the finance industry / wall street

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no honor among thieves

flagp∞st (dayo), Tuesday, 6 March 2012 22:07 (five years ago) Permalink

The ex-Goldmanite op-ed that's lighting up the blogosphere:

o. nate, Wednesday, 14 March 2012 19:26 (five years ago) Permalink

this is not just a Goldman Sachs problem, but a Wall Street problem. Goldman was not alone in selling clients CDOs stuffed with shaky subprime mortgages, for which it paid the SEC $550 million a couple of years (and two Greg Smith bonuses) ago. Nor was it alone in pumping Russia full of debt in the late 1990s, nor was it alone in parachuting out of the market ahead of its clients in 1929.

Of course, this won't change the view of Republicans and the likes of Geithner and others.

curmudgeon, Wednesday, 14 March 2012 19:48 (five years ago) Permalink

"We used to make things in this company. Like synthetic credit products. And the clients liked them!"

s.clover, Wednesday, 14 March 2012 20:01 (five years ago) Permalink

like i said in another thread, if you started at Goldman Sachs when Henry Paulson was running things and you're looking at that as some sort of golden era of ethics and integrity, then you've wearing some pretty strong blinders or have a strange definition of ethics and integrity.

kurwa mać (Polish for "long life") (Eisbaer), Wednesday, 14 March 2012 23:50 (five years ago) Permalink

I'm slightly sympathetic to him because he's from a foreign country - like I could maybe see him arriving here and buying everything about ~america~ without too much skepticism

flagp∞st (dayo), Wednesday, 14 March 2012 23:53 (five years ago) Permalink

it is good that someone who was on the inside is taking a few good kicks at an obvious villain in a relatively well-respected and well-read forum. also, i don't want to jump on him b/c i'm positive that as we speak there's an army of well-paid flunkies working overtime and at Goldman Sachs's behest to tear him down as we speak.

that said, there is a certain naivete to his column.

kurwa mać (Polish for "long life") (Eisbaer), Thursday, 15 March 2012 00:02 (five years ago) Permalink

plus, i hope the he's got a nice stash of "fuck you" money tucked away somewhere ... or pictures of some Goldman Sachs bigwig doing something unspeakably vile (other than what they've done to their investors, the American taxpayers or the world-at-large).

kurwa mać (Polish for "long life") (Eisbaer), Thursday, 15 March 2012 00:07 (five years ago) Permalink

discussion of his bronze medal in ping-pong is a nice touch -- suitably egomaniacal yet somehow naive-seeming as well

mookieproof, Thursday, 15 March 2012 00:18 (five years ago) Permalink

yeah, they have to show that they retain the common touch even though they're still smarter-and-more-accomplished-than-pathetic-little-you-will-ever-be.

kurwa mać (Polish for "long life") (Eisbaer), Thursday, 15 March 2012 00:52 (five years ago) Permalink

dude was UK based, though I gather GS London culture was about the same as New York's.

boxall, Thursday, 15 March 2012 00:57 (five years ago) Permalink

only for the last two years of his career

flagp∞st (dayo), Thursday, 15 March 2012 01:00 (five years ago) Permalink

Ah right, good catch.

boxall, Thursday, 15 March 2012 01:07 (five years ago) Permalink

this story reminded me of this bit from a a long Goldman article the Times (UK) did a couple years ago:

[Brian Griffiths] is one of the bank’s international advisers and also acts as company pastor. ‘I had one guy who came to see me — I thought about his career — but he wanted to talk about the morality of banking. That was a long conversation,’ Griffiths recalls.

boxall, Thursday, 15 March 2012 01:15 (five years ago) Permalink

lol The Church of Goldman Sachs

kurwa mać (Polish for "long life") (Eisbaer), Thursday, 15 March 2012 01:17 (five years ago) Permalink

a long Goldman article the Times (UK) did a couple years ago


mookieproof, Thursday, 15 March 2012 01:21 (five years ago) Permalink

the author's a little fawning but there aren't many interviews with Blankfein & co. so it's a decent read

boxall, Thursday, 15 March 2012 01:25 (five years ago) Permalink

first woman partner at GS speaks about the nyt op-ed

strange how rosy the glasses get when reminiscing huh

dayo, Tuesday, 20 March 2012 11:54 (five years ago) Permalink

A not-too-sentimental GS reminiscence:,goldman-sachs-is-unveiled.aspx

This one seems pretty balanced to me.

o. nate, Tuesday, 20 March 2012 14:08 (five years ago) Permalink

IDK I think maybe people have started to read Matt Taibbi a little too literally? It's possible that things actually seemed better at one time at GS, or that not every investment banker and trader and manager in every department had an alter to satan on his desk at which he promised to screw over clients in every way possible.

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 14:08 (five years ago) Permalink

GS is the Duke basketball team of Wall Street sports.

dandydonweiner, Tuesday, 20 March 2012 14:27 (five years ago) Permalink

xxp I worked as a bond salesman on Goldman’s London trading floor in the early 1990s.

according to michael lewis's liar's poker, bond traders are the worst of the worst right?

dayo, Tuesday, 20 March 2012 14:38 (five years ago) Permalink

I feel like every book about every kind of trader makes that claim

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 14:40 (five years ago) Permalink

idk - I think the rogue's gallery in are all former bond traders

dayo, Tuesday, 20 March 2012 14:42 (five years ago) Permalink

Here's a more critical look:

Everyone knows there are sophisticated clients and "sophisticated clients." Your client trust shtick is tailor made to fleece the latter.

This reminds me of the old adage: If you don't know who the sucker is at the table, then it's probably you.

o. nate, Tuesday, 20 March 2012 14:46 (five years ago) Permalink

that is one of my favorite blogs, O.Nate.

dandydonweiner, Tuesday, 20 March 2012 14:47 (five years ago) Permalink

Everyone knows there are sophisticated clients and "sophisticated clients." Your client trust shtick is tailor made to fleece the latter.

This point needs to be made more. There's a HUGE difference between a hedge fund and an icelandic municipal pension fund. It's basically the larger scale version of why boiler room guys love lawyers and doctors as clients -- professionals with a high estimation of their own intelligence and some real money to invest, but whose professions actually don't require them to have any financial or investing acumen, so they're easily suckered.

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 14:55 (five years ago) Permalink

you can actually reverse that from the perspective of lawyers and doctors too

iatee, Tuesday, 20 March 2012 14:57 (five years ago) Permalink

Anyway I don't think Goldman is doing anything that different than anyone who trades in specialist merchandise (be it antiques, art, or whatever) just that they do it on a larger scale. If you don't know anything about antiques and you go shopping for something, you're likely to overpay, because only an expert really knows how much these things are worth. It's nice to think the salesman will sell it to you for what it's really worth, but perhaps a bit naive?

o. nate, Tuesday, 20 March 2012 15:09 (five years ago) Permalink

yup, in fact art dealers (and probably investment bankers) like to go after newly minted celebrities, athletes who just won their first championship, etc.

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 15:10 (five years ago) Permalink

difference being that GS hedges against their clients with their client's money

dandydonweiner, Tuesday, 20 March 2012 16:15 (five years ago) Permalink

Not sure what that means, unless you're talking about margin?

o. nate, Tuesday, 20 March 2012 16:23 (five years ago) Permalink

Actually, something I kind of don't get about investment banking: once a bank is both selling and trading for its own account, isn't it almost by definition betting against anything it sells? Like, GS has investment product X; if it thinks X is such a good investment, why not hold onto it? I'm not talking about underwriting, which is a huge part of their business, but investments where GS actually takes a position and then later sells the position to a "client" -- why the fuck would you ever want to buy what they're selling in that circumstance, if GS is really so smart?

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 16:28 (five years ago) Permalink

I mean I guess there are other reasons to sell things -- liquidity, short-term versus long-term, appetite for risk, etc. But the whole thing still sounds like a very funny business model to me, and this would be equally true for any investment banking firm.

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 16:29 (five years ago) Permalink

I thought the whole issue there was that they were trading against the clients with their own (ie., Goldman's own) money - not with the clients' money. If I was to put that in terms of the antiques dealer analogy, that would be more like selling a counterfeit antique - clearly wrong and illegal because it involves lying about the merchandise.

o. nate, Tuesday, 20 March 2012 16:42 (five years ago) Permalink

hurting, if gs feels like they have too much apple stock and owning more isn't worth the risk, and you feel like you don't have enough tech stocks and that position might be risky, both sides can gain. in theory it does not have to be a zero sum game.

iatee, Tuesday, 20 March 2012 16:44 (five years ago) Permalink

I mean they can't own everything in the world

iatee, Tuesday, 20 March 2012 16:45 (five years ago) Permalink

Don I think you are getting confused, although that bloomberg article itself is somewhat confusingly written. I believe if they WERE a hedge, that would be more defensible, since any investment bank would hedge its positions to "reduce risk." The problem is that if they weren't a hedge but a "bet," at least according to the critics making that argument.

the prurient pinterest (Hurting 2), Tuesday, 20 March 2012 16:46 (five years ago) Permalink

Uh, well I was making a point badly (although I sense you know what I was trying to say.) My bad.

From afar, selling securities to a client and then turning around and shorting those securities (as a hedge against their own long mortgage portfolio) isn't quite the level of sophistication in most specialist merchandisers. It's that level of speciality I think that separates traders in a hedge fund from an antique dealer. Seems like a lot of the positions that GS takes are with pretty complex instruments.

dandydonweiner, Tuesday, 20 March 2012 17:13 (five years ago) Permalink

That's a good point. Antiques dealers can't go short, afaik. So it's a bit of a different ballgame. Also, obv much bigger stakes are involved. I was mainly talking about the client/counterparty distinction and how it's a grey area.

o. nate, Tuesday, 20 March 2012 19:12 (five years ago) Permalink

ha, when i saw "goldman nuns" in the url i thought itnwas a reference to "some get shot locked down and turn nuns/cowardly hearts and straight up shook ones." like greg smith had "turned nun" #morningthoughts

i don't believe in zimmerman (Hurting 2), Wednesday, 21 March 2012 12:16 (five years ago) Permalink

three weeks pass...

stop us before we kill again:

s.clover, Thursday, 12 April 2012 16:55 (five years ago) Permalink

Ok this isn't exactly about "the finance industry" but I have been puzzling over the ideas of David Graeber, and I don't understand this:
The current financial system – based on central banks – really goes back to 1694 when a group of London merchants made a loan to the King of England to fight some war in France, and he gave them the right to call themselves "the Bank of England" and loan the money he owed to them to other people in the form of bank notes. That's what British money actually is - an IOU from the king, an uncashed check.

What I am missing in this formulation is how did the Bank of England "loan" "debt"? Are they lending the privilege of being owed money? Normally I thought debt was sold, not lent.

i don't believe in zimmerman (Hurting 2), Monday, 23 April 2012 22:25 (five years ago) Permalink

Let's use fantasy numbers, just to make the idea emerge more clearly.

We'll say the Bankers loan the King a million gold coins, each worth "ten" and he agrees to pay them back "twenty" for every "ten" he recieved. In one scenario, the Bankers just sit around waiting for their million "twenties" to dribble back in from the Exchequer, until they're all paid. Fine. They will make 100% profit. But they have to wait for it until the King coughs it up.

The smart Bankers realize that the King's promise to pay back is worth something. People trust it, sort of. They decide to monetize this promise to repay by dividing it up into twenty million notes, each worth "one". This is what the King promised, after all. Now they turn around and make loans, but instead of lending gold coins (the King has most of them atm), they lend these notes. They are as good as gold, because hey the King would never default, amirite?

The clever bit is that they lend all these "good as gold" notes at interest and announce they will take either gold coins or these notes back as payment for the principal and the interest. History ensues, to much hilarity.

Aimless, Tuesday, 24 April 2012 00:13 (five years ago) Permalink

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