Goldman Sachs Exec Goes to Washington and Leaves Dismayed [wealthwire]

Jim O’Neill, Goldman Sach’s Chairman of Asset Management, just spent a week in Washington D.C.

He assumed that the horrific nature of the looming fiscal cliff crisis would light some fires under politicians and get them moving towards a resolution.

Boy was he wrong. As he puts it in his latest article:

“After the discussions I had with people in DC. although this was not a major feature of any discussions, I did leave more concerned than I had been this time a week ago about the ‘fiscal cliff’. I’d been assuming for weeks that in order to avoid the 4% of GDP tightening that no deal would imply, it would be easy to find a deal…

“One has to hope that the economy will be sufficiently robust, despite the fiscal issues, for the Fed to shift its position. A combination of large fiscal tightening and pressure on the Fed to reduce its monetary friendliness doesn’t seem like a great combination for equity markets. Of course, the lack of fiscal tightening and no agreement for future fiscal tightening doesn’t seem like a brilliant recipe either. I hope it’s just my jet lag but I find myself pondering the following: usually countries will not deal with tough fiscal challenges unless markets force them.”

Unfortunately, if and when the market forces action, it may be far worse than the 4% hit to GDP that is expected.

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Goldman Sachs: the bank that thought it ruled the world

Goldman Sachs was ‘doing God’s work’ – but it is now being investigated for fraud. Harry Wilson reports.

Traders at the New York Stock Exchange


‘Long-term greedy” was the phrase that Sidney Weinberg, Goldman Sachs’s legendary managing partner from the 1930s to the 1960s, used to describe the American investment bank’s overarching strategy. Such a pious mission statement from a corporate titan would make a modern audience balk. However the phrase neatly encapsulates the way that Goldman Sachs has operated over the past 80 years, a period in which it has risen from being a little-known, slightly scrubby broker to the world’s most profitable, powerful and controversial financial institution.

When Lloyd Blankfein, Goldman Sachs’s current chairman and chief executive, was caught saying last year that the bank was doing “God’s work”, the contrast between Goldman Sachs’s own view of its business and what the rest of the world thought of it was vividly demonstrated.

His comments came just weeks after the firm was memorably described in an article in Rolling Stone magazine as a “vampire squid wrapped around the face of humanity relentlessly jamming its blood funnel into anything that smells like money”. Doing God’s work is the last thing most think Goldman Sachs is up to.

As Philip Pullman writes in his latest book, The Good Man Jesus and the Scoundrel Christ, “As soon as men who believe they’re doing God’s will get hold of power, whether it’s a household or a village or in Jerusalem or in Rome itself, the devil enters into them.”

Last Friday, those who believed that the devil was running the show at Goldman Sachs finally received the news they had been waiting for. America’s Securities and Exchange Commission (SEC) said that it was investigating the bank for misleading investors in so-called collateralised debt obligations, a complex financial product sold by the bank during the boom years of the Noughties.

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Goldman builds a bank for rich customers

Reuters/Brendan McDermid

Goldman Sachs Group, the major US bank has created an in-house bank to lend money to wealthy people and companies, aiming to make deposits less vulnerable to the volatile markets.

The move is in line with a strategy to turn Goldman Sachs into a private bank to serve rich individuals around the world, the Wall Street Journal reports. The new business will also lend more directly to corporations, particularly those, which do business with Goldman. The bank plans to boost its loan portfolio to $100 billion from $12 billion in April.

“It’s a private bank,” for its wealthy investing clients, Goldman’s CEO Lloyd Blankfein said. “We can afford to do that because we have the contacts and the balance sheet.” The shift in bank policy would allow wealthy clients an alternative to European banks which have recently pulled back from the sector, he added.

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Goldman Builds Private Bank []

Goldman Sachs Group Inc. is building an in-house bank to lend money to wealthy people and companies, in a significant shift that underlines the harsh business climate facing Wall Street since the financial crisis.

The New York securities firm, known for its aggressive trading and big corporate deal-making, is ramping up its activities to become a private bank to serve wealthy customers around the world. The new unit will also lend more directly to corporations, some of whom already make investments and do business with Goldman. Executives have set a goal of $100 billion in loans, up from $12 billion at the end of March.

Goldman Sachs is quietly building a bank to lend money to companies and the rich, in an effort to generate profits lost amid post-financial crisis regulations. Liz Rappaport has details on The News Hub. Photo: Reuters.

While Goldman says its financial investment in expanding its bank is a modest one, its ambitions represent a huge change of heart among the managers of the 144-year-old firm, including Chairman and Chief ExecutiveLloyd C. Blankfein.

Goldman has long been almost synonymous with Wall Street’s swashbuckling style and big bonuses, largely from businesses like trading and investment banking. Now, buffeted by a wave of new regulations, market turmoil and a sluggish global economy, revenue in these traditional powerhouses has fallen.

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Goldman: 75% chance the Fed will ease at next meeting [SoberLook]

Goldman’s latest research suggests that the Fed is likely to ease at the next meeting this month. This assesment is primarily based on their proprietary indicator called the GS Financials Conditions Index (GSFCI). As a backdrop, they point out that the US economy has slowed, as shown in the chart below. Both the nonfarm payroll growth and the CAI index (Goldman’s index of broad economic activity) have declined sharply.

At the same time the Financial Conditions Index has shown a substantial tightening.


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The Goldman Grift Shows How Greece Got Got []

By Reggie Middleton

Greece will burn economically because of financially engineered, grifted ways and it most definitely will not be the only country in the EZ to do so. I have made this unequivocally clear since February of 2010, over two years ago -reference the Coming Pan-European Sovereign Debt Crisis.

So who is responsible for such a potentially cataclysmic event and what can be done about it? Well, amazingly, I’ll answer it all in one post by combining a little reporting with some hardcore, truly objective, independent financial analysis. Ahhh, I love this new media blogging thingy! From Bloomberg:

Goldman Secret Greece Loan Reveals Two Sinners

Greece’s secret loan from Goldman Sachs Group Inc. (GS) was a costly mistake from the start.

You know, one sentence into this Bloomberg piece it already smacks of realism simply by indicating it was a mistake for an unsophisticated party to do business with Goldman. It’s a damn shame that such a statement can be so believable on its face without even an ounce of justification provided yet. It goes to show you exactly how many feel, deep down, Goldman actually manages to outperform. It takes money from the foolish, as opposed to earning it by being the so called best of the best. It is the best, but the best had marketing and grifting – not necessarily engineering the best solution for its clients. You see, most of the time the best solution for your clients are antithetical to both your bonus pool and margin expansion.

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