GOLDMAN SACHS RESTARTS CARRY TRADE BUSINESS!

I despise Goldman Sachs.  They are all-around jerks, they are the Super-gnomes who have super-destroyed the entire planet’s financial systems, they are locusts who plague us and they should be put out of business!  Their activities should be made illegal.  Goldman Sachs is in the news not because of their goofy lawsuit against a blogger.  They are in the news because they are looting the world and don’t give one hoot about who knows this.  They just want their bonuses and their carry trade free money, damn it!  And so, time for more GS news, Precioussss!

Goldman wants to go back, but can it? | U.S. | Reuters

Meet the new Goldman Sachs, trying to be the same as the old Goldman Sachs.

Gollum, in the Lord of the Rings, has two selves.  They argue all the time but the nasty side always wins.  So it is with Gollum Sachs: they always revert to the vicious side, every time.  So it is today: their pretense at ‘sacrificing’ themselves to save America like with Paulson or the new president of AIG, but this is now revealed to be totally fake.  They had one aim only: to get as much money to flow into their pockets as humanly possible.

With the total collapse of the world’s entire financial systems, they scrambled off to leech off of our government. They were allowed, WITH NO SUPERVISION, to suddenly claim, they were now banks, not investment houses!

By pulling the sheep’s wool over the wolf, they pretended to be grazers, not predators.  Now that their precioussss bonuses are being hammered, they throw off the sheep’s skin and howl in rage.  They will devour us and we can’t stop them!

The fifth-largest U.S. bank said late Monday that it earned $1.66 billion in the first quarter, as it boosted its risk and assets.

It also raised extra capital to repay the government, in a move widely seen as an effort to avoid extra regulatory scrutiny, particularly when it comes to compensation.

And where did this ‘capital’ come from?  I found out!  I figured it all out.  More about that in a few minutes!

These are unusual steps in an environment where most Wall Street banks are slimming down their balance sheets, taking risk only reluctantly and slashing compensation.

“Goldman wants to go back to the way things were before the crisis, where they do what they do best, which is taking risk, and the government leaves them alone,” said Bill Fitzpatrick, an analyst covering financial stocks at Optique Capital Management in Milwaukee.

Goldman Sachs not only is left alone by our government regulators, they NEVER leave US alone!  They run as many parts of the government, elected, appointed or via lobbying, they run everything for themselves.  And look at the crappy job they did, too!  They wrecked absolutely everything.

TheHill.com – Lawmakers renew fire on G. Sachs

Financial giant Goldman Sachs, one of the biggest and best-connected firms on Wall Street, is coming under increasingly intense and bipartisan criticism on Capitol Hill.

That criticism culminated Tuesday in an investigation of payments to Goldman and several other banks made by AIG, announced by the inspector general (IG) assigned to watchdog the Wall Street bailout. 

It’s a sharp contrast from September, when Rep. Dennis Kucinich (D-Ohio) seemed almost alone in directing his fire at the financial giant.

“Is this the United States Congress or the board of directors of Goldman Sachs?” he asked as he lashed out at the $700 billion Wall Street bailout.

I supported Kucinich for President.  We would not have the torture lawyers fighting to destroy our Constitution, for example.  And using assassin drones to fly into Pakistan and kill women and children: this, too, would not be happening.  Obama is barely different from Bush.

The bailout was unpopular, but there was little official complaining that its architect, Treasury Secretary Henry Paulson, was a former Goldman CEO or that he picked another Goldman alumnus, Neel Kashkari, to run the program.

But in the weeks since AIG disclosed that it paid Goldman Sachs $13 billion of its taxpayer-funded bailout as a counterparty, the firm is getting plenty of unflattering mentions in hearing rooms and hallways.

About time.  And just in time to learn that GS has corrupted ALL of Obama’s economic advisors.  He should FIRE ALL OF THEM NOW.  Not tomorrow.  Tonight.  Instead, he is letting this odd collection of tax cheats, illegal alien bosses and under the table bribe takers, run amok.  Arrest all of them.

The investigation by the bailout IG had been requested by 26 members of Congress in a letter circulated by Rep. Elijah Cummings (D-Md.), a senior member of the Oversight and Government Reform Committee who has railed against corporate misdeeds. His letter noted that Goldman had claimed it wouldn’t be harmed if AIG failed and couldn’t pay its counterparties.

26 members signed?   OMG.  Talk about pathetic.  They are all busy, checking to see how much money GS gave them during the last election.  Hint: it was A LOT OF LOOT.


The investigation applies to all of AIG’s counterparties, including several foreign banks like Societe General and Barclays. But Goldman is the best known among them, and the most politically connected in the United States.

Goldman Sachs is very, very politically connected just like Madoff. And look where Madoff and his corrupt buddies are going: to jail.  Why stop with him?  Now, to explain why GS is suddenly flush with loot, look at this news:

Carry Trade Comeback Means Biggest Gains Since 1999 (Update2) – Bloomberg.com

The carry trade is making a comeback after its longest losing streak in three decades.

THE CARRY TRADE HAS RETURNED!  THE FLOOD OF FUNNY MONEY WILL RESUME!

Stimulus plans and near-zero interest rates in developed economies are boosting investor confidence in emerging markets and commodity-rich nations with interest rates as much as 12.9 percentage points higher. Using dollars, euros and yen to buy the currencies of Brazil, Hungary, Indonesia, South Africa, New Zealand and Australia earned 8 percent from March 20 to April 10, that trade’s biggest three-week gain since at least 1999, data compiled by Bloomberg show.

Differentials matter.  Playing currency games with BORROWED MONEY is a big money maker.  Ever since world trade has been resolved with only fake funny money, we get both bond games that are rigged as well as easy currency games.  And the most dangerous of them all is the carry trade business!  

Goldman Sachs Group Inc.Insight Investment Management and Fischer Francis Trees & Watts have begun recommending carry trades, which lost favor last year as the worst financial crisis since the Great Depression drove investors to the relative safety of Treasuries. Now efforts to end the first global recession since World War II are sending money into stocks, emerging markets and commodities.

The wretched carry trade machine which simply dumped debt on everything in sight, is resuming.  While major nations like Japan and the US and the UK all pump more funny money into the system while running interest rates at ZIRP.

Don’t Blame The Elite – Forbes.com

The truth is that markets stumble upon prosperity. New ideas are constantly being tried out. Most of them are bad, but that is fine, because markets ruthlessly eliminate bad ideas. A few of them are good, and that’s enough, because good ideas spread fast in a market system. In the language of biology, markets are evolutionary environments that select very powerfully for wealth-creating organizations. They attract the smart people to the right places, magnify their good qualities and smother their failures.

Ah, the Adam Smith evolutionary world, but with no blood!  Actually, far from failures vanishing from view, they are very stubborn.  They never go away.  More like Frankenstein’s monster, they come back. More like those vampire movies or Schwarzenegger shows, they never, ever die. 

This is simple: the bad systems, the bad games, the bad deals make the users very, very rich, very, very fast.  This is why there have to be cops all over the place, with strong laws forbidding the use of these bad schemes!  

Once we accept that economic progress is largely a matter of trial and error, with accidental successes catching on and bad ideas failing really fast, the financial crisis itself looks very different. Yes, there were a lot of ideas out there that seemed smart but turned out to be flawed: issuing bad mortgages, repackaging them and betting big on the outcome. But that wasn’t the root of the problem. Every day, thousands of ideas that seem smart turn out to be flawed. A small firm might go bust, some people might have to look for new jobs, but there is no catastrophic consequence for the country as a whole.

This time, the problem was that the seemingly smart ideas simply didn’t fail quickly enough.    Like, in the first 5 minutes!  This was largely because they grew so fast. Credit default swaps–quasi-insurance contracts that, unlike real insurance, can also be used to make side bets on the likelihood of financial distress–are barely a decade old. When the dot-com bubble burst, they were a niche market. Yet last summer, the Bank for International Settlements estimated that there were almost $60 trillion of over-the-counter credit default swap contracts outstanding. (The market had doubled in size in the year preceding the credit crunch, June 2006 to June 2007.) Such astonishing growth exemplifies the exotic instruments that entangled a brave new financial system. By the time the vulnerabilities of the new ideas became apparent, they were large enough to take down the world’s banks.

The derivatives beast still lives!

Next time, we’re going to have to make sure that the next clever financial idea grows a little slower or is tested a little earlier. One way or another, early failures are better than late ones. As for the elite, I’m not too worried. They’ll be able to find something useful to do–even if it isn’t on Wall Street.

58% of the men and 45% of the women graduating from Harvard went to Wall Street.  All smart people wanted to make money the easy way so all graduates hiked to Wall Street as fast as possible. This destroyed our intellectual base and all the creative stuff moved offshore.

’08 Saw More Raises for CEOs: Survey – Business news | Newser

More American CEOs than not received raises in 2008, Reuters reports. An AFL-CIO poll of 946 chief executives saw 480 with increased pay, while 463 took a cut. Salaries were up 7%, too; execs with raises earned an average of $5.4 million, while those who saw cuts took in an average of $3.9 million. The union hopes the results will spark a conversation on executive compensation.

So, despite record LOSSES, the bosses still got pay hikes!  

http://www.bis.org/publ/work279.pdf?noframes=1

The evolution of index products in credit risk transfer markets has allowed market participants to trade standardised contracts on pools of a variety of underlying credit instruments. This, in turn, has added a degree of transparency and liquidity to market segments as diverse as leveraged loans or commercial and residential mortgage-backed securities (MBS). For instance, the ABX.HE indices, which are based on credit default swaps (CDS) written on US home equity loan (HEL) MBS, track the price of credit default insurance on a basket of such deals. Since the start of the recent financial turmoil in the summer of 2007, the ABX index family provided a widely followed barometer of the collapsing valuations in the US subprime mortgage market, which have been at the core of observed credit market developments.1 In addition, and despite some shortcomings, ABX price information appears to have been widely used by banks and other investors as a tool for hedging and for gauging valuation effects on subprime mortgage portfolios more generally.2 On 19 December 2007, Markit, the administration and calculation agent for the ABX indices, announced that the scheduled index “roll” on 19 January 2008 would be postponed for three months due to a lack of eligible collateral. The postponement was repeatedly extended and eventually called off,3 marking a serious dent in what had been a very successful, though brief, history of the first benchmark indices referencing subprime mortgage collateral—a history that had taken these indicators from a somewhat obscure corner of the US financial system right into the centre of developments in global financial markets….


The results presented in this paper suggest that declining risk appetite and heightened concerns about market illiquidity have provided a sizeable contribution to the observed collapse in ABX prices since July 2007. While fundamental factors, such as indicators of housing market activity, have continued to exert an important influence on the subordinated ABX indices, the AA and AAA indices have tended to react more to the general deterioration of the financial market environment, such as declining risk appetite and market liquidity. These results underline the well-established view that risk premia are important components of observed prices for default-risky products, and that the relative importance of non-default risk factors will tend to increase in periods of strong repricing of credit risk. This suggests that theoretical pricing models that do not sufficiently account for these factors may be inappropriate, particularly in periods of heightened market pressure.



picture-102

See how this works?  Talk about madness.  As the ABX bonds collapsed, the bosses all handed out immense pay raises and bonuses like candy.  

Jesse’s Café Américain: Goldman Sachs Buries Losses to Beat the Estimatespicture-111

Last night in a surprise move Goldman announced their earnings early, showing a surprising profit of $1.8 billion, beating the Street estimate handily. The bulk of their profit purportedly came from speculative trading for their own accounts, using ‘cheap FDIC guaranteed funds.’

Goldman also took the opportunity to announce a new stock issue designed to allow shareholders to help them pay back their government TARP funds. Since Goldman is putting aside 50% of its profits for employee bonuses even now, while they are still holding government subsidies, the reasons for this are obvious.

What was not reported last night is that Goldman had changed their reporting periods to begin the 1st quarter in January 2009 when they declared themselves to be a bank holding company. Prior to that, their fiscal 2008 year ended on November 30.

This made the month of December 2008 an ‘orphan month’ that was ignored in the financial headlines.

This means, they used several tricks.  They are getting 0% loans and buying expensive debts issued by desperate nations in financial difficulties!  They also cheated on their bookkeeping and lied about losses, dumping all of them during a month when they were between accounting periods due to CHANGING INTO A REGULATED BANK.  Now, they intend to morph back into a pirate ship again.  

FT.com / Companies / Financial Services – AIG in spotlight over derivatives

The unit that all but destroyed AIG has failed to sign up for the overhaul of the global derivatives market which was given added impetus by the troubles at the US insurance group.

AIG confirmed that its financial products unit, whose soured bets on credit default swaps forced the company into government hands last year, did not adopt the “Big Bang” protocol that has been signed by more than 2,000 market participants.

The protocol, created under the auspices of International Swaps & Derivatives Association, is intended to make it easier for investors in the opaque market for credit derivatives to know what will happen to their contracts if debt defaults occur. It came into force on Wednesday.

AIG Financial Products opted to eschew the protocol and make bilateral agreements with counterparties on more than 200 outstanding derivatives trades.

People close to the situation said the highly complex nature of many of AIG FP’s trades, particularly the credit default swaps on mortgage-backed securities, made it easier to negotiate with individual counterparties rather than adopt a catch-all protocol.

Now, AIG is also morphing back into what it was before: the Father of the Derivatives Beast!  The entity that  made that monster grow like mad is now…going to return to doing this.  With the help and blessings from Goldman Sachs!  This is absurd.  The entire horror of the last two years ends with….the status quo being reset!  With one major difference: our entire nation is much, much deeper in debt!!!!!

Lehman Sitting on Bomb’s Worth of Uranium Cake as Prices Slump – Bloomberg.com

 Lehman Brothers Holdings Inc. is sitting on enough uranium cake to make a nuclear bomb as it waits for prices of the commodity to rebound, according to traders and nuclear experts.

The bankrupt bank, in the throes of paying off creditors, acquired uranium cake “under a matured commodities contract” and plans to sell it when the market improves “to realize the best prices,” Chief Executive Officer Bryan Marsal said.

Lehman, once the fourth-largest investment bank, has an estimated $200 billion in unsecured liabilities left to pay. The uranium, which may be as much as 500,000 pounds, might fetch $20 million at today’s prices of about $40 per pound, said traders who asked not to be named because of the confidential nature of the data. Marsal said the traders’ estimate of Lehman’s uranium holding is “reasonable,” while declining to be more specific.

And we were worried about the effing Iranians????  Arrest the Lehman people for screwing around with yellow cake.  Bomb them like we bombed Iraq.  Remember: it was all about yellow cake, wasn’t it????

Wells Fargo May Need $50 Billion in Capital, KBW Says (Update1) – Bloomberg.com

Wells Fargo & Co., the second- biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.’s Frederick Cannon.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.

First-quarter net income rose 50 percent to about $3 billion, Wells Fargo said last week in announcing preliminary results that topped the most optimistic Wall Street estimates and sparked a 32 percent jump in the stock. The bank attributed the profit to a surge in mortgage originations and revenue from Wachovia Corp., acquired in December. Full results are scheduled for April 22.

And they are still losing tens of billions a month.  Gads. And the ‘window’ is open for them and then, they slam the door on regulations the minute they get their paws on carry trade loans.

Rio’s Albanese Gets ‘Last Chance’ With China Bailout (Update1) – Bloomberg.com

Tom Albanese’s proposed bailout of Rio Tinto Group by Aluminum Corp. of China may be his last chance to hold on as chief executive officer.

He’s having trouble convincing shareholders and regulators that the $19.5 billion cash injection, which includes the sale of stakes in some assets and a convertible bond issue, is the best way to slash Rio’s $38.9 billion of debt. Rio shareholders will meet today in London to vote on proposals including the appointment of directors and their remuneration.

China has sovereign wealth.  And note that they are buying up distressed properties and they are NOT using carry trade loans, either.  Note, also, that poor Rio Tinto is in tins of trouble!  Down the Rio they sail!  Look at the pile of debt sitting on them!  Nearly $40 billion and most of it originated in the CARRY TRADE LENDING SCHEMES!  Eventually, the Chinese will pry all of this out of the hands of the gnomes.

Shell in talks with Chinese oil companies over Iraqi sites – Telegraph

Iraq produces about 2.5m barrels of oil a day. China is the world’s second-largest consumer of oil and its state-run energy companies are keen to expand their foreign reserves. A partnership with Shell would be China’s second major venture in the Gulf state. State oil group CNPC’s $3bn (£2bn) project to develop the al-Ahdab field was Iraq’s first large oil deal with a foreign company after the fall of Saddam Hussein.

HAHAHAHA.  See?  We fought for Iraq and now, are losing it all.  Goldman Sachs has their bonuses.  Rio Tinto and Shell have deep debts and the Chinese have SWF money to bail everyone out, if the Chinese have an interest.  Gah.  What on earth are we DOING????

The status quo SUCKS for us!  We should be fighting for a new system, a new day, something must effing CHANGE, damn it!  Hell’s bells, what are we waiting for, anyway?

ΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩΩ

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1 Comment

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One response to “GOLDMAN SACHS RESTARTS CARRY TRADE BUSINESS!

  1. Z

    The Case of the Missing Month

    I blogged the Goldman Sachs call this morning, starting at 7 a.m. The newest posts are at the top.

    7:50 a.m.| Call Over: The call ended quietly with little additional talk about December.

    7:45 a.m.| How Quickly We Forget: One analyst points out how much money Goldman seems to have put aside for liquidity, and complains that the decision reduces profit margins. The response: “In this environment, prudence is the better path.”

    Goldman said it also expects capital markets activity to keep picking up, at least for quality assets, and notes that there are two (small) initial public offerings scheduled this week, the first such week since last summer.

    7:40 a.m.| Distressed Assets: Goldman thinks that within a few months the buyers and sellers of distressed assets will come together and will then provide opportunities for the bank.

    That forecast, if it comes through, would end a lot of the problem with the marking such assets. I suspect a lot of banks will not like to see that happen. For the more distressed banks, it could produce pressures to take more write-downs.

    7:25 a.m.| A.I.G.: Guy Moszkowski of Merrill Lynch wants to know if they made money from the now-famous government-financed American International Group transactions.

    The answer is cautious. Most of the impact was in December. For the first quarter, the total A.I.G. effect on earnings was, in round numbers, zero.

    So what was the A.I.G. effect in December? They did not say. Is it possible the loss then would have been larger without the A.I.G. bailout? We’ll see if any analyst asks.

    7:15 a.m.| December Write-Offs: They did discuss December up front (unlike in the news release). It sounds as if they took write-offs everywhere, including commercial real estate and private equity. They took more write-offs in both of those areas in the first quarter.

    So how did they make money? One answer is that this is a great time to be in the banking business — if you ignore what we politely call legacy assets. Customers are desperate for cash, and will pay for it. Fees are up. If underwriting volumes continue to rise, this could be a great, great year. Assuming, of course, that the write-offs are over.

    6:50 a.m.| Where’s December?: Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.

    How did it do that? One way was to hide a lot of losses in not-so-plain sight.

    Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.

    The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.

    Would the firm have had a profit if it had stuck to its old calendar, and had to include December and exclude March?

    We’ll see if they discuss that.

    http://norris.blogs.nytimes.com/2009/04/14/the-case-of-the-missing-month/

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