Thoughts on The Vampire Squid Podcast?
Have you guys heard this guy's podcast? Do you think it is legitimate and helpful for understanding the financial services industry? Saw him on Business Insider the other day, Goldman Sachs TMT Analyst that recently left and trying to "increase transparency in finance".
Haven't listened to it, but I think I saw the same BI article. Isn't he simply explaining what IB is at a very basic level? I think most people wouldn't find it interesting. Maybe those looking to get into finance would listen.
Tried listening to it. A little flat and boring. But for the most part, we're not the intended audience because we already know most of the stuff he's talking about.
Bump, I think he does a great job for what he's trying to do - Wall Street 101. None of us do everything in finance so I've gotten good perspective on a couple topics.
The Vampire Squid (Originally Posted: 02/21/2013)
Nowadays it seems tough to find a proper financial scandal or controversy that Goldman isn't involved in somehow. Just off the top of my head I've got:
Quite a list! And now theres a new one... I'm sure everyone read about Buffet / 3G buying out Heinz; here's something you may have missed. Goldman had a solid 'Sell' rating on Heinz for its clients and was happily buying their stock off them in the time leading up to the buyout. Then a mysterious bank account in Switzerland starts buying a ton of interests in Heinz just before the deal is announced. The SEC has launched a probe into this, citing one 'GS Bank' account as the primary target of investigation. GS? Goldman Sachs? Hmm......
Anyway, this isn't some massive conspiracy post about how Goldman rules the world, but rather a question as to when (if ever) will Goldman Sachs go too far and be caught up in one too many scandals? I'm aware that all the large banks are involved in scandals one way or the other but over the years Goldman certainly seems to have had more than its fair share.
European sovereign debt crisis - Goldman does a great job representing its client, top marks.
Tentacles in government - As one of the toughest places to work, and connected to everything, it's not surprising that so many talented people have joined/been created in the crucible that is the GS environment.
Accounting misrepresentations - you say it's worth $10, I say $20, let's make a market...
AIG bailout - AIG was selling insurance that it couldn't pay out on. Without a central clearing house, no one (not even AIG) knew how much exposure these guys had to CDOs, CSODs etc...
Corzine - "A Corzine spokesperson responded that Corzine "never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds"
Shorting what it's selling - In a huge office/offices there are going to be a ton of different opinions, trading doesn't have to abide by the analysts opinions, infact, they should form their own opinion.
Frontrunning & flash crashes - The argument that the algos are front running clients and double dipping on the transaction fee has been around for a while, that said, the NYSE likes the volume, especially when they were trying to sell.
Raj Gupta - As a former director of both GS and Proctor and Gamble, I'm sure that you equate P&G as a nefarious shady organization. Really, you say, "look, that guy, that one guy in ~60,000 (current and former) employees is an asshat, that must be an evil company". Sure, there's been some shady characters come from GS, and everywhere else too.
you work for goldman? i'd like to send you my resume
Surely you're not serious? You do know that an individual/third party usually has to act through a finanacial intermediary to buy equities (call options in this case).
The Heinz trades were just executed by GS. They weren't the ones actually profiting from them...
I'm going long GS on the next pullback.
http://articles.businessinsider.com/2009-11-09/wall_street/30054567_1_b…
Classic Case of Schadenfreude. If you can't beat'em/join'em, hate on'em.
Understand that this is Goldman's World.
FundamentallyU, Sorry, I'm not a GS banker, and I'd still rather work for Jamie then Lloyd, but I just get tired of people using a very broad brush and a myopic strokes to paint a whole industry.
Listened to some douche say that everyone at GS should go to jail, he got mad when I said, yeah, even the janitors. Okay, so only some of the peopel at GS should go, he says yeah. I say, you realize that in a company with >30,000 employees, deal teams are comprised of anywhere from 5 to 20 right? So if one deal goes for shit, that's a one hundreth of one percent of the people at the company that are responsible for it. I didn't have to talk to him much longer.
A lot of those aren't all that specific to Goldman.
The big question is... so what?
And the answer is .... never mind, you're right. Move along, everyone.
Most criticism against GS (and IB in general I'd say) is mostly out of some hidden envy or something similar. While IBs (and CRAs) indeed have their fair share of the financial+sovereign debt crisis, many populist politicians and media use them as scapegoat. The current crisis IMO is a fundamental/structural problem of the current financial/economic/political system of western economies (each has its own case of course but similar outcome/problem). Your "Golden Boy" was just doing his job.
FYI, the FX Swap that GS went into with the Hellenic Republic was, they say, for facilitating Greece's access to the eurozone, as some criteria of the Maastricht Treaty were not met yet. (not the EU, Greece has been a member of the EU since 1981.) The other reason which also seems very likely is that Greece wanted to hedge its FX exposure to the Japanese Yen, as it had issued bonds denominated in that currency, something absolutely prudent and fair to do. Maybe it's a combination of both? I don't know. What I do know is that most people who accuse so conveniently GS+Greece, don't know either.
OP quick correction regarding your statement that GS has been "advising" customers to buy certain products which, at the same time, GS has been shorting. The advisory business is very different than the market-making business. Charlie Rose interviewed Lloyd Blankfein a few years back, and Lloyd had to make this same distinction several times.
[comment pointing out that OP's list isn't 100% accurate, thus allowing me to sidestep the main argument and the fact that 70-80% of it is, then pretending GS doesn't do a lot of shady shit]
People like to rip on banks, blah blah. But the reality is that without the infrastructure and products offered by these banks, our whole society grinds to a crawl. Complain about the housing crisis, forget that the invention of tranched MBS enabled billions of pension fund dollars to drop interest rates in the mortgage markets, enabling millions of people to buy more affordable homes. With the lower mortgage payments, these people were then able to buy furniture, groceries, travel etc... Money market funds, same deal, enables most big companies to carry on their day to day operations.
Think back to calculation for GDP, now reduce the velocity of money to 1 or
^ Gospel
^ Gospel
^ Gospel
The Vampire Squid Swims On (Originally Posted: 05/10/2012)
Lloyd Blankfein, the CEO for Goldman Sachs, was interviewed on Bloomberg Television last week. What an intimidating man.He was there to present Goldman Sachs in the best possible light, and to stop the bleeding from the negative publicity the company has been receiving since the financial crisis. For example, Rolling Stone's Matt Taibbe had referred to Goldman Sachs as "a vampire squid wrapped round the face of humanity." During the interview, Blankfein said what he wanted to say, avoiding unpleasant issues while trying to project an optimistic view of Goldman Sachs and the global economy.
Europe is slowed, Blankfein explained, but China is growing--by half a UK economy every year.
ROE was 12.2% last quarter, he said. Blankfein prefers share repurchases to dividends. Share repurchases improve ROE, but the shareholders want a stable, consistent dividend and Goldman Sachs is giving the shareholders what they want.
Unless you only lend to one client, according to Blankfein, conflicts of interest are inevitable. When you advise a client and then lend to that client, you need to get paid back. Blankfein spoke about there being more scrutiny and more second guessing. He spoke about "the rise of the BRIC" and how his predecessors did not visit China and did not visit India.
At one point, Blankfein appeared to be irritated with the interviewer, Eric Schatzker. Schatzker wondered whether Blankfein was acknowledging that some banks were too big to fail. Blankfein cocked his head to the side and said with a combination of bewilderment and annoyance: "Gee, how did you get that extrapolation?" I cringed, wondering how I would have coped with such an implicit assault against my character. Schatzker followed that question by praising Blankfein, explaining that in 2007, Blankfein "predicted that a dislocation in the credit markets was the biggest risk confronting the global economy." Schatzker acknowledged repeatedly that Blankfein was right, especially since the consensus believed otherwise.
Earlier in the interview, Blankfein was asked to comment on the statement made by Arthur Levitt, former head of the SEC and current policy advisor to Goldman Sachs, that Goldman should stop saying it puts clients first. This is what Levitt had said in a previous interview with Schatzker:
Blankfein said that he had spoken with Levitt about this and believed that Levitt meant his comment to be considered in a narrower context. I find that hard to believe.
Here is a New York Times excerpt that helps to explain why the public perception of Goldman has been so unfavorable lately:
Nice article.
He is an asshole ! He will be appointed head of the NOT Federal Reserve.
Schatzker is a tool. Now Sara Eisen, that girl he's on InsideTrack with.. wouldn't kick her out of bed for eating crackers.
Did he talk about the GS twitter?
Well written hdavid. SB +1
Vampire squid is such a funny image.
Pretty certain (correct me if I am wrong) Goldman Sachs is one of the largest Bloomberg users in the world. Think of the conflict of interest there.... Its never in Bloomberg's interest to show Goldman Sachs in a negative light.
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