Bad week for Goldman Sachs

If you haven't read The Great Bubble Machine by Matt Taibbi, take the time to do so. It's a very broad article, so it doesn't nail Goldman down as well as a more specific article and it's by no means a complete catalog of their sins, but it captures the scope of Goldman's transgressions and reach.

Goldman Sachs has called even more attention to Taibbi's piece by howling about the article. Here's Taibbi vs. Van Praag (Goldman Vice President/PR-guy nicknamed "Von Doom").

Even the NY Times noted the Goldman's PR shitstorm: The dense revolving-door conflicts of interest are appalling. Goldman is howling about Taibbi’s article, but the bottom line was articulated last week by the economic blogger Felix Salmon of Reuters. He wrote that he couldn’t “think of a single government regulation over the past couple of decades which has remotely harmed Goldman Sachs” as opposed to the many that “have done it a world of good.”

And just to cap it off, a hacker stole some of their secret trading code and shipped it to Eastern Europe.

I think the most devastating indictment of Goldman Sachs came from analyzing their trading for major clients (universities, pension funds, etc.). Zero Hedge has been tracking their trades for major clients and developed a compelling case of Goldman front running major trades. Goldman will buy up some shares, then process the (large volume) purchases for their client, then sell their front-run shares. The institutional purchase will be so large, it moves the market. Goldman is shafting their client and putting trust in the whole system at risk for a fairly small pot of money. How did Goldman respond to Zero Hedge? They pressured the NYSE to stop releasing data that caught their hand in the cookie jar.

There is one bright spot out there: among the requirements being considered in new banking regulations: extremely large reserve requirements for mega-corporations (Citi/Goldman/etc.). Now there's a regulation that would put a crimp on Goldman. If you pose a lot of risk to the system, you have to carry around extra reserves to go along with your risk. We'll see what happens with the regulation.

UPDATE: Goldman will be laughing all the way to the bank. Massive profits for the last remaining investment bank.

"At a time when the supposedly progressive party controls all the political branches of the federal government, our economy is being run like a glorified banana republic." -LGM

Meanwhile, Krugman says more signs pointing to a jobless recovery.

UPDATE 2- Goldman Sachs employee caught doing what they do best (fuck us). Unfortunately, this 15-year-old girl was actually an undercover cop.

UPDATE 3- Bashing Goldman Sachs is a Game for Fools. By Michael Lewis. Bitingly satirical take on Goldman's recent woes. Well worth your time. Lewis has been on a roll with his last few articles.