For as Balzac wrote, “Behind every great fortune there is a great crime.”
Where is this crime heading?
Record Wall Street profits are indeed rolling in for the ultra-secretive globe-strangling (increasingly tight with Asia) Goldman Sachs, which just so happens to specialize in investment banking, ie. underwriting and advising/enabling mergers and acquisitions; and credit markets, where most of their profits are coming from now. GS provides a dual service in advancing a global, private market order: assisting in mergers & acquisitions while aiding and abetting the privatization of the world inside a $27 trillion credit market.
Now, just how do they do it? For starts, GS is one of the top operators here, and this elite society runs the government - hell, de facto they ARE the government.
Thus, more important to note than the profits these pigs are swilling in (set out in the IHT article below), is the long-term planning and the trends implied in the continuing sell-off of the USA they aide and the massive conflicts of interest (to put it nicely, as in: they have privatized the government onto themselves) inherent in Goldman-US Gov positions, with Hank Paulson now residing as honorary treasury secretary, Stephen Friedman fresh off a 3-year stint on Bush's National Economic Council, Robert Zoellick (in on Trade and State), and Josh Bolton as a Bush policy adviser (now his friggin' Chief of Staff) -- public service posts long since privatized in a tradition of Goldman-connected bankers and lawyers, like JF Dulles & R. Rubin (Clinton Administration) for example.
And GS works all sides of this New Market Order:
The Economist notes in admiring tone: "Indeed it has become harder to distinguish between who is a Goldman client and who is a Goldman competitor....In terms of its investment banking, Goldman now finds itself on so many sides of a deal simultaneously that the mind boggles."
http://www.economist.com/opinion/displa ... id=6850300
More on here's how they do it:
The most cited example is its role in the recently completed merger of the New York Stock Exchange and Archipelago, where it represented both sides while having an ownership stake in one, an ex-chief operating officer on the other, and an underlying business (trading) which had customers whose interests in competitive markets potentially diverged from Goldman's own interest in consolidation. In America this is considered banking nirvana—fees from all sides and clients who, mostly, do not recoil.
So here's the latest good news for Goldman, bad news for us:
Visions of bonus heaven in Goldman Sachs profit
http://www.iht.com/articles/2006/12/13/ ... oldman.php
Money is not supposed to grow on trees. Unless you happen to work at Goldman Sachs.
The investment bank reported earnings Tuesday that left jaws agape on Wall Street. Quarterly profits soared 93 percent. The bank earned nearly as much per share in 2006 as it had in the last two years combined, both of which were also record years. Immediately after the results were released, they were labeled the best ever by an American investment bank.
Investment banking earnings are often proxies for the health of the American and global economy [that is, the economy working for the top 1% of the population - Gouda]. And conditions have been ripe for Goldman and its competitors to mint money.
Stock markets have been on a tear for months, while credit markets — far bigger than the equity markets — have continued to be robust. Credit derivatives continue to grow at a geometric pace, with $27 trillion outstanding. Opportunities abound to invest in companies, trade securities or advise clients in markets around the world, including China, Russia and the Middle East.
Private equity firms continue to buy increasingly large companies — witness the Blackstone Group's $36 billion acquisition of Equity Office Properties Trust, the nation's largest office-building owner and manager, a deal Goldman advised on. And hedge funds, which account for 40 to 80 percent of trading in certain markets, represent significant profit-making potential for Wall Street — and, of course, for Wall Street's persistent leader.
Even David Viniar, Goldman Sach's cautious chief financial officer, sounded vaguely optimistic.
"Our economists' view is that we will continue to have good economic growth, somewhat slower in the U.S., somewhat better in Europe and very good in Asia," Viniar said. And "our business tends to be tied to economic growth more than anything else."
Like many universal and investment banks, Goldman Sachs has transformed its business to capitalize on sea changes in the capital markets, particularly new opportunities in far-flung markets and a shift from issuing and trading plain-vanilla stocks and bonds to building and trading complex derivative products. That shift is apparent in the makeup of Goldman's revenue.
And yet Goldman's size seems to insulate it from downturns in some of its businesses. For example, the firm has aggressively developed internal hedge funds for wealthy investors, which generate high fees for Goldman.
Big profits now, but GS did not coin the phrase "long-term greedy" for nothing.
On a final note, from The Economist article cited above:
"But it is also possible that Goldman's growth is a bit of Oz, a magical name obscuring something far more ordinary behind the curtain."
On edit: added Balzac quote; minor edits for clarity