By Trace Mayer, on December 7th, 2009
Goldman Sachs (GS) gangbangers are engaged in public service, or more appropriately pillaging, as fast as possible even while the victims are getting increasingly shrill in their protests. No means no and the gangbangers are not being respectful. Bankers, financiers, hedge fund managers and others are being exterminated under suspicious circumstances. Even senior gangbangers have issued guidelines for Goldman Sachs (GS) employees congregations in public.
You cannot make this stuff up. So, in the culture of Goldman Sachs (GS), if their employees start getting exterminated then how will it affect the stock and how can the situation be played for profit?
TENSENESS IN THE OFFICE
The Goldman Sachs (GS) gangbanger’s public pillaging is being increasingly revealed and the hundreds of millions, even billions, of people they have stolen from and wronged are getting rightfully upset. This is bound to create some tenseness and nervousness around the gangbanger’s hideout. Bloomberg’s Alice Schroeder, author of The Snowball: Warren Buffett and the Business of Life, reports:
The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank. … Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs …
The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.
My the tangled web that Goldman Sachs (GS) gangbangers weave.
WARNINGS
Lloyd Blankfein, Chief Gangbanger for Goldman Sachs (GS) and whose wife does not like to wait in line at charity events, proclaimed that Goldman Sachs (GS) was ‘doing God’s work’. Interestingly, CNBC reported, Lloyd Blankfein “added that he understood, however, that people were angry with bankers’ actions: “I know I could slit my wrists and people would cheer.”
 As the Huffington Post reported:
L’Osservatore Romano is reporting that Goldman Sachs is indeed Doing God’s work, and His Former Holiness Joseph Ratzinger has confirmed the unsolicited hostile takeover. Writing under his pen name Benedict XVI, Ratzinger verified that total control of the popular religion has been transferred to Goldman Sachs and His New Holiness Lloyd Blankfein.
But seriously, the Bible has many examples from Elijah with the chariots of fire to Daniel in the lion’s den of those who did God’s work being protected. And what type of work did Jesus do? Mark records:
And they come to Jerusalem: and Jesus went into the temple, and began to cast out them that sold and bought in the temple, and overthrew the tables of the moneychangers
But instead of relying on God’s protection the Business Insider has reported, “all Goldman Sachs employees received earlier this month. They were told not to organize small [12 maximum] parties even if no firm money goes to pay for them.”
So during the holidays remember to keep that Christmas spirit.
WAGING OF WAR
During the Panic of 1873 many investment houses went bankrupt. Tensions got so heated the United States Army was deployed to New York City to protect the bankers.
When the rich wage war its the poor who die in Afghanistan but when the cake eating poor wage war its the rich who died in France. This time around the Goldman Sachs (GS) gangbangers are going to want security provided by highly trained troops, or former troops, whose parent’s pensions have been stolen and whose best friends have died in their arms in foreign lands.
A few days ago I was talking with a friend who had just returned from an overseas war deployment with the United States Navy. I jokingly recounted how the armed forces protected the bankers in 1873 and asked him ‘What would you do if ordered to protect the bankers?’ He jokingly replied to the effect, ‘I would go, stand between the angry crowd and the banker and when the time was right I would grab the bankers and throw them to the crowd.’
EXTERMINATED VAMPIRE SQUIDS
I can understand why the leading gangbangers at Goldman Sachs (GS) are getting nervous as the number of parasitic vampire squids that have been exterminated keeps growing. Andrei Kozlov, Russian central banker, was riddled with bullets. Dead hedge fund managers include Seth Tobias, Oleg Zhukovsky, Rene-Thierry Magon de la Villehuchet, Michael Klein, Peter Wuffli and Kirk Wright.
The list goes on. It includes David Kellerman, Freddie Mac CFO and even James MacDonald the CEO of the Rockefeller family offices. I suppose we should wish their famlies the best; except for New York tax attorney William Parente. Whoever he angered worked corruption of blood and his wife and two children were also murdered. There are many more examples.
SERVICE BUSINESS
Goldman Sachs (GS) is primarily a service business and dependent upon the individuals who receive an average bonus of about $700,000 from a total pot of $16.7B. When a company’s workforce is so universally hated and have wronged so many millions, even billions, of people there is a possibility that retribution will be taken. If retribution is taken then how could that affect earnings and how could the company benefit from the unfortunate circumstances?
Wall Street is full of sociopaths and you cannot grow a conscience if you do not have one. Unfortunately, for this exercise we will have to analyze like the Goldman Sachs (GS) gangbangers; with the lack of a moral compass.
Key-man insurance can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the individual specified on the policy. The policy’s term usually does not extend beyond the period of the key person’s usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity.
Not only is there a very real threat to Goldman Sachs (GS) gangbangers from the outside, evidenced by the weapons permits and limitations on sizes of gatherings, but there is a potential conflict of interest from the inside. Sure, if Goldman Sachs (GS) gangbangers were to start targeting their own employees to benefit from key-man insurance it would be illegal and they should be prevented from receiving proceeds because of killer and slayer statutes.
But perhaps the gangbangers will get their vassal politicians to create ex-post facto legislation to provide immunity. As CNET reported:
A federal judge in San Francisco has tossed out a slew of lawsuits filed against AT&T and other telecommunications companies alleged to have illegally opened their networks to the National Security Agency.
U.S. District Judge Vaughn Walker on Wednesday ruled that, thanks to a 2008 federal law retroactively immunizing those companies, approximately 46 lawsuits brought by civil liberties groups and class action lawyers will be dismissed.
Which employees should the upper brass target? If you have spent the last 5-15 years putting in 80-100 hour weeks then how much would you sell your health for? An even better question may be how much would your boss sell your health for? Why should they share profits with you?
CONCLUSION
The Goldman Sachs gangbangers are among the largest hordes of parasitic vampire squids on the planet. The absence of their aggressive theft would increase the standard of living for millions even billions of humans. As a peacemaker who believes that force should never be used aggressively against innocent people or their legitimately acquired property I would prefer to starve the vampire squids I am opposed to and not be an instrument of extermination. It is unfortunate that the parasitic Goldman Sachs Gang has been and is so aggressive that their host victims may feel they have no other choice than to act in self defense by gunning for Goldman Sachs gangbangers.
Through the use of key-man insurance and ex post facto legislation to provide immunity for illegal behavior the Goldman Sachs Gang can tremendously increase the gang’s profitability and the bonus share for the senior partners. If the gang’s leaders do happen to find themselves in an uncomfortable situation then they will likely be bailed out, if possible. Nevertheless, I would not tamper with such a filthy instrument either way.
DISCLOSURES: Long physical gold but neither long nor short with GS and neither long nor short (except for being a US citizen) on any GS employees.
By Eldon Mast, on December 7th, 2009
President Obama convened a “jobs summit” at the White House Thursday morning. It was likely one of the more brilliant moves of his presidency.
One of the most notable early promises from Obama was that the massive stimulus measure signed into law earlier this year would save or create 3.5M American jobs. The President and the White House have continued to defend that claim vigorously since stimulus spending began.
The biggest challenge for them has been that even though spending has reduced the number of jobs losses, net job losses have continued and thus the unemployment rate continued to rise… until this week.
For months business groups, financial blogs, labor leaders, think tanks and lawmakers were lining up to offer the President their ideas about creating jobs. The Left arguing that more spending is required, while those on the Right argue that the government intervention and spending programs have been wrong all along.
So why hold a “jobs summit,” and underscore a 10.2% unemployment rate right at the dawn of an congressional election year? The move is brilliantly timed.
Based on the job loss data that we’ve been tracking here, we’ve said repeatedly that a return to net jobs growth will be real and measurable in the data by Christmas. This week showed more evidence that economic activity has now resumed to such a level that the unemployment rate has peaked, joblessness has started to fall, and jobs growth is now resuming.
So the timing could not have been better for Obama to go on record on Thursday: “We are going to be bringing together people from all across the country — business, labor, academics, not-for-profits, entrepreneurs, small and large businesses — to explore how we can jump-start the hiring that typically lags behind economic growth, but we don’t want to wait. We want to see if we can accelerate it.”
The summit came one day ahead of the government’s latest jobs report, which showed job losses all but ended during November and that the unemployment rate is now starting to fall from its peak level of 10.2%. Congressional Democrats who have been bracing for a rough election year in 2010 (owing in part to the weak jobs market), could not be more pleased to see a trend line that now clearly points to jobs creation in the months leading up to those elections.
The $787 billion economic stimulus package has now conservatively saved more than one million jobs — a point highlighted again by Vice President Joe Biden on Tuesday. And more projects are in the pipeline that will put Americans to back to work, including very exciting new infrastructure, Internet broadband, and high-speed rail initiatives.
As these new programs actually ramp up, as economic recovery continues to gain momentum, and as jobs growth resumes, Obama can now point to a stimulus plan that got the economy back on track, a TARP program that saved our large banks, and a December 2009 jobs summit that was the catalyst to employment creation in 2010. Perfectly timed.
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By Winton Bates, on December 4th, 2009
This question arose as I was thinking about the relationship between the determinants of happiness (i.e. survey measures of subjective well-being or SWB) and human flourishing at a national level.
Recent research has been able to explain around 90% of inter-country differences in average SWB in terms of average income levels, enough money for food, healthy life expectancy, friends to count on, perceptions of freedom, corruption, charitable donations and church attendance. (See: John Helliwell et al, NBER Working Paper 14720.) It is not surprising that these factors affect well-being but it is hard to accept that items on this short list could explain as much as 90% of variation among countries in average well-being. Other factors that might also be thought likely to affect well-being include education, environmental quality, democratic institutions, and participation in cultural and sporting activities.
In the case of education, some studies have shown that while higher levels of education tend to be associated with higher levels of SWB, the effects of education tend to drop out when other factors such as health status and income are included in models. Education improves health and income-earning potential and thus indirectly contributes to SWB. Furthermore, the importance of education to individual well-being does not depend solely on its impact on satisfaction with life or happiness. Education could arguably still be good for people even if it did not make them feel good.
It is possible that similar considerations may apply with regard to environmental quality. For example, water and air pollution are detrimental to health and longevity. Furthermore, arguments advanced in favour of preserving the natural environment do not rest solely on the contribution it makes to the emotional well-being of humans.
However, there does not seem to have been as much research done on the contribution of environmental quality to SWB. This may be because of the difficulty of interpreting available survey data relating to perceptions of the natural environment.
The World Values Surveys include questions concerning the priorities that people give to environmental protection. These surveys show that the proportion of the population who consider that higher priority should be given to environmental protection than to economic growth tends to be somewhat higher in high-income countries with relatively high average SWB. These results might reflect what Ronald Inglehart has described as a shift toward postmaterialist values in advanced industrial societies rather than dissatisfaction with efforts to preserve the environment.
The Gallup World Poll asks respondents specifically whether they are satisfied or dissatisfied with efforts to preserve the environment in their country. Some characteristics of countries in which high and low proportions of the population are satisfied with efforts to preserve the environment can be compared in the chart below. The other variables shown in the chart are: per capita GDP expressed as a percentage of that in the country with highest per capita GDP (United Arab Emirates); average quality of life (data from the Gallup World Poll expressed in percentage terms); government effectiveness -perceptions of the quality of public services; and regulatory quality – permitting and promoting private sector development. (The latter two indexes are sub-indexes of the World Bank’s suite of governance indicators, converted to percentage terms such that the country with lowest rating has a score of 0% and the country with the highest rating has a score of 100%.)
The chart hows that satisfaction with efforts to preserve the environment tends to be somewhat greater in countries with higher average incomes. The factor that stands out most, however, as a characteristic of countries in which there is greatest satisfaction with efforts to preserve the environment is government effectiveness.
Countries which rate highly in terms of both satisfaction with environmental efforts and government effectiveness include Singapore, Austria, Switzerland and New Zealand. At the other end of the scale, countries which combine low ratings in terms of both of these factors include Mongolia, Ukraine and Pakistan.
By Rok Spruk, on December 4th, 2009
From Alberto Alesina and Silvia Ardagna (link):
“We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis”
By Rok Spruk, on December 4th, 2009
The Economist published a thorough discussion (link) of China’s currency policy and reasons why yuan is unlikely to re-valuate any soon.
By D H Smith, on December 4th, 2009
From Politico 44: You’re invited — On the jobs summit list …
“CONFIRMED ATTENDEES INCLUDE: Eric Schmidt, Google; Randall Stevenson, AT&T; Surya Mohapatra, Qwest ; Frederick Smith, Fed Ex; Brian Roberts, Comcast; Bob Iger, Disney; James McNerney, Boeing; Andrew Livens, Dow; Peter Solmssen, Siemens; Stephanie Burns, Dow Corning; Phaedra Ellis Lamkins, Green for All; Reed Hundt, Coalition for the Green Bank; Larry Mishel, EPI; Alan Blinder, Princeton; Paul Krugman, Princeton; Joe Stiglitz, Columbia; Bob Greenstein, Center on Budget and Policy Priorities; and Jeffrey Sachs, Columbia. PLUS SMALL BUSINESS OWNERS, including David Ickert, Air Tractor; Woody Hall, Diversapack; and Rose Wang, Binary Group. AND Anna Burger, Change to Win; Leo Gerard, United Steel Workers; Joe Hansen, United Food and Commercial Workers; Randi Weingarten, AFT; Mayor Frank Cownie, Des Moines; Mayor Julian Castro, San Antonio; and Mayor Ed Pawlowski, Allentown, Pa.”
In other (Grayling) words, we have (1) big contributors whose large corporations have been laying off workers, (2) union leaders who represent barely one-in-ten US workers and whose grasping has sent jobs overseas, (3) leftist economists, (4) war-horses of the DC policy establishment, (5) members of the red-green coalition, (6) political allies, and (7) a few small business people of whom nothing is known.
THE CRISIS IN EMPLOYMENT IS REAL. Nothing that will come out of this jobs summit will have any effect on it, however. Exhorting industry to hire will not. Shaming banks into extending more credit to business will not. Temporary subsidies and $3000 new-hire tax credits will not. Make-work schemes will not. Enterprises will not hire or commit any new resources as long as their tax and regulatory regimes are totally unsettled, as they are with this anti-enterprise statist administration. Business owners do not know what they face in terms of higher taxes and giant mandates for health care, cap-and-tax, and other pet “make-the-rich-pay” schemes of the left. But they do know for certain that these things will be burdensome, and maybe fatal. No sensible business person will hire or invest under such threat.
Better to milk your business for cash to consume while you can. Maybe now’s the time to move offshore. The Chinese Communists are more business friendly than the US Democrats, and probably easier to deal with than the United Steel Workers or United Food and Commercial Workers.
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By Rok Spruk, on December 3rd, 2009
Reserve Bank of Australia decided to continue the increase in benchmark interest rates by 25 basis points to 3.75 percent in the light of short-term inflationary expectations (link). Here (link) is a brief macroeconomic outlook of Australia.
By Claus Vistesen, on December 3rd, 2009
If the theoretical discussion in the context of monetary policy, through most of 2009, has been centered on the different tools disposable to central banks in the form of unconvetional measures it seems almost certain that 2010 will be all about putting theory into action. Most notably is of course the much debated concept of exit strategies from quantitative easing (or enhanced credit support in the case of the ECB), what it means to really exit, how to exit, and when to exit.
Starting with the last point the G3 central banks have pretty all indicated that the latter part of 2009 and beginning of 2010 would see a gradual, but firm exit from quantitative easing and thus, essentially, unwinding of asset purchases and extraordinary liquidity provisions. In terms of how and without going too much into details all three central banks have clearly communicated how they intend to unwind QE if and when they see it fit. Finally, and on the first point it is naturally much more difficult since you can really only answer this question ex-post.
As I argued recently communicating an exit strategy may be quite simple not least since this task appeals to the more technocratic discourse which central banks master with ease, but actually performing one in practice may not be so easy. Recent evidence seem to vindicate this point.
Consider then the 12-month loans from the European Central Bank set to end with the last allotment the 15th of December where the ECB, according to Bloomberg, will lend as much as 150 billion euros ($227 billion). Now, the fact that demand for this tender will large is not so important but that it comes at this point in time when markets and the economy seem decidedly fragile is quite another;
(quote Bloomberg)
The ECB, which may detail conditions for the loans tomorrow, will lend banks 150 billion euros ($227 billion) in the Dec. 15 tender, according to the median of 19 economists in a Bloomberg News survey. That’s double the 75.2 billion euros banks drew in September, though less than half the 442 billion euros allotted in the first tender in June. The ECB will offer the loans at a fixed 1 percent, its current benchmark rate, 18 of the economists said.
The ECB has already signaled this month’s 12-month loans are likely to be the last as it starts to scale back its emergency lending to banks. With financial markets jittery after Dubai last week said it would seek to delay debt repayments, and Greece’s ballooning budget deficit pushing up its borrowing costs, European banks may take the opportunity to stock up on the ECB’s cheap cash.
“Take-up could potentially be very large, it’s the last opportunity to get into what could be a nice little earner,” said James Nixon, co-chief European economist at Societe Generale SA in London, who expects demand to total 200 billion euros. “Given the wobbles about Greece and Dubai, the ECB will cross their fingers and hope the 12-month tender goes off without too much of a problem.”
Clearly, today’s ECB meeting will tell us a lot, not least in relation to whether the ECB will be offering this final tender at a fixed rate or, in foresight of excess demand, deploy a variable rate. As Societe Generale points out in their latest ECB watch, Trichet and co seem very eager to remove liquidity as soon as possible as they consider the risk that banks’ operations may become too dependent on them. Naturally, I agree with this position, but as ever the ECB risks facing some hard questions in the context of e.g. a double dip recession in Germany, a blowout in Spain or Greece (which is coming), or if suddenly an event akin to the Dubai unravelling enters the stage to disrupt markets. Especially on the second point, it will be very interesting to see how intra-Eurozone spreads react to the unwinding of bank funding as I have long suspected (as well as many others) that the liquidity provided by the ECB has been used to fund the widening fiscal deficits in the Eurozone.
Elsewhere in the G3 or more specifically, at the BOJ any talk of an exit from QE was temporarily halted this week as the BOJ held an emergency meeting where the central bank responded to the increasing woes of the government by committing to a 10 trillion yen ($115 billion) program to supply loans to commercial banks at the prevailing refinancing rate of 0.1%.
(quote Bloomberg)
The central bank yesterday said it will offer three-month loans to commercial banks at 0.1 percent under the new facility. Governor Masaaki Shirakawa stopped short of boosting the monthly target for government-bond purchases from 1.8 trillion yen, a step analysts said may be taken within months.
The decision followed escalating warnings from Prime Minister Yukio Hatoyama’s government about the danger of prolonged consumer-price declines, exacerbated by the surge in the yen to a 14-year high. By contrast, Shirakawa, who met with Hatoyama today, in recent weeks raised his economic assessment and announced plans to end some emergency lending programs.
Shirakawa’s announcement “aimed to explicitly show the BOJ’s stance to cope with deflation and strong yen pressures proactively with minimum action,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo, who previously worked at the Bank of Japan. “We look for the bank to be eventually pushed into taking further actions to satisfy the government.”
As is readily clear, the decision by the BOJ to re-enter, as it were, QE follows mounting worries in the government about an annual deflation rate of some 2% and a JPY trading close to 80 to the USD which is not fun when you are dependent on exports (not to mention that Japan has also lost competitiveness to its main Asian rivals). It is of course particularly interesting to note the idea of the BOJ “satisfying” the government which seems a farcry from the situation in Europe where Trichet couldn’t give a sh’te about the cries from Eurozone government leaders. In this way, we should not be surprised to see the BOJ announcing that it is about to step up the purchase of government bonds. Gleen Macquire from Societe Generale (who is very good on Japan mind you) estimates, according to Bloomberg, that monthly government-debt purchases need to exceed 2.2 trillion to 2.5 trillion yen to have a “meaningful effect.
Of Theory and Practice
The two examples above show that while exit strategies may be very nice and handy in theory, they are bit more difficult to initiate in practice. In this respect, it is important for me to emphasize that I am no QE apologist who simple believes that liquidity provisions should be provided indefinitely and without a critical view of the underlying circumstances. However, at this point in time the central banks may be playing a dangerous game, especially in the case of the ECB where I would expect it to be a bit more difficult to simply turn on the tab again if it turns out that the initial decision to exit was premature. In this sense, it is the strenght as well as the weakness of the ECB that it tends to climb onto a very high horse in relation to regime changes and major policy reversals (although to be fair, the ECB has repeatedly stated that it is not committed either way).
In any case, I will be following the QE exit stragies played out before us in real time with some interest since they are bound to provide important precedence for future policy makers.
By Eldon Mast, on December 3rd, 2009
On Wednesday the Fed released its summary of comments received from its 12 regional districts in the November time-frame. The notes represent a collection of comments from businesses and other contacts outside the Federal Reserve and does not necessarily represent the views of Federal Reserve officials.
The regional reports indicate that economic conditions continue to improve across the U.S. since the last report and in general represent the best economic reports of 2009.
The good news highlights are summarized below:
Boston–results show signs of improvement. Some firms are starting to hire or plan to do so next year. Most businesses expect the recovery to take hold in 2010.
New York–The economy has gotten better. No indications of significant price pressures. General merchandise retailers say sales have improved. Signs of a pickup in tourism in New York City. District auto dealers reported a rebound in sales.
Philadelphia–Manufacturers reported an increase in shipments. Retailers indicate sales have been rising.
Cleveland–Staffing firm representatives report an uptick in job openings across a swath of industries.
Richmond–Housing, retail and banking economic activity increased. The residential real estate sector continues to benefit from tax credits for home buyers.
Atlanta–A majority of retailers described activity as exceeding their modest expectations. Office, industrial markets, and commercial construction finally showed signs of bottoming out at low levels. The pace of layoffs has slowed.
Chicago–Economic activity is up. Business spending included an increase in temporary hires.
St. Louis–Economic activity showed signs of improvement. The sales outlook among the retailers for the rest of the year shows 58 percent of the retailers expect sales for the rest of the year to increase or remain unchanged over 2008 levels.
Minneapolis–Overall economic activity was up. Services, manufacturing, energy, mining and residential real estate actually saw moderate increases and consumer spending has stabilized. Labor markets showed signs of improvement.
Kansas City–The economy expanded modestly in October and early November. Retail sales increased and were expected to keep doing so. Manufacturing grew moderately. Residential real estate recovered further.
Dallas–Economic conditions have firmed over the past six weeks. Activity improved in several industries, such as high-tech manufacturing, paper, petrochemicals, staffing services, housing and energy.
San Francisco–Economic activity appeared to pick up modestly. Consumer demand showed signs of improvement. Agricultural producers reported stable sales. Demand for housing showed further modest improvement and banking contacts reported largely stable loan demand.
Overall the economic recovery continues to build momentum.
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By Rok Spruk, on December 2nd, 2009
The Economist discussed the return of deflation in Japan (link). Meanwhile, the Bank of Japan has published an interesting publication of macroeconomic overview of the Japanese economy (link).
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