When you evaluate Goldman’s 10K, it’s easy to see that they stopped being an investment bank and became a derivative player which Buffet had warned about for years. And if Goldman was going to be a derivative player, and they set the market standard for Wall Street, then everyone else wanted to play too!
Everybody had to have their hand in the till. If Goldman was making money as a derivative player, then couldn’t we? Thus Merrill, AIG, Morgan Stanley all got into the swap game. The problem is that no one…including Paulson knows what really exists.
The American taxpayer will not know the value of the poker hand their buying. Goldman bonus compensation is just round the corner…as it the rest of Wall Street’s. It’s not the CEOs you need to worry about…it’s everyone.
Wall Street starts evaluating people’s performances in September/October and November. Bonus is paid out sometime between February and April. And what is the average bonus Goldman partners are eligible for? For the thousands of people who aren’t partners? They get paid on average $260K salary with a bonus of about $400K. Then there are Managing Directors who aren’t partners, they’ll get anywhere from $1-2 million. And the Goldman partners? Anywhere from $5 to 15 million. Now let’s look at how many Goldman ‘s partners there are…at least 400.
In 2007, Goldman Sachs allocated nearly $17 billion for salaries, benefits and bonuses in the first nine months of the year.
In a few months, at least $7 billion will be paid out to Goldman partners in bonus…which doesn’t include bonuses for the rest of the firm. Paulson is purchasing this “poker hand” on behalf of the American taxpayer and ensuring that Goldman partners get their bonus. Great job Paulson.
In today’s Financial Times, George Soros rightly states,
First, he let Lehman fall…why? They were the sacrificial lamb. What if the government doesn’t intervene in the mess the boys on the street made? The government gave Paulson a blank check with Fannie and Freddie Mac. Fannie and Freddie has been bubbling with serious systemic problems for years. Aside from the fact that politicians didn’t understand it, Fannie and Freddie were poorly conceived. The reality is you cannot have a government owned entity that functions as a public entity and compensate people accordingly. They were a run on the American taxpayer…so a government take over is a good thing. How are you going to manage the problem now?
What’s he mean? Nobody knows what the paper is worth except for maybe the owners. American taxpayers don’t know what we’re buying. Who sets the price? The buyer…does this make any sense?
George Soros and others agree. Soros has more integrity and objectivity than Paulson who is ex-Goldman. It’s good to hear that someone else is as scared as I am about a blank check to Wall Street.
Copyright 2007 Ev Nucci
ev nucci
3 Comments
September 25, 2008 at 8:16 am
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February 19, 2009 at 7:40 am
The Government blank cheque syndrome is also on this side of the Atlantic.
The Irish Government has bailed out their buddies in the banks and the guys still want their bonues.
But, thankfully, there has been a bit of a St. Valentine’s Day Massacre in the banking boardrooms according to an amusing blog that we spotted.
http://jobs2ireland.com/jobs2ireland-blog/ilp-ceo-to-resign/