What is Goldman Sachs, exactly?

The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS), is a bank holding company that engages in investment banking, securities services and investment management. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street but has its secondary office at 30 Hudson Street, Jersey City, New Jersey.[1] The firm has offices in all global financial centers and acts as a financial advisor and money manager for corporations, governments, and wealthy families around the world. Goldman offers its clients mergers & acquisitions advice, underwriting services, asset management, and engages in proprietary trading, and private equity deals. It is a primary dealer in the U.S. Treasury securities market.

According to Goldman Sachs they 'do' a number of things. This from their own advertisements:

Advising

• Asset Allocation
• Environmental Markets
• Mergers and Acquisitions

Financing

• Bank Loans
• Debt Financing
• Equity Capital Markets
• Lending

Investing

• Asset Management
• Bank Deposits
• Closed Ended Investments
• Mutual Funds
• Private Equity
• Private Wealth Management
• Securitised Derivatives

Securities

• Clearing Services
• Execution Services
• Fund Administration
• Pensions, Endowments and Foundations
• Prime Brokerage
• Products
• Securities Lending Programs
• Transition Services

Research

• Global Investment Research

Well well, this Sachs Goldman is something to behold. One hundred and forty years old. My god, almost as old as Bob Hope was at the time of his death, if I recall correctly.

Now I am not an economist. And I certainly never maintained much of an economy, having lost everything in the crash. Which crash? Never much matters. Crashes will always be with us, just like Goldman Sachs.  And I might add, whether we like it or not.

I have decided however, with all the hubbub and ado these days about such matters as investment banking, and hedge funds, and geniuses of high finance like Bernie Madoff (oh and Madoffs will always be with us also), to examine this conglomerate from the point of view of a peasant.

But I cannot take on such a burden without breaking Goldman Sachs down to the basics in terms of analysis. So with that rather long and engaging introduction (I mean you are engaged are you not?) let us begin the impossible.

ASSET RELOCATION

Now, it would seem to anyone with a degree in Anthropology that this phrase is rather simple to understand.

You have an asset in one place. And you take that asset and put it elsewhere. And it is this kind of genius that has made Goldman Sachs what it is today. I contacted a friend of mine, Sleepin' Jesus who also is in the asset relocation business. He is a trucker. But you may be surprised to learn that GS is into something a little different. I mean they really do not even own any trucks.  According to their own advertisement, asset relocation would be overseen by GS:

The Global Investment Strategies (GIS) group offers global expertise in such areas as strategic asset allocation, liability-driven investing and active risk budgeting for institutions.

• Advises based on the sound principles of modern finance and executes through proprietary models
• Recommends both general and Goldman Sachs Asset Management (GSAM)-specific portfolio solutions
• Provides a framework and solutions for pressing investment policy issues
• Delivers economic and financial forecasts for global markets
• Maintains ongoing dialogue with clients to generate best research ideas

Now I called them, at the number provided, and they insist that you must have an asset in the first place in order to qualify for their aid. I told them I had a computer and a table and a chair and a 32 inch TV and they hung up on me.

So, we must assume we have an asset. Some asset of importance.  Like twelve billion dollars.

And then they promise to advise based upon sound principles of modern finance...using proprietary models. Wow.

And, one of the ways you might be advised to relocate your twelve billion dollars would be with Goldman Sachs, evidently.

Now I say, always go with the very best.

Right now I am watching a 50's film. It is called The Devil's Disciple. It was based upon a play written by George Bernard Shaw.  It stars Kirk Douglas, Burt Lancaster and Sir Lawrence Olivier.

One of the greatest British (Irish) playwrights of all time. The greatest British Actor of all time. And two of the greatest American actors of all time.  See. I mean this movie worked because it had the best.

Well a fellow by the name of Matt Taibbi has written a delightful essay on Goldman Sachs, introducing us to this giant of  market manipulation in a recent edition of the Rolling Stone magazine. http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine/print

The Great American Bubble Machine. And here I thought GS did not 'make' anything.

Well, from the get go GS denied that they have anything to do with bubble machines at all:

"We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good."

I was worried for a minute. I mean we are talking about one of the most important economic forces in America today and it looked like they were making something. But instead, they in fact do not make bubble machines at all. Phew!!! What they are is a force for good.

Kind of like Superman. I mean he is a force for good also. The Movie was also on today but has no script to speak of and certainly no actors except, of course, Kevin Spacey. Although he does not really contribute much at all.  Stick with Olivier, Lancaster and Douglas is what I say.

At any rate back to Asset Relocation:

The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup -- which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York -- which, incidentally, is now in charge of overseeing Goldman.

I am going to boil down the basics of asset relocation into a set of rules.

The first rule appears to be that YOU NEED FRIENDS IN ORDER TO RELOCATE ASSETS.

That is probably why I have always failed every time I attempted to relocate assets. And you want to have those friends regardless of the fickle American Election Cycle. That is, you need friends who are Democrats and you need friends who are repubs. It is really the only way to go.

Now like GS' other rule, about getting people and corporations to relocate their money with them, Goldman Sachs relocates its people. Now I attempted to confirm all of this important information by calling Rubin. Well, I guess he was too busy to take my call.  But I get the feeling that if Joshua Bolten called Rubin, Rubin would not be too busy to take his call.

And while we are at it, it certainly appears that you must relocate a bunch of assets directly to your friends to kind of insure that they will remain your friends. I mean if GS had relocated a couple hundred million dollars to me, I would make sure I would never be too busy to take their call.  I actually left a message with GS and told them if they would simply relocate a couple of  million in my direction, I would even carry a special phone that was only programmed to take GS calls. Ha!!!

Now to wind up this first chapter on global economics, I would like to discuss what an asset actually is.

Lewis Black does a shtick on water. Like me, when he was a kid he would play outside all day.  But ever so often he would get thirsty. What to do about this thirst? Well, he would run down into his basement and get a glass of water. Exactly what I did.

Now, back in our ancient history, there were spas. You would retire to a spa when you were ill. And located nearby to these spas were magic springs. By drinking from the magic springs or bathing in water taken from the magic springs, you would sort of 'spring back to life'.

Well, rich people are idiots just like many of us. So companies went to magic springs, retrieved the water, and popped it right into a bottle. No sugar, no corn syrup, no spices. Just water.  Of course, in order to get by the FDA these companies would have to boil the water and place it into disinfected bottles and prove, via testing and such that the bacteria and poison count was down to an acceptable level.  Which means that the water from the magic springs had little or nothing to do with the water in the bottle.

Ok. So naturally companies came along that wanted to cut out the middle spring. So the scandle a decade ago was that some of the magic spring water companies, were actually getting their water from the same place Lewis and I were getting our water. From a municipal water supply.  Now, these companies have to write a note to their customers on the bottle, that the water from a municipal water supply. IT IS TAP WATER. Ha!!!

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

Get it? Now you and I may look at a 50 cent sponge and say, hey, we got a 50 cent sponge. But an economic genius might think, hey, I can get a 20 cent stick and connect it to a sponge and call it a magic windshield cleaner upper. I will get some nice Asian people to connect the sponges to the sticks for 25 cents and hour. Then I will sell the cleaner upper for 9.95 plus shipping and handling. And I will advertise it during dickday's favorite shows.

Now, in the old days in this state we had usury statutes. There was an 8% limit on what could be charged in interest on a bank loan that was unsecured. And 6% on a 30 year mortgage on your home.

Then the Federal Government changed all that. There are few 'fixed loans' anymore. The interest you pay on the first year you have the loan may look nothing like the interest you pay on that same loan two years later.  What most people have are variable rate loans where only the lender can predict with any certainty what the interest rate may be a year after you sign the loan document.

Now you have home 'worth' 150 grand.  Your loan is for 130 grand. You make 39 grand a year as a fourth grade teacher and your husband makes 29 grand a year as a part-time accountant and a floor man at Wallmart. You and your mate sign the documents and you send in 1300/month to the mortgage company (which has nothing to do with the mortgage company you signed the note with) and everybody is happy and you are now living a Leave It To Beaver suburban American Dream.

Except, after paying property taxes, and water and sewer charges, and utilities, and phone, and car loans...and after buying sponges on a stick and such...you have about $65.00 left over at the end of every month. And now you get the notice that your new Principle/Interest payment is now $1900/month.  Then your son gets sick from a preexisting condition and your husband loses his job.

Okie dokie.  Oh and your house is now worth $110, 000.

Now the day after closing on your home, the mortgage was packaged and bundled with two thousand other mortgages by GS. And GS sold that bundle for a profit to z corporation that might pay GS so much every year for five years.

Except you are now bankrupt, nobody is making a mortgage payment, z corp has no income coming in on the mortgages it purchased...........

We shall return to this discussion in a few days.

IN THE MEANTIME, WHERE THE F...IS MY BONG?