Goldman Sachs and Helicopter Ben

From the Daily Capitalist comes this piece on why Goldman had a perfect trading record:

Goldman Sachs and Helicopter Ben

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You may ask: how is that possible? Are they that good? The reason is that they are taking advantage of free money from the Fed:

“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

The trading results, which helped the banks report higher quarterly profit than analysts estimated even as unemployment stagnated at a 27-year high, came with a big assist from the Federal Reserve. The U.S. central bank helped lenders by holding short-term borrowing costs near zero, giving them a chance to profit by carrying even 10-year government notes that yielded an average of 3.70 percent last quarter.

The gap between short-term interest rates, such as what banks may pay to borrow in interbank markets or on savings accounts, and longer-term rates, known as the yield curve, has been at record levels. The difference between yields on 2- and 10-year Treasuries yesterday touched 2.71 percentage points, near the all-time high of 2.94 percentage points set Feb. 18.

Read the rest here
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And then there's this

Rigged-Market Theory Scores a Perfect Quarter:
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Of course, no matter what the question is these days, it seems the answer from Goldman always is: We’re a market maker. When senators ask about e-mails that show Goldman telling its sales army to dump crappy mortgage bonds from its warehouse on its clients? Market maker. When the e-mails show Goldman created the crappy deals? Market maker. By Goldman’s definition, an Amway salesman pitching energy drinks to old ladies in nursing homes would qualify as a market maker. It’s all just matching buyers and sellers to create liquidity, you know.

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Here's Nathan's view on the above piece:

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What’s pretty clear to me right now is that the markets are completely controlled by very few entities – they have been captured. And let’s think about the implications of this, because to me it plays like some James Bond (ridiculous) or Austin Powers (funny) movie, you know there’s always the evil villain in the background whose mission is to RULE THE WORLD, ba, ha, ha! Let’s just say it’s not a coincidence they called him “Goldfinger.”

Well guess what? It’s happened – only sadly this is no movie, it’s for real.

And just think about this. Those four banks that had perfect records are so powerful that should any of the managers of those companies simply turn off their trading computers, the removal of that liquidity would set off a chain of events that could literally collapse the markets of the entire world – just like the taste we got last Thursday but was quickly reversed.

Is this not nearly the power the President of the United States has? We have allowed the power to concentrate into so few hands that we have in effect given them the power to devastate the globe in nearly an instance. The people running these firms did not go through a public vetting process and they do not work on behalf of the people. Think about that – it never should have been allowed to happen and now that it has, we absolutely need to take action.

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Goldman Sachs Overview

In a post that really needs to be read in its' entirety, The Automatic Earth takes a big picture look at all the happenings around the world, forming a giant ball of toxic sludge ready to make landfall on the world's economies.

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New-fangled Fed currency swaps with central banks will run into the trillions, means America is bailing out foreigners. But America is very simply once again through backdoor tactics (never let a crisis go to waste) bailing out its own big banks.

Over the weekend, Obama was on the phone with Merkel and Sarkozy, calling for strong measures, and they said: "Sure, we got "strong" down, but we’re not bailing out your guys, boyo. So show us the money."

And so he did. Europe's central banks are buying up PIIGS sovereign debt as we speak -partly with Fed (US taxpayer) money-, and who do you think are the sellers? SocGen, Deutsche, Goldman, JPMorgan. Want to bet? No need to thank me, Mr. Grayson, glad to be of service.

Moreover, and this would be the topic of the day if we hadn't gotten immune to the immoral hazard of it all,

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US regulators are still searching for the cause of last Thursday's market plunge, or so they'd like us to believe. And whether the 1000 point drop was caused by either Goldman, software malfunction, fat elbows, trained dolphins, your "kind" of waitress, or Chinese hackers, one thing is certain: the US government inability to either figure out what went on, or, alternatively, to spin a good lying tale around the whole "event", will keep a lot of people out of the stock market.

For all they know, it may happen again tomorrow morning, wiping out all they have. Then again, the lower the trading volumes, the easier -and cheaper- it gets to make the stock markets look good. Still, lots of investors will have moved into gold, but much of that is just paper. And yes, gold will be fine down the line, but not in the immediate future. Think: getting a haircut administered by a lawnmower.

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Read the rest here

Goldman Sachs' moral obligation

I think I could go on talking about Goldman Sachs' moral obligation for a couple of hours and if moral obligations were the law, I think I could do a pretty good job of convicting them in a court. Goldman Sachs' moral obligation to Wall Street? Where is Goldman Sachs' moral obligation to society? Do we, as a society, believe companies can do anything that isn't against the law even if it hurts millions of people? Do drug companies have any obligation to keep new forms of biological weapons that could wipe out mankind from escaping into society if isn't against the law?

Goldman Sachs' moral obligation to Wall Street

(Fortune) -- After much fanfare, the shareholder meeting at Goldman Sachs ended Friday, much as the world ends in T.S. Elliot's, The Hollow Men: "Not with a bang but a whimper."

Up for a vote by shareholders was the separation of the chairman and CEO positions at Goldman, which are currently held by Lloyd Blankfein. In support of the proposal, Julie Tanner, Assistant Director of Socially Responsible Investing at Christian Brothers Investment Services, said in a statement: "While separating the positions of Chair and CEO is not a guarantee against future scandals, it does provide another layer of checks and balances and could improve the board's ability to oversee the activities of the company."

Meanwhile, Proxy Democracy, which helps investors keep track of the actions of institutional shareholders, reports that both AFSCME's employee pension plan and CalPERs voted in favor of the measure. The Florida State Board of Administration and the Ontario Teacher's Pension Plan also voted in favor, according to industry watcher, Pensions & Investments.

Against the measure, and in favor of the chairman and CEO positions being held by the same person, Goldman (GS, Fortune 500) wrote in its proxy: "The combination of our Chairman's ability to call and set the agenda for Board meetings with the CEO's intimate knowledge of our business provides the best structure for the efficient operation of our Board." (Emphasis added.)

In the end, the Goldman position prevailed......

Read the rest here

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In the meantime, here's how other countries handle the problem:
Bankers jailed, sued as Iceland seeks culprits for crisis