Goldman's new money machine: warehouses • Hacker News Board

Re: Goldman's new money machine: warehouses

#71

Post by yummyfajitas » Sun, Nov 06, 2011, 1:32 PM UTC

potatolicious wrote: post #24

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.…

Ah yes, you're right of course - there is no objective measure of the balance of good and evil. What I do does eliminate jobs. Does the benefit to everyone else outweigh the loss of these jobs? Many people would say yes, some would say no. Some job eliminations open the door for more jobs - for different people. Does this balance the morality of putting people out of work? I don't know. Nobody does. But there is some…

The artificial supply squeeze on industries benefits... what exactly, besides Goldman itself?

If aluminum becomes more scarce in the future (Goldman seems to be betting that it will be), then Goldman has done us all a favor by conserving it in the present.

If it is not more scarce in the future, then Goldman will lose money.

Re: Goldman's new money machine: warehouses

#72

Post by Goladus » Sun, Nov 06, 2011, 1:42 PM UTC

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…

> There are two basic components in house prices: the cost of land and the cost of construction.

Those are the components of house cost, not price. Price is determined by supply and demand. Take two identical houses on the same street, the one in the superior school district will command a much higher price.

Re: Goldman's new money machine: warehouses

#73

Post by cletus » Sun, Nov 06, 2011, 3:53 PM UTC

podperson wrote: post #69

cletus wrote: post #49

Earlier quoted context omitted.

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 Austr…

I'm saying what's happened in the US and Australia is different.

US prices were driven by rampant speculation fueled by shady lending practices where the lenders weren't accountable for defaults and a product that was doomed to failure from the start.

While there has been speculation in Australia, it seems driven largely by structural changes in the economy. Resources has brought a lot of money in. Those people traded up for property closer to the ocean and/or the city, driving up those prices leaving new entrants to live further and further out.

This is basically a natural phenomenon that happened in a somewhat accelerated fashion. I see a plateauing of prices for some years to come as a result.

Rents are simply playing catch up with the change in house prices. They always lag. There's nothing surprising here.

It is however concerning because Australia is very much dividing between the haves (construction/resources) and the have nots (everyone else).

I largely missed this bubble as I was working in Europe at the time (2001-2004). As it turns out, financially speaking I would've been better off buying a house for $80k (in 2000, worth $350k+ in 2004-2005) and sitting on a beach in Spain for 4 years than working.

Australia just isn't that attractive a place to live (for me) now and that's kinda sad.

Re: Goldman's new money machine: warehouses

#74

Post by paganel » Sun, Nov 06, 2011, 4:01 PM UTC

cletus wrote: post #46

Alex3917 wrote: post #44

Earlier quoted context omitted.

"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." I hear this argument a lot. While I think it would be an exaggeration to say that what Wall Street does benefits no one, at the same time it's clear that what Wall Street does is designed primarily t…

> 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.

Unfortunately, having your own former employees moving into positions holding political power (http://en.wikipedia.org/wiki/Jon_Corzine , http://en.wikipedia.org/wiki/Henry_Paulson) is not Capitalism, it's Oligarchy.

Re: Goldman's new money machine: warehouses

#75

Post by seigenblues » Sun, Nov 06, 2011, 4:20 PM UTC

whatusername wrote: post #65

seigenblues wrote: post #34

Earlier quoted context omitted.

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.

It collects measurements from distributed renewable energy installations and uses those measurements to measure & optimize the systems' performance.

I suppose you could have engineers drive around with clipboards, but the amount of data collected and the frequency its collected at would suffer. In other words, that job could never exist for a human.

Is that close enough to count for your "theoretically"? I don't think so, personally, as it could never make business sense to have that job be needed for the operation of the business, so...

Re: Goldman's new money machine: warehouses

#76

Post by ArchD » Sun, Nov 06, 2011, 4:41 PM UTC

Tycho wrote: post #63

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…

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…

Perhaps it means that you can't dictate the value of an instrument to somebody else. Everyone makes his own assessment of an item, so if someone wants to buy it from you above what you think it's worth, or conversely, sell it to you below what you think it's worth, it's your freedom to trade and not your business to try to change his mind.

However, persuading a potential buyer that something is worth a high value while secretly you believe the value is low is another matter. That's what people do all the time, though, not just bankers. For example, a lot of sales people do that.

However, there is a difference. Most people know to take what a sales person says with a grain of salt. Besides, if you don't like the sales person or his product, you can always walk away. In the case of banks, there is a lack of integrity somewhere. People were expecting the government to protected their interest by making and enforcing the right regulations. The government didn't do that and banks made off with public money. The government involved the public in its complicated legal and financial system that is hard to understand for common people, and failed to make it work for them.

Re: Goldman's new money machine: warehouses

#77

Post by diminish » Sun, Nov 06, 2011, 6:55 PM UTC

toyg wrote: post #66

rayiner wrote: post #54

Earlier quoted context omitted.

> 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.

in addition all this was motivated by the stiff rivalry with the centralized and militarized soviet union,

Re: Goldman's new money machine: warehouses

#78

Post by BillSaysThis » Sun, Nov 06, 2011, 7:15 PM UTC

hammock wrote: post #35

rapind wrote: post #17

Earlier quoted context omitted.

So hypothetically if someone wanted to opt-out of this essentially corrupt system completely, how would they go about it? I mean paying taxes in a country with bailouts certainly ties you up into the system. Even without bailouts, living in a country tied to a dollar that's being printed like mad kind of ties you up into it too right? So... how exactly would one go about this? Possible?

http://seasteading.org/

If only they had a solution for defending themselves and an answer to why national governments would deal with them (i.e., seasteads are unlikely to be self-sufficient, even in the aggregate, for many years if ever and therefore dependent on trade with existing national polities).

Re: Goldman's new money machine: warehouses

#79

Post by ruggeri » Sun, Nov 06, 2011, 7:21 PM UTC

Did anyone else feel this was a poorly written article? Maybe I'm obtuse, but I found it _very_ difficult to understand. I felt like the writers were too busy sexing up the article to focus on explaining what's going on here...

It sounds like metal traded on the LME must be stored in an LME certified warehouse. The LME-certified warehousing market doesn't appear to be very competitive, as Metro/GS can take its sweet time getting you your metal yet not go out of business. _LME's_ conflict of interest is that it's supposed to regulate warehousers when one of its biggest members (GS) owns said warehouses. The alleged "warehouse strategy" then was for GS to buy the warehouses and create the conflict in the first place.

Did I get it?

Re: Goldman's new money machine: warehouses

#80

Post by tptacek » Sun, Nov 06, 2011, 10:03 PM UTC

yummyfajitas wrote: post #71

potatolicious wrote: post #24

Earlier quoted context omitted.

Ah yes, you're right of course - there is no objective measure of the balance of good and evil. What I do does eliminate jobs. Does the benefit to everyone else outweigh the loss of these jobs? Many people would say yes, some would say no. Some job eliminations open the door for more jobs - for different people. Does this balance the morality of putting people out of work? I don't know. Nobody does. But there is some…

The artificial supply squeeze on industries benefits... what exactly, besides Goldman itself? If aluminum becomes more scarce in the future (Goldman seems to be betting that it will be), then Goldman has done us all a favor by conserving it in the present. If it is not more scarce in the future, then Goldman will lose money.

It's troubling that a comment like this has to be buried deep in a thread about religion, Platonic ideals, might-makes-right, higher-order thought, and the nature of morality --- most of it stipulating Goldman is evil.