(Sorry, I can't help but at least include a one-sentence rant here: IMHO, if this isn't an exercise in irrational/outrageous class disparity in this country--with regard to some appearing to act as if they're above the law, and to then be grossly compensated for that--I don't know what is.)
A couple of interesting pieces are running on Bloomberg Media right now. Combined with other recently-noted facts about Wall Street behemoth Goldman Sachs, it's not a stretch to say that millions are beginning to wonder just what the hell's going on over there? And, perhaps more importantly, what the hell's going on in America right now?
At what point do we say: Enough? Is that what's playing out before us right now?
Today we're learning that, in the midst of the worst economy that this country's--and the world's--seen since the Great Depression, and despite the reality that they received $10 billion in TARP funds which they've since paid back, they're making more money than ever: "
Goldman Sachs Trading Revenue May Beat Record, Moszkowski Says."
Goldman Sachs Trading Revenue May Beat Record, Moszkowski Says
By Christine Harper
July 9 (Bloomberg) -- Goldman Sachs Group Inc. is on track to beat its 2007 trading-revenue record, enabling it to boost compensation by an estimated 64 percent from last year, according to Bank of America Corp. analyst Guy Moszkowski.
Goldman Sachs has "unmatched risk-taking/risk-management skills in a market that strongly rewards these because of decline in competitor risk appetite," Moszkowski wrote in a note to investors today. The New York-based firm "appears on track to accrue significantly more comp than `08, despite little change in headcount."
--SNIP--
...Moszkowski predicts the company will reap $26.45 billion from trading this year, a gain from $25.36 billion in 2007 when the firm shattered Wall Street profit records.
Moszkowski said the firm will set aside 44.2 percent of total revenue to pay compensation and benefits, letting it pay workers $17.92 billion compared with $10.9 billion last year. Goldman Sachs had 27,898 employees at the end of March. If that number remains unchanged and Moszkowski's compensation estimate is correct, it would mean an average of $642,447 per employee.
The article continues to tell us it's due to their sheer brilliance.
The bank's debt and equity underwriting, trading and fixed income operations may have boosted profit in the quarter amid "muted" competition, New York-based Moszkowski wrote.
"Goldman Sachs derives a high proportion of revenue from trading and market-making activities," he wrote. "Second quarter could be a record quarter for Goldman in equity underwriting."
Others infer it's because they're breaking a variety of trading laws and regulations: "Goldman Sachs Loses Grip on Its Doomsday Machine."
Goldman Sachs Loses Grip on Its Doomsday Machine
Commentary by Jonathan Weil
July 9 (Bloomberg) -- Never let it be said that the Justice Department can't move quickly when it gets a hot tip about an alleged crime at a Wall Street bank. It does help, though, if the party doing the complaining is the bank itself, and not merely an aggrieved customer.
Another plus is if the bank tells the feds the security of the U.S. financial markets is at stake. This brings us to the strange tale of Goldman Sachs Group Inc. and Sergey Aleynikov.
As some may recall, I covered this extensively in a diary a few days ago, in: "Breaking: FBI Arrest Opens Goldman-Sachs' Pandora's Box."
The abbreviated version of the story, in a few sentences: A senior technology strategist and Vice President at Goldman-Sachs, Sergey Aleynikov, copied much of his firm's "secret sauce"--an extensive set of proprietary, automated stock trading software code and algorithms--all related to "program trading." Upon finding out about this, senior officials at Goldman-Sachs informed the FBI of all of this and had Aleynikov arrested at Newark Airport on July 3rd.
The code, as it has been noted by many, including Goldman-Sachs, allows the firm to execute securities/commodities transactions in microseconds, thus providing their company with an extreme edge over their competitors. The tacit fact is, with proper monitoring of market trades, in general and as facilitated by Goldman's own practices, it's entirely conceivable--albeit significantly questionable from a legal standpoint--that the firm would be enabled to "frontrun" its competition at quite a grand scale, too, since it could see trades occurring in real-time, and then execute its own trades automatically at lightning speed, before the previously-observed trades of others were even concluded.
All along, for the past nine-plus months--and in part due to government-related authorizations to enable Goldman to assist the Feds in propping up stock/commodities markets during the noted economic upheavals of same during this period--it has also been widely noted that Goldman had all but cornered the market, literally, in terms of the sheer volume of in-house trading the firm was engaged in during the time, supposedly, on its own behalf; to the point where it had been widely observed and documented that well over half of all program trading occuring on Wall Street (we're talking 20%-30% plus of all stock/commodities trades in this country, for all intents and purposes), during many weeks over the past nine months, was being executed by Goldman-Sachs, too.
As Bloomberg's Weil points it out to us this afternoon...
It wasn't just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."
How could somebody do this? The precise answer isn't obvious -- we're talking about a black-box trading system here. And Facciponti didn't elaborate.
--SNIP--
Market Manipulation
All this leaves us to wonder: Did Goldman really tell the government its high-speed, high-volume, algorithmic-trading program can be used to manipulate markets in unfair ways, as Facciponti said? And shouldn't Goldman's bosses be worried this revelation may cause lots of people to start hypothesizing aloud about whether Goldman itself might misuse this program?
I think it's great to finally see this last paragraph in print, especially from an MSM/Wall Street bastion and media outlet like Bloomberg today. However, I have to wonder aloud: Given the lack of an uproar (not to mention the ongoing economic suffering right now) on Main Street about all of this--at least when one compares the inadequacy of planned stimuli from the government to the middle class versus the trillions upon trillions that we have lavished upn Wall Street--if we're not going to scream about this together, then what's the point?
Where's the outrage? Are we that ambivalent? Or, is it to the point where the zeitgeist is simply that this is just the way things are; and there's simply very little that we may do to affect the outcome?
Are we witnessing the tip of an iceberg of major social change here in the U.S? Or, am I kidding myself?
If not now, when?
What say you?