Goldman-Sach's $25.84 billion dollars profit.

"Greed is good" - the famous and trite line from Gordan Gecko in the movie Wall Street.  Gecko has nothing on the executives of Goldman-Sachs, who are triumphantly announcing their record profits.  What work has Goldman done which earns them this fortune?

I am not a fervent socialist, nor am I a devoted capitalist.

But in a country where middle class and lower class wages have either remained constant or fallen for thirty years, you have to wonder what the hell is going on when an investment bank can report profits of $25.84 billion dollars.  $16.5 billion will go to salaries and, most importantly, bonuses.

New York Times

How does Goldman earn those funds?  Essentially, by being a transaction cost.  Goldman produces nothing physical.  They don't build factories, schools, roads, develop medicines, create movies, write software, treat the sick, protect the nation.  They provide investment advice, primarily in the area of investment banking, mergers and acquisitions, and other financial services.  The people who created that $25.84 billion dollar profits are the people who actually did something.

$25.84 billion dollars in profits - an amazing number.  Enough to fund a dozen major universities on the scale of the University of Michigan, UVA, Duke.  Far more than the budget of NASA.  Not enough to pay for the Iraq fiasco, but it's a start.

How are we going to convince people to become scientists, engineers, teachers, firemen or policemen when such amazing sums can be made by manipulating a spreadsheet?

•  Quarterly profit was $3.15 billion

  I am not sure where you are getting your profit figure of $25.84 billion.  Their annual revenue was somewhat over $9.54 billion, certainly not shabby, but not half of the number you are citing for profit.

  Of the $3.15 billion quarterly profit, you are right that over 50% goes to salaries and bonuses.  Masters of the Universe have to pay for their Park Avenue penthouses somehow.

  by Numerian on Tue Dec 12, 2006 at 02:46:51 PM PDT

  •  The $25 Billion

    Is the amount returned to shareholders, plus the amount returned to employees in salary and bonuses.

    Goldman, Sachs is in the business of doing one thing:

    Helping the rich get richer.

    by bink on Tue Dec 12, 2006 at 02:50:55 PM PDT

    •  Hmm

      Looks like I did the math wrong, too.  Anyone care to look at the lead paragraph in the Times article and determine what the real nos. are?

      by bink on Tue Dec 12, 2006 at 02:52:30 PM PDT

      •  Yearly revenue $37.67 billion

        Profits $9.4 billion

        http://biz.yahoo.com/...

        by skymutt on Tue Dec 12, 2006 at 02:54:44 PM PDT

        •  And

          The other $16 billion mentioned in the article?  Is that set aside out of current yet revenue for salaries, bonuses?

          by bink on Tue Dec 12, 2006 at 02:56:57 PM PDT

          •  There is no "other 16 billion"

            Revenue = all the $ they take in
            Profits = what's left over after all expenses of doing business
            Salaries/Bonuses = some, but not all, of the expenses of doing business.

            by skymutt on Tue Dec 12, 2006 at 02:59:30 PM PDT

        •  Well, could we consider the bonuses profits?

          It seems that they're playing with the numbers - if you give $16.5 billion for salaries and bonuses - how much of that should be considered profit, how much should be returned to shareholders?

          by barryannarbor on Tue Dec 12, 2006 at 03:18:12 PM PDT

          •  No, they are not profits

            "Profits" means something specific-- it is exactly what's left over after all the company's expenses, regardless of how out of line or excessive you or I or anyone else might consider those expenses to be. They aren't playing with the numbers, they're telling you just what they did... they paid out $16+ billion in compensation to their employees.

            You can talk about how high the company's profits are, and you can talk about excesses in how the company compensates its executives and employees-- but they are two separate issues.

            by skymutt on Tue Dec 12, 2006 at 03:28:46 PM PDT

    •  Yes

      That's what investment banks do. I'm not sure why it surprises some people.  

      by johnny rotten on Tue Dec 12, 2006 at 02:54:43 PM PDT

      •  No Surprise to Me

        Yet, when they announce stuff like this on CNN, it's done in such a way as to prompt cheering from the public.  Why would I cheer something like that?

        by bink on Tue Dec 12, 2006 at 02:56:23 PM PDT

      •  It's what PayPal does. It's what eBay does.

        It's what Expedia and Ticketmaster do, and it's what Visa and MasterCard do. I don't know what's so shocking about any of this.

        by ticket punch on Tue Dec 12, 2006 at 02:57:07 PM PDT

      •  Nothing wrong with making a buck

        I never pay much attention to somebody who tells me how much a company's making, and I'm supposed to be outraged by the figure alone. If you want me to be outraged, show me what horrible things the company did to earn the money. Tell me how they were responsible for dumping toxic waste into our drinking water, or how they are short-changing our troops over in Iraq to squeeze out a few million more in profits. Give me something to be outraged about... becuase if somebody gets rich, and it doesn't hurt me-- hey, good for them.

        by skymutt on Tue Dec 12, 2006 at 03:11:06 PM PDT

        •  Show me the legitimate things

          they did!

          I know what Exxon-Mobil did.

          I know what Wal-Mart does.

          I have had thousand of dollars lost due to bad "deals" promoted by Wall Street types.

          by SingleVoter on Tue Dec 12, 2006 at 06:04:16 PM PDT

          •  Well, tell me about it

            Show me how it's Goldman Sachs' fault...  If you think they've done something wrong, document it, diary it... Tell me how Goldman Sachs screwed you out of your money. For all I know, it could have been other "Wall Street types" that screwed you out of your money, and Goldman Sachs is innocent. I just want facts, not generalities. The point being, there's a presumption of innocence that we operate under in this country. In the scope of this thread, I have not seen one legitimate claim of wrongdoing by Goldman Sachs based on any evidence or facts.

            by skymutt on Tue Dec 12, 2006 at 07:08:32 PM PDT

•  Though not a big fan of Goldman-Sachs,

  my fairly progressive governor was their CEO.

  by GTPinNJ on Tue Dec 12, 2006 at 02:56:51 PM PDT

  •  and took them public

    against most of the wishes of the board, but in turn making all of the partners mega-mega-mega-millionaires.

    by kath25 on Tue Dec 12, 2006 at 02:58:13 PM PDT

  •  Progressive on Social Issues

    But intent on serving his class, where economic ones are concerned.

    by bink on Tue Dec 12, 2006 at 03:02:02 PM PDT

    •  Well...

      he did co-author the Sarbanes-Oxley Act to address corporate malfeasance.

      by GTPinNJ on Tue Dec 12, 2006 at 03:04:03 PM PDT

•  Science vs. IB

  You are right to point out that as long as a Wall Street Wiz can take home a $20 million bonus while a scientist must toil in obscurity for a $200,000 grant, that our best and brightest will not always choose the path towards the greater good.

  I don't necessarily want greedy scientists; I want the playing field to be a bit more level so that there isn't such an obvious economic discrepancy. I know plenty of very smart people who chose IB over something more altruistic because of the cash. They mostly would have made fine scientists.

  Luckily, in NYC, bonuses are immediately taxed at a rate of 50%. So the gov't will end up keeping a lot of that money, even after they all file their crooked tax returns.

  by kath25 on Tue Dec 12, 2006 at 02:57:41 PM PDT

•  GS

  FWIW, Goldman's stock went down today.

  by davybaby on Tue Dec 12, 2006 at 03:11:01 PM PDT

  •  That makes more sense than you might think.

    Things can't really get much better at Goldman, but they could get a heck of a lot worse.  The current trading range of their share price reflects the current good conditions.  Were circumstances to change, they would likely change for the worse, not for the better, and the share price would drop.

    So growth-oriented holders of Goldman stock are better served by selling now at current share prices than by selling later at likely lower share prices.  Lots of people realizing this and selling results in downward pressure on the share price.

    by horsewithnoname on Tue Dec 12, 2006 at 03:21:46 PM PDT

•  So what?

  I don't quite get what you want to happen.

  You are frowning on their success and using it to bemoan people's career choices and the hint at the way things "ought to be".

  Why? People will become scientists, teachers and all those other things.

  Others will go into finance and investment banking.

  What's it to you?

  Investment bankers provide a service which leads to the creation of more capital to create more jobs and push the economy forward.

  They wouldn't be earning that money if there wasn't any value to that service.

  by ztn on Tue Dec 12, 2006 at 03:46:22 PM PDT

•  Well, I AM pro-capitalist, and this shit

  makes me retch. It is disgusting.

  by jeff in nyc on Tue Dec 12, 2006 at 03:48:20 PM PDT

  •  Why is it disgusting?

    Curious to know why you find this offensive.

    by Rey Mota on Tue Dec 12, 2006 at 04:10:15 PM PDT

•  I have no problem at all

  with GS making a profit, even if it's a huge profit.  Good for them, they must be doing something right.

  by Rey Mota on Tue Dec 12, 2006 at 04:07:14 PM PDT

•  just submitted this to digg

  digg it here

  by Dr Seuss on Tue Dec 12, 2006 at 04:45:05 PM PDT