risk management anyone? I guess no one’s learned anything from the past couple of years.