Goldman Inspires Jealousy, Suspicion With Soaring Profits
By Mat Probasco, Newser Staff
Posted Jul 13, 2009 2:55 AM CDT
This building on Broad Street in New York's Financial District houses brokerage firm Goldman Sachs.   (AP Photo/Richard Drew, file)

(Newser) – Goldman Sachs is expected to announce stunning profits for the second quarter tomorrow, inspiring jealousy on Wall Street and suspicion on Main Street, as taxpayers wonder whether they've been taken for a ride, reports the New York Times. The bank repaid its multibillion dollar government loan last month, and could show a profit of $2 billion for the 3 months, which in turn is expected to translate into $18 billion in salary and bonuses this year. How'd they do it? By taking risks no one else is willing to take, analysts tell the Times.

Goldman capitalized on chaos in the financial markets, making a fortune trading bonds, buying and selling volatile currencies and commodities, and playing a roller-coaster stock market brilliantly. But it also cleaned up on fees for handling the stock offerings by other, less fortunate financial institutions desperate to raise cash. And it profited from the disappearance of rival Merrill Lynch. Said one less impressed analyst: "They exist, and others don’t, and taxpayers made it possible.”

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Jul 13, 2009 3:38 AM CDT
In a perfect world, the stock market would decline another 70 or 80 percent along with the shuttering of about that fraction of our nation’s banks. Yes, unemployment would rise as hundreds of thousands of formerly well-paid brokers and bankers lost their jobs; but at least they would no longer be extracting wealth at our expense. They would need to be fed, but that would be a lot cheaper than keeping them in the luxurious conditions they’re enjoying now. Even Bernie Madoff costs us less in jail than he does on Park Avenue. The thing that is dying—the corporatized model of commerce—has not, nor has it ever been, supportive of the real economy. It wasn’t meant to be. And before we start lamenting its demise or, worse, spending good money after bad to resuscitate it, we had better understand what it was for, how it nearly sucked us all dry, and why we should put it out of our misery. /
Jul 13, 2009 1:10 AM CDT
Goldman Sachs "exists, and others don’t, and taxpayers made it possible,” said one industry consultant. -- You're welcome.