Wednesday, July 15, 2009

What's wrong with this picture?

Greetings good citizen,

Well, it seems today’s markets were quite as ‘exuberant’ as yesterday’s which I heard explained away as the old ‘buy the rumor and sell the news…’ BS.

Do you suppose it was ‘disappointment’ over the amount of profits declared by Goldman today? according to some sources Goldman has been the beneficiary of far more than a paltry 2.7 billion!

Let’s proceed to tonight’s offering so we can read how the MSM lauds its conquering hero…

Goldman Sachs' $2.7B Profit Shows Firm's Prowess
Published: July 14, 2009

Filed at 2:20 p.m. ET

NEW YORK (AP) -- Goldman Sachs is emerging as the king of post-meltdown Wall Street.

The New York-based banking giant took advantage of improving markets to widen the gap between itself and its competitors, earning more than $2.7 billion during the second quarter.

The result is a remarkably speedy recovery from last fall, when Goldman lost $3.29 billion in four months during the worst of the financial crisis. [You ain’t seen nothing yet…] Goldman, which was already the strongest financial institution heading into the financial crisis, has now staked its claim as the undisputed powerhouse on Wall Street with the ability to take on more risk than its struggling competitors.

''Goldman really is in a class by themselves,'' said Phillip Silitschanu, a senior analyst with Aite Group. ''They've always been the golden child of the market.'' [Once again we are left to wonder just who is this guy and why should we care what he thinks?]

That has been even more amplified during the recent credit crisis and ensuing recovery as credit and debt markets have started to open up. While other banks have been trying to preserve cash to protect against further losses, Goldman has been getting back to its core businesses that made it so profitable in the past.

Profits at Goldman, the first bank to report second-quarter earnings, came from strength in underwriting stock and debt offers, and higher-risk trading. Goldman's peers, meanwhile, have been stung by greater loan losses because of their focus in retail banking, and thus have had to stick with a more conservative approach to business. [Hold on Slim, didn’t Goldman, along with every other Investment Bank, petition the government to become ‘retail banks’? They may have paid back the TARP but I didn’t hear anything about their switching back to an ‘investment bank’ model…]

''Some competitors reined in risk-taking activity,'' said Cubillas Ding, a senior analyst with consulting and research firm Celent. Goldman's historically strong and disciplined risk management allowed it to enter trading where its competitors might have been more hesitant, Ding added. [Yet another ‘famous’ financial commentator heard from!]

Also during the second quarter, Goldman freed itself of restrictions tied to the government's Troubled Asset Relief Program. Last fall, as the credit crunch worsened and Goldman's competitor Lehman Brothers collapsed, the U.S. Treasury Department launched a program to provide $700 billion in funds to the financial sector. [Let’s not forget ‘who’ was running the Treasury at that particular time, nor should it be overlooked that this guy was the former CEO of…Goldman Sachs.]

Though it had adequate capital to handle the downturn, Goldman was compelled to participate in the program, receiving $10 billion. As part of the program, the government placed certain restrictions on banks, such as additional oversight and executive compensation caps.

Goldman, relying on its healthy capital base, paid back those funds in June, freeing itself of the added restrictions. Not all other banks have been able to repay their government debt yet. Bank of America Corp. and Citigroup Inc. have been among the hardest hit by the downturn and each received $45 billion from the government. [Um, it should also be mentioned that neither BOA or Citi were investment banks.]

The government is now in the midst of converting part of its loan to Citigroup for about a one-third stake in the company. Both Bank of America and Citigroup are expected to report second-quarter results later in the week. [The government’s gonna what? We could have owned them outright for a fraction of what they’ve been given already!]

Goldman's profit would have been even larger during the second quarter had it not recorded a one-time charge to repay the $10 billion to the government. The charge reduced earnings by 78 cents per share.

While Goldman was preparing to repay the government, it was also taking advantage of the thawing credit markets and a rallying equity market. With its own balance sheet intact, Goldman became a primary source for other companies looking for an underwriter to help them tap the reopened markets. [This is simply more ‘green shoots’ twaddle!]

''When times are bad, the thinking goes, go with the best of the best,'' Aite Group's Silitschanu said.

Goldman's equity underwriting division generated record revenue from the surging business. Trading revenue also soared, jumping more than 51 percent from the previous quarter and nearly doubled from the comparable period last year. Goldman was able to cash in on fixed-income, currency and commodities trading during the April through June period. [Wasn’t there a recent news item that more clearly explains how Goldman ‘earned’ its record profits? Something to do with some software?]

Goldman earned $2.72 billion, or $4.93 per share, after paying preferred dividends, for the quarter ended June 26.

Analysts polled by Thomson Reuters, on average, forecast earnings of $3.54 per share for the quarter. Profit also exceeded last year's fiscal second-quarter results. For that period, which ended May 30, Goldman earned $2.05 billion, or $4.58 per share.

Despite Goldman's strong earnings, its shares fell 39 cents to $149.05 in afternoon trading. Investors and analysts were widely expecting a big profit, and pushed shares higher by more than 5 percent Monday ahead of the earnings report.

It seems as though this anonymous reporter doesn’t have their facts straight. It seems Goldman made most of its money from AIG paying off on credit default swaps…roughly 13 billion worth.

And who decided to ‘rescue’ AIG rather than allowing it to go bankrupt? Wouldn’t that be former Bush administration Treasury Secretary, Hank Paulson, former CEO of Goldman Sachs?

This whole thing is one huge stinking turd but the MSM apparently doesn’t see it that way.

So what do you think good citizen? Is Goldman a ‘heroic’ enterprise or do the recent controversies over pirated software and Matt Taibbi’s damning report start to look more credible?

Because it’s not Goldman Sachs on trial here good citizen, it is the entire US government.

Thanks for letting me inside your head,


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