What Would Happen if Goldman Went Under? (AOL Poll) | 8 comments (8 topical, 0 hidden)
Wow (none / 0)

Goldman Sachs seems to be the winner in the big financial casino that crashed last year. They made the right bets one way or another, and literally busted the bank. To what extent they did or did not play by the rules should determine the extent of our outrage over their record profits. At least they have been profitable altogether and payed back all government money they directly recieved.

However, if they indeed are going to pay their employees $ 16 billion this year, one has to wonder where that incredible amount of money is coming from. A quarterly profit of $ 2.7 billion doesn't really explain it; projecting that it will be sustained over the next nine months (which is even doubted in the NYT article) it would "only" amount to a profit of $ 10.8 billion over a year. What about the other $ 5.2 billion they will give away to employees? It really looks like Goldman executives were giving away a substantial part of the company's capital to put it into their own pockets.

Whether the government would once again bail them out if needed can be reasonably doubted. This whole "too big to fail" line is wearing off; even a dimwit would see that saving them over and over again wouldn't make any sense whatsoever. The government already put a lot of their political capital into preserving the financial industry, and - nevermind Geithner - would probably not want to make a big political mistake in repeating such action within the next eight years. Everybody knows how the public opinion would percieve such pointless generosity.

 

by OldGerman on 07/16/2009 07:15:18 AM EST

where it came from (none / 0)
It ain't hard to make money when you are making all the rules as well as have unlimited leverage, not to mention changing them along the way. There are 650 trillion dollars left of unresolved bets, that were legalized under Goldman's proxies. Given that the world GDP is about 50 trillion how can they be profitable, or even allowed to still exist. There is no way to create that amount of money, nor back it.

Let me put it in to some perspective. Goldman Sachs burned a city to the ground in order to cook a few hot dogs over an open fire. That is a proportional representation of the risk reward to world for the depression error gambling that GS and a few other major players helped revive through billions in lobbying.


GS short sold Lehman, Behr Sterns and AIG into neverland, collecting on side bets all the way up and all the way down. The 14 billion paid out after we bought AIG was just a drop in the bucket. AIG sold 500 billion in cds market, and that was only  a fraction of their business,  yet the payouts from the bad bets wiped out the company to the point of needing 200 billion in tax payer dollars to stay afloat. Let alone Fed money.

Goldman Sachs was the architect of the disater, and the second biggest winner.


by sisco66 on 07/16/2009 10:18:10 PM EST

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What Would Happen if Goldman Went Under? (AOL Poll) | 8 comments (8 topical, 0 hidden)