Register for Free
Post comments, receive updates via email, gain access to exclusive content, and more.
Spam Safe!
Email
A long while ago (September 2008), I wrote an article entitled " The Greatest Looting Operation in History" and followed it up with another entitled "America is Being Looted."
What shocked me at the time was how brazen the perpetrators were being in their efforts, almost as if they had no fear of being exposed or being asked any hard questions.
In an article that came out today, this was confirmed to an extraordinary degree.
Goldman Sachs $100 Million Trading Days Reach Record in Quarter
By Christine HarperAug. 5 (Bloomberg) -- Goldman Sachs Group Inc. made more than $100 million in trading revenue on a record 46 separate days during the second quarter, breaking the previous high of 34 set in the prior three months.
Trading losses occurred on two days during the months of April, May and June, compared with eight days in the first quarter, the New York-based bank said today in a filing with the U.S. Securities and Exchange Commission.
There is no possible way in a free market system where everyone has the same advantages and information for Goldman Sachs to sport a win-to-loss ratio of 46-to-2. Ergo, Goldman Sachs is running a gigantic scam at everyone's expense while the SEC, the Fed and everyone else politely looks the other way.
There are mountains of evidence pointing to the fact that markets trade in inherently unpredictable ways.
Because of this, really extraordinary traders are those that can keep their noses slightly, but consistently, above water. Turning in a win-loss ratio of 60/40 is considered extremely good. Getting to 70/30? Best to stop now and write a "trading guru" newsletter selling your system while it still works. But 80/20? Now you are just on a lucky tear that will soon be reversed in a humbling way. Given this, what would we say about a 96.9 to 3.1 ratio? (Thanks DavidC for the correct figures here).
That's what Goldman Sachs' daily win-loss ratio works out to and it speaks of something other than "being good" or "being lucky." This is just comparing Goldman Sachs' $100 million "win" days against their total number of losing days and I admit I have no idea what their actual win/loss ratio looks like on a trade-by-trade basis. But on a daily basis alone, this sort of performance cannot be chalked up to anything but an unfair advantage.
Anybody with even a minor appreciation of statistics knows that this represents something other than "being good." This represents an unfair advantage to a degree that is truly mind-boggling.
If this seems esoteric and therefore perhaps unimportant to you, I would like to point out that when it comes to trading, someone's win is somebody else's loss. Trading is a zero sum game.
Money is not created through the act of trading. It would be a mistake to think that Goldman Sachs somehow created this money through the act of their trading genius. For Goldman Sachs to win $100 million in a day of trading means that somebody else lost $100 million. Most likely a huge collection of somebody elses.
I would suggest that the most probable source of these funds, the ultimate loser, is the taxpayer.
This means that as Goldman wins, you lose, I lose, and our future gets diminished so that a pathetically small number of already obscenely rich individuals can continue to game a rigged system to their obvious and magnificent advantage. While I am sure that somebody, somewhere has convinced themselves that it is a good thing to allow Goldman Sachs to recapitalize itself in this way, obviously rigged markets are not a good idea for a country that depends on the willing flow of foreign funds, and they are also certain to misallocate capital.
Moving along, one thing I truly despise is when unfounded statements or opinions are inserted into an article and presented as fact such as this example.
Goldman Sachs’s trading results reflected the firm’s willingness to take on more risk during the period.
No, the results do not reflect "the firm's willingness to take risk." This is more likely than not a direct quote from the Goldman Sachs PR department.
If all a firm needed to do to enjoy outlandish trading results was to "take on more risk" then they'd all do it and - presto! - everyone would have higher trading profits!
That's just not how things work, unfortunately. Anybody who is turning in a ratio of winning-to-losing trading days of 46-to-2 is not trading in a fair and competitive manner.
Instead we might reasonably conclude, knowing what we know about how equities markets are supposed to work, that 46-to-2 reflects an unfair advantage, not a taste for risk, as the scribe put it. One could reasonably re-write that sentence to read:
"Goldman Sachs’s trading results reflected the firm’s clever use of lobbying funds and influence to skirt the rules that everyone else abides by. Their gain was your loss. "
What these trading results tell us, as clearly as one could ever hope in this day and age, is that Goldman Sachs (and likely other major recipients of bailout money) is gaming the system to their benefit and everybody else's loss.
I suppose it would be even clearer if we received individual, hand engraved notices informing us of this fact, but, for me, the presence of only 2 days of trading losses in an entire quarter is more than sufficient.
America, you are being looted, and the pirate's name is Goldman Sachs.
- cmartenson's blog
- Login or register to post comments
- 6489 reads
Print
Comments
Dr. M, your personal PM allocation is looking more and more reasonable with each passing day.
Captain Sheeple
WOW! ...how outrageous is that?
Part of me is saying "...that just can't be so in this country". The other part is getting angry.
Jeff
"If the American people ever allow private banks to control the issue of their currency...the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." Thomas Jefferson 1802
Hello Chris,
The data states that GS made more than $100m on 46 days and losses on 2 days. In other words they made gains on the other days but just not as great.
I've done a (very) quick calculation and between 1st April and 30th July there are 65 working days (I haven't accounted for bank holidays). So GS's actual win-to-loss ratio is 63 to 2 (96.92%).
DavidC
This is just unbelievable...
I have heard this store from other sources, but to hear it here makes it REAL. Thanks.
DavidC - great points.
So what we know is that GS enjoyed 46 days with more than $100 million in gains, 17 days with less than $100 million in gains, and 2 losing days.
So we might guesstimate that they "made" somewhere around $5 billion.
And using the more accurate 63 to 2 win/loss ratio changes the result to 96.9 to 3.1. Doesn't change it much, does it? (I've amended the post above to reflect this...thanks)
Chris,
I share your sentiments that collectively we are being ripped off by Wall St and the Fed. In the heat of the financial crisis, Bernanke stated that "we" have to save Wall St. in order to save Main St. Nonsense. After thirty eight years of fiat money and finance capitalism, its very clear that the few on Wall St. benefit mightily while the majority on Main St. get an ever shrinking piece of the economic pie. And the pie is propped up on ponzi debt.
Since 1970, nominal GDP has increased at an annualized rate of approximately 7%. Annualized inflation, as measured by the CPI, since 1970 has been approximately 4.5%. Hence, 65% of our "growth", and investing for that matter, is inflation gathering/shuffling. At this point, there is more inflation in the system than actual output. My father bought his first house in 1970 for ~ $50K. Today that house is worth ~ $500K. The house didn't increase in value it increased in price due to inflation. In fact, with time, structures depreciate so the inflationary gains are even greater than $450k.
Is it any wonder Wall St. inflation shufflers have thrived while the majority have struggled. And to add insult to injury, Wall St. used its unearned financial influence to increase taxes on wages and consumer goods while decreasing taxes on financial gains that gather inflation tax deferred.
You want to know why Bernanke fears deflation. It's not because people will buy less if prices fall. Look at I-pods and computers - falling prices increase demand. No, Bernanke knows that finance capitalism and Wall St. (founded on ponzi asset prices) will collapse without inflation.
Right now CPI prices and wages are falling. Bernanke can't quickly and easily stop that. But he knew he couldn't allow asset prices to fall any further so he handed free money to Goldman and others. I have no doubts Bernanke also spearheaded suspending FASB 157 (mark to market). Goldman's success is due to a beneficent central bank - now more than ever. What a sham(e).
Allow me to decode the above mentioned claim from Bernanke: We have to further decimate the middle class in order to save Wall St..
The AsiaTimes has a detailed article on this subject that opens with this:
Page 1 of 2
Goldman Sachs, the lords of time
By Julian Delasantellis
Just for the moment, let's pretend that James Cameron's 1984 The Terminator was being made for the first time today, and, instead of the evil robots emerging from the fatally misguided foundries of Cyberdyne Systems, they came from the dark laboratories of Goldman Sachs.
From out of the future, a warrior is sent back in time to warn the present.
"You still don't get it, do you? They'll find your money!! That's what they do! That's all they do! You can't stop them! They'll wait for you! They'll reach down into your bank account and tear its f*&^*^g balance out!"
http://www.atimes.com/atimes/Global_Economy/KH05Dj03.html
It's worth a read as it discusses some of the possible mechanisms used to generate the above mentioned kill-ratio. The author does not mention one interesting quote that appeared in the press regarding the code theft - that "in the wrong hands" the software could be used to manipulate the market...
history rhymes
And if that's not enough:
From the Washington Post (you may have to register):
http://www.washingtonpost.com/wp-dyn/con...
Excerpt below:
In other words, businesses that may have broken the law may not be charged if they owe funds to the government or are expected to contribute to the recovery. So, using that argument, drug dealers should be left alone because they contribute money to the local economy?!
I wonder if GS's enormous profits has something to do with GS's program trading methods, and, maybe some government help:
"That wealth is generated on computer systems that can handle greater trading volumes at ever increasing speeds. These platforms often rely on algorithms -- a sequence of instructions used for calculation and data processing -- that can spot unseen opportunities in the market and give their users a huge advantage measured in milliseconds.
For banks such as Goldman Sachs Group Inc (GS.N), the codes are worth a fortune and this value also make them a tempting target for thieves -- as appears to have happened with Sergey Aleynikov, a former computer programer at Goldman arrested by the U.S. Federal Bureau of Investigation last Friday.
...
"If you happen to have built a model that makes you even 200 milliseconds faster than me, you are in a much better position," said Sang Lee, managing director of research and advisory firm Aite Group. "You may be able to trade a thousand times before I even see what's going on and act on it."
http://www.reuters.com/article/ousivMolt/idUSTRE5667JR20090707
"At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajIMch.ErnD4
Now, look at this chart of the percent of program trading on the NYSE: http://www.swampreport.com/investments/program-trading-as-of-total-nyse-volume/ —this is about last time you will see a such chart, because:
"...the NYSE has taken action to make sure that nobody will henceforth be able to keep track of the complete dominance that Goldman Sachs exerts over the New York Stock Exchange. This basically ends our weekly Program Trading updates disclosed every Thursday indicating that Goldman has singlehandedly captured all of NYSE's program trading.
In an information memorandum released on June 24 (09-31), the NYSE Regulation team has announced the Decommissioning of the Daily Program Trading Report (DPTR)."
http://www.zerohedge.com/article/nyse-halts-transparency-feels-goldman-program-trading-disclosure-unnecessary
"A couple of months ago, we also learned through Zero Hedge that Goldman had profited greatly from a sweetheart deal with the federal government concerning a new program instituted by the Feds known as "The Supplemental Liquidity Provider" Program ("SLP"), launched this past Thanksgiving, which was supposed to provide "market liquidity" (i.e.: an ongoing, active market) for selected groups of 500 different NYSE stocks per SLP participant. As Durden pointed out to all who were interested, it certainly appeared to him that Goldman was the only active participant in the program.
http://www.dailykos.com/story/2009/7/6/750420/-Breaking:-FBI-Arrest-Opens-Goldman-Sachs-Pandoras-Box
Of course, GS itself would never use their program to manipulate the market "unfairly."
Of course,GS would not have told the NYSE to stop the DPTR.
Of course, the federal government would not be using the SLP and GS as a means to manipulate the market (e.g., plunge protection team) .
Or, would they?
c_w
A $100M/day for the next year will have transferred about 1/12 of the combined value of two of the nation's largest pension funds (CalPers and CalSTRS: http://www.latimes.com/business/la-fi-calpers22-2009jul22,0,5416427.story) to the upper scum at GS; in twelve years, they will have it all--every last penny. This seems like a system that will last a long time...
And if the money ain't comin' from such places, it ain't comin' from nowherz! Zerosum.
People "just don't get" GS--and well over a million of 'em wont be gettin' any pension because they don't get GS. Not that the people should be required to get anything: that was supposed to be the function of our "legal" system.
I, for one, have reached a level of rage that I never knew possible; I'm sure there are those who feel at least as angry, but who truly have nothing left to lose. I'm fairly confident that Goldman has created at least a small cadre of Timothy McVeys out there: some scattered individuals, some small and, maybe, large groups. This can't possibly go on for much longer without there being some horrific consequence...
And the real problem here is not that people "just don't get GS," it's that GSians are so insulated in their artificial golden cocoon that they "just don't get" reality. I'd bet my life savings this is coming to a head within a very short period of time. The time when I felt like I was one of the few who got GS has obviously come to a jolting end; now, it's who doesn't get it?