5 Responses to “The Economy Is Even Worse Than You Think” »»

1. ItsHardNotToBeACynic
   Comment by ItsHardNotToBeACynic | 07/15/09 at 1:29 am

   Huh? The economy is doing great! At least, if you work at Goldman Sachs. They reported a record quarter yesterday. The average salary at Goldman this year might hit $770K according to the NY Times.

   You may also recall that Henry Paulson use to be the head of Goldman before he became Bush’s Wall Street bail-out Czar.

2. Funny
   Comment by Funny | 07/15/09 at 6:34 am

   it has less to do with Goldman’s link to Paulson, and more to do with them being the only Wallstreet player left in operation.

   Business sort of comes to you when your the only player left.

   Time to get all Bell on them, and break them up into smaller companies that are “not to big to fail”.

3. Mike
   Comment by Mike | 07/15/09 at 7:19 am

   Funny, most of Wall Street thinks quite the opposite to you. Fron what I read and hear, if Goldman’s credit default swaps (CDS), contracts where Goldman had bought protection against certain bonds losing value, turned out to be worthless, Goldman would most likely have been insolvent and gone the way of Lehman Bros.. Given that Goldman bought most (all) of those swaps from AIG, this means if AIG went under and couldn’t pay under the swaps, Goldman would go under. Instead, the govt. pumped over $100 billion (that’s billion with a B) into AIG, part of which went in turn to Goldman, who was AIG’s sigle largest creditor via CDS. That’s in addition to the govt. giving Goldman direct capital.

   Contrast that with people who had Credit Default Swaps (CDS) with Lehman – they collected pennies on the dollar.

   There are plenty of Wall Street and international firms that are still in operation – only Lehman and Barclays have gone under. Of course, the other big firms are for the most part operating under constrained capital, but then again so is Goldman. Goldman is not succeeding because it’s the only game left in town. Most of their big gains this past quarter appear to be from their automated trading operations, that basically take advantage of weaknesses in other firms’ automated trading systems.

   Mike

4. ItsHardNotToBeACynic
   Comment by ItsHardNotToBeACynic | 07/15/09 at 8:52 am

   Hi Funny,

   Yep, Goldman is one of the last man standing. However, why did Paulson and company let Bear Stearns and Lehman fail, yet saved AIG, Merrill, and Citigroup with tax payer bailouts?

   As Mike pointed out, some of the tax payer money provided to AIG ended up going to Goldman. That tax payer money is now funding those $770K salaries at Goldman.

5. Mike
   Comment by Mike | 07/15/09 at 8:58 am

   Ooops, my bad – Bear Stearns went under, Barclay’s is still chugging along. Thx IHNTBAC.

   Mike

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