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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Thursday, September 30, 2010

Cartoon Depictions of Goldman Sachs

We are familiar with Goldman Sachs's role in helping to transfer wealth from middle Americans to the rich via derivatives. GS is also in the business of creating hundreds of millionaires and some billionaires through salaries and egregious bonuses--hardly a socially responsible activity.

Historically, fine artists called their preparatory drawings "cartoons" before they were painted. Cartoons in popular culture are line drawings with captions that are often meant to be humorous.

Here are two pages of cartoons that pithily pinpoint, in an amusing way, some of the characteristics of Goldman Sachs, including its massive influence, its global reach, its unethical behavior, its opaqueness, its betting behavior, its lack of accountability, its fraudulent trades, its acquisitiveness, and so on.

Find the cartoons and writings here


Anonymous said...

Mystery of Disappearing Proprietary Traders: Michael Lewis

No. 3 -- Goldman Sachs, Morgan Stanley and JPMorgan are not in fact abandoning proprietary trading. They are just giving it a different name.

They are dismantling the units called “proprietary trading” and shifting the activity onto trading desks that deal directly with customers. (Which would explain why so few prop traders are being let go.)

After all, you don’t need a proprietary trading desk to engage in the two activities that any proprietary trading ban would seek to prevent: 1) running huge trading risks, and 2) taking the other side of the customers’ stupid trades. Goldman Sachs’ infamous Abacus program -- the one that talked American International Group into selling vast amounts of cheap insurance to offset subprime mortgage risk, and then shorted the instruments they themselves had created -- wasn’t dreamed up by the prop trading desk. It was the brainchild of what customers knew as the “Client Facing Group.”

In short, there are any number of explanations why Wall Street firms are all at once letting it be known they intend simply to walk away from what has been, until very recently, their single most lucrative line of work.

Anonymous said...

Why Be A Market Maker When You Can Just Be A HFT Scalper?

To an extent this should answer Michael Lewis' rhetorical questions posed yesterday in Bloomberg, as to why Wall Street firms are voluntarily eliminating their prop trading divisions. The simplest answer: everyone is entering the scalping business, with some already having a material advantage over others. As to what this means for the market, the answer is another virtually assured flash crash: "If [regulators] do not make it sufficiently attractive for us to continue as market makers, then we will probably selectively deregister," Peterffy said in an interview. "Potentially we could even become a high-frequency trading firm ourselves, and provide liquidity when it is in our interest." And it gets worse.

The cannibalization of profits courtesy of HFT means very soon everyone will be an HFT! And when that happens, virtually everyone will be on the same side of the trade, until there is a regime change and everyone rushes to the other side, which according to many is precisely what happened on May 6, when the market went bidless. So yes, this is exactly what will happen once again, as more and more of Wall Street realizes that this last loophole to eeking out a few extra pennies per trade is the only place to be. What happens next is anyone's guess, although as the following guest post from Wall St. Cheat Sheet explains, it won't be pretty.

JR said...

Thank you, Anonymous #1, for the link to Michael Lewis. We should pay attention to what he says.

JR said...

And thanks to Anonymous #2 for additional information on GS proprietary trading and HFT.

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