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Goldman's new money machine: warehouses

reuters.com

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Re: Goldman's new money machine: warehouses

#61

Post by gaius »

Alex3917 wrote: post #50
cletus wrote: post #46

Earlier quoted context omitted.

> at the same time it's clear that what Wall Street does is designed primarily to benefit themselves. So what? I don't begrudge them making a profit. Capitalism is the engine that propelled us from riding around on horses to putting a man on the Moon in the span of one man's lifetime. But there are builders and extractors [1]. Allowing a farmer to forward-sell his crop so his income is known adds value. It also allow…

"Capitalism is the engine that propelled us from riding around on horses to putting a man on the Moon in the span of one man's lifetime." Except for that it was actually socialism that put a man on the moon, seeing as it was a government project.

Paid for with... Magic beans?

Re: Goldman's new money machine: warehouses

#62

Post by makthrow »

yummyfajitas wrote: post #20
drats wrote: post #4

Earlier quoted context omitted.

I think you raising "hackers" with this is the perfect way to describe the situation. Goldman are hackers in the same sense the main stream media refers to crackers as hackers, not hackers in the creative sense used by this community. Futures markets have a purpose, in food and energy for example, but GS along with others has been manipulating them in dodgy ways. Ditto for this article and aluminum. They helped Greec…

They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. This is caused by legally mandated chinese walls, designed to give banking customers confidence that the bank is behaving in their best interest. The sales/structuring desk is legally obligated to structure/sell CDO's after agreeing to do so. They are also…

Right, but they do talk to each other.

Re: Goldman's new money machine: warehouses

#63

Post by Tycho »

drats wrote: post #4
rdl wrote: post #2

This has been posted here before. Part of me respects then for being such excellent hackers of the letter of the law, but mostly I agree that this firm in specific is a. Armpits squid which is out of control and distorts markets, causes widespread harm to markets and individuals, and is not effectively controlled by regulators (who are largely Goldman alumni, in their revolving door system). I have no idea what the r…

I think you raising "hackers" with this is the perfect way to describe the situation. Goldman are hackers in the same sense the main stream media refers to crackers as hackers, not hackers in the creative sense used by this community. Futures markets have a purpose, in food and energy for example, but GS along with others has been manipulating them in dodgy ways. Ditto for this article and aluminum. They helped Greec…

I remember a clip on the news with a GS employee saying to the tribunal (or inquest or whatever) that selling CDOs to some customers while betting against them at the same time was 'not a problem in the context of market-making.'

I'm not really sure what he means by this, although some stuff I read recently suggested that traders will often sell and buy a security at the same time in order to make the stock look more active/liquid and encourage other investors to join in. Anyone care to elaborate on this?

The chinese wall explanation offered elsewhere makes more sense though.

Re: Goldman's new money machine: warehouses

#65

Post by whatusername »

seigenblues wrote: post #34
fleitz wrote: post #21

Earlier quoted context omitted.

You're a programmer, most of what you is put people out of work. That thing you automated? Someone who doesn't know how to program lost their job because of it, and it ain't coming back. You'll tell yourself that you've created opportunities for two more programming jobs for someone else to enhance your automation work, but that guy with the GED is still out of work. Tough shit buddy, should have learned to program.…

You're just describing one kind of programming. I write code that does things that literally couldn't be done by people. it's a job where there wasn't one before -- and it helps create other jobs where there weren't any before. I don't want to say our company wouldn't be able to exist without that code, because my code wouldn't exist without the rest of the company, either, but the point remains: If your self-justifi…

Really? I'm curious to know what code you write then? I write code that does things faster/better/cheaper/easier -- but theoretically at least a person could perform whatever task I'm writing.

Re: Goldman's new money machine: warehouses

#66

Post by toyg »

rayiner wrote: post #54
cletus wrote: post #46

Earlier quoted context omitted.

> at the same time it's clear that what Wall Street does is designed primarily to benefit themselves. So what? I don't begrudge them making a profit. Capitalism is the engine that propelled us from riding around on horses to putting a man on the Moon in the span of one man's lifetime. But there are builders and extractors [1]. Allowing a farmer to forward-sell his crop so his income is known adds value. It also allow…

> Capitalism is the engine that propelled us from riding around on horses to putting a man on the Moon in the span of one man's lifetime. Ironic that it was Communism that beat us at every milestone except for the last one, and only due to an accident of history (the death of the leader of the Soviet space program just before a push for a moon mission and the lack of someone to fill his shoes).

And the Apollo program was hardly a poster-child for capitalism: federal government-run program, very centralized and partly militarized, very wasteful and expensive, at a time when marginal rates of taxation where above 70%.

Let's be honest: massive technological pushes that do not deal with production efficiency have nothing to do with capitalism or even democracy.

Re: Goldman's new money machine: warehouses

#67

Post by shareme »

cletus wrote: post #8

Investment banks do provide valuable services: market making (providing liquidity in many markets), capital raising, the creation of financial instruments so investors can hedge against certain kinds of risk and so on. Unfortunately I think we're reaching the point of banks overstepping their bounds and creating far more problems than they really should. This strategy seems similar to the "demand shock" approach they…

We go back to having banks regulated similar to the laws in the 1970s or ask banks to pay off the Fed deficit to keep them un-regulated..

Re: Goldman's new money machine: warehouses

#68

Post by yummyfajitas »

makthrow wrote: post #62
yummyfajitas wrote: post #20

Earlier quoted context omitted.

They recommended to various customers to invest in all sorts of CDOs while at the same time betting against them having internally decided they were going to fail. This is caused by legally mandated chinese walls, designed to give banking customers confidence that the bank is behaving in their best interest. The sales/structuring desk is legally obligated to structure/sell CDO's after agreeing to do so. They are also…

Right, but they do talk to each other.

If you have evidence of this, please notify the SEC.

Re: Goldman's new money machine: warehouses

#69

Post by podperson »

cletus wrote: post #49
justsee wrote: post #38

Earlier quoted context omitted.

Why do you assert that Australia "didn't have the bubble in real estate prices that the US did"? We have a significant asset bubble here. It hasn't popped primarily because we've had government-sponsored inflation of prices via the First Home Owner's Grant. The unwinding of the asset bubble finally seems to be happening in Australia now and will trigger many of the same financial issues for our banks (for instance Co…

You're either understating (or simply unaware of) the extent of the real estate bubble in the US or you're overstating that bubble in Australia (or both). To suggest the FHOG (which is $7,000 now and only ever got as high as $14,000) is responsible for this is disingenuous at best. What's your argument for this? There are two basic components in house prices: the cost of land and the cost of construction. Land is ess…

As an Aussie living in the US and somewhat out of touch with what's going on back home, I'm fascinated and confused by this. Are you arguing FOR or AGAINST the idea that there's a significant asset bubble in Australia?

We were recently looking at relocating to Sydney and were blown away by how prices (including rents) had increased since I last lived there (in 2002).

The interesting thing to me is that rents in Australia seem to have skyrocketed while prices have not (they're high, but rents are higher). In the US the housing bubble was characterized by prices increasing far faster than rents (which led to an illusory improvement in standard of living as people borrowed against "equity" and spent the difference). It looks to me as though Australian rents have risen faster than prices, which presumably has the reverse effect.

Re: Goldman's new money machine: warehouses

#70

Post by yummyfajitas »

umarmung wrote: post #48
cletus wrote: post #46

Earlier quoted context omitted.

> at the same time it's clear that what Wall Street does is designed primarily to benefit themselves. So what? I don't begrudge them making a profit. Capitalism is the engine that propelled us from riding around on horses to putting a man on the Moon in the span of one man's lifetime. But there are builders and extractors [1]. Allowing a farmer to forward-sell his crop so his income is known adds value. It also allow…

There is really only ONE possible and proven sustainable solution to this mess. It was realised in the aftermath of worst financial crisis ever seen, the Great Depression. It worked so well to create such stability, or at least certainly did not cause any harm to the real economy for so long, that the world saw the longest sustained period of growth it has ever seen and is also considered by all economists to be the…

2. Financial instability had minimal to zero systemic impact in advanced countries because banks were only permitted to engage in funding and financing directly related to the real economy.

Um, the dotcom bubble happened under Glass-Steagall. So did 1987, the 1997 Asian financial crisis, and the 73-74 crash.

3. In addition, a side effect due to the partitioning and lack of artificial wealth interconnectedness, TBTF was not possible.

No. The Savings&Loan bailout and LTCM bailout both occurred under the Glass-Steagall regime.

4. All manner of speculators were able to exist even then, but they knew they only had one chance with the capital they had since completely different types of financial activity were not allowed to co-mingle under the same organisation or group.

You have no idea what you are talking about. The decline of product-specific trading desks was caused by the onset of stat-arb and had nothing to do with Glass-Steagall.

40 years later, here we are - in real (inflation-adjusted) economic terms per capita for median person effectively back to square zero...

This is a statistical artifact. The median person who's parents were in the united states in 1968 has income (adjusted for chained CPI, which is not the same as inflation) 29% higher than their parents. Immigrants lower the average/median.

http://crazybear.posterous.com/did-immigrants-and-simpsons-p...

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