Goldman, God & the Great Vampire Squid

Catherine, News & Commentary on November 19, 2009 at 10:11 am · No Comments

Goldman Sachs has a political problem and the tension is rising daily as the housing market continues to swoon and unemployment grows.

Goldman’s business model is simple.

The investment bank uses taxpayer credit to engage in high risk speculation for its own account in a manner that prevents capital from circulating to the real economy.

This results in huge profits which Goldman uses to pay billions in bonuses to Goldman partners and bankers.

It also causes falling income and increased bankruptcies in small and medium size business which increases unemployment.

With unemployment over 10%, lots of educated people have the time to unpack and explain the Goldman model to everyone else. Consequently, Goldman’s business is de-mystifying daily in the blogosphere.

Throwing salt on open wounds, Goldman’s chairman recently said that they were doing “God’s work.

The response was not positive. Maureen Dowd of the New York Times quoted Rolling Stone’s Matt Taibbi, who labeled Goldman “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Then the TARP Inspector General nailed Secretary Geithner for shoveling money into Goldman through the AIG bailout.

Goldman countered by announcing that it was giving $500 million away to 10,000 small businesses while a number of Congressmen called for Geithner’s resignation.

The response was again not positive. Mark Gilbert, the London bureau chief for Bloomberg, wrote:

“Here’s another way of looking at this sudden burst of supposed generosity. Goldman has $16.7 billion stashed in its bonus pot from the record profit earned in the first nine months of the year, which works out at $527,192 per staffer.”

“That means those 10,000 small businesses the securities firm says it wants to help are worth the equivalent of about 1,000 Goldman employees. Alternatively, a Goldmanite’s average contribution to society is pitched at the equivalent of 10 small enterprises, based on that bonus-versus-charity calculation.”

“Even at the Stakhanovite work rates the firm legendarily squeezes out of its staff, that’s quite a stretch. The idea that one banker is worth 10 businesses is the kind of math that got us into this mess, with finance falsely elevated until it became an end in itself, rather than a means to providing services to the real economy.”

“The public isn’t likely to fall for this charade.”

Gilbert than ends his brilliant math lesson by also invoking Matt Taibbi’s label that Goldman is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Sounds like Goldman is getting a new brand.

To top things off, Goldman’s investors were hoping for vampire squid-like returns. Dismayed at payouts to bankers and philanthropy, they want a bigger piece of the pie.

Will the vampire squid get strangled by its own tentacles? After all, as the Chairman pointed out, there is a God. Stay tuned…

December 02, 2009

Who Would Want To Be A Vampire Squid At Christmas?
Telegraph.co.uk

December 01,2009

Goldman Sachs – Going Long Lead?
Catherine Fitts’ – News & Commentary

November 20, 2009

Investors Press Goldman For Bigger Share of Profits
Yahoo News

November 19, 2009

Fear of Double Dip in Housing
The Wall Street Journal

November 19, 2009

Geithner Blames Collapse On Previous Admin Even As Tim Was President Of FRBNY Under Bush; Resignation Time
Zero Hedge

November 18, 2009