Comments (32)

Mar 19, 2011

"Look, you're my best friend, so don't take this the wrong way. In twenty years, if you're still livin' here, comin' over to my house to watch the Patriots games, still workin' construction, I'll fuckin' kill you. That's not a threat, that's a fact.

Mar 19, 2011

Yeah and everyone wants to go into IBD there....lol

Mar 19, 2011

And everyone knows they cheat (front-running); you can't have like 99% profitable trading days without cheating

Mar 19, 2011
alexpasch:

And everyone knows they cheat (front-running); you can't have like 99% profitable trading days without cheating

Don't be jealous Alex.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Mar 19, 2011
happypantsmcgee:
alexpasch:

And everyone knows they cheat (front-running); you can't have like 99% profitable trading days without cheating

Don't be jealous Alex.

It's simple statistics dude. Just like how it was impossible for Bernie Madoff to make money so consistently and with so little volatility, the fact that GS makes money so consistently is a blatant tipoff that they're engaged in a ton of shady practices.

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Mar 19, 2011

Alex,

I'm not going to entirely disagree with you here. While they do "Supposedly" engage in a whole slew of extremely shady activity that may or may not be misconstrued as front-running and taking the opposite side of the trade, you are forgetting that they have the absolutely cheapest source of funding ever as a Bank Holding Company. They have access to the Fed Discount Window, which means they can borrow at a quarter of a point interest rate. As soon as they see gains that exceed their principal and quarter point interest, they are effectively in the black for the day. At that point... They make a daily profit of 15%... they are walking away with 14.75% profits without risking their own capital as long as they can generate a quarter of a point in returns for the day based on the principal of their loan.

Case and point:

Goldman borrows 10 Million from the Discount Window at a quarter of a point in overnight funding to be paid back at the end of business tomorrow. They will owe the Fed 25 Thousand in interest. As long as their trading operations bring in that 25K to cover the interest payments and Goldman doesn't lose the principal, every cent they bring in over that is profit that contributes to their profitability.

Mar 19, 2011
Frieds:

Alex,

I'm not going to entirely disagree with you here. While they do "Supposedly" engage in a whole slew of extremely shady activity that may or may not be misconstrued as front-running and taking the opposite side of the trade, you are forgetting that they have the absolutely cheapest source of funding ever as a Bank Holding Company. They have access to the Fed Discount Window, which means they can borrow at a quarter of a point interest rate. As soon as they see gains that exceed their principal and quarter point interest, they are effectively in the black for the day. At that point... They make a daily profit of 15%... they are walking away with 14.75% profits without risking their own capital as long as they can generate a quarter of a point in returns for the day based on the principal of their loan.

Case and point:

Goldman borrows 10 Million from the Discount Window at a quarter of a point in overnight funding to be paid back at the end of business tomorrow. They will owe the Fed 25 Thousand in interest. As long as their trading operations bring in that 25K to cover the interest payments and Goldman doesn't lose the principal, every cent they bring in over that is profit that contributes to their profitability.

And you don't find this the least bit shady? Why is the Fed essentially indirectly funding GS trading operations? (it's not GS, but all banks, it's a huge sham imo) It's essentially a wealth transfer from the government directly to the banks.

Mar 19, 2011

Honestly I believe this is media stretching the truth about Wall Street as usual........I mean think about it Prop Trading has basically vanished, so should we expect their profit that decline dramatically?!? I think not.

Also does it bother anybody else that they say "our money" in reference to tax dollars, as if we don't pay tax? and more then them at that. lol

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

Mar 19, 2011
1man2nv:

Honestly I believe this is media stretching the truth about Wall Street as usual........I mean think about it Prop Trading has basically vanished, so should we expect their profit that decline dramatically?!? I think not.

Also does it bother anybody else that they say "our money" in reference to tax dollars, as if we don't pay tax? and more then them at that. lol

They aren't stretching the truth as much as you think.

Are you serious? The use of the "our money" reference is totally valid... I work on Wall Street and I think that a lot of what was done was total bs wealth transfers to a segment of society that has absolutely no need to be bailed out (and we continue to do it today). No industry receives more in the way of hidden subsidies than Wall Street.

Mar 19, 2011

Alex, working on wall street you should know more than anyone that the bailouts were necessary. regardless of the morality/ethics of the situation, do you honestly think everything would be better today had the banks been left to fail? the bottom line is that although it is fucked up that the banks can take as much risk as they pleased with the knowledge that they would be bailed out, the financial system, and the economy as a whole, would probably still be a complete fucking shitshow had nothing been done and more banks failed.

Mar 19, 2011
leveRAGE.:

the financial system, and the economy as a whole, would probably still be a complete fucking shitshow had nothing been done and more banks failed.

I'm sorry, but the economy IS a complete fucking shitshow, as you put it. Have you recently looked at the hordes of people falling out of the labor force, employment as a percentage of total population, housing starts, percentage student default rate, poverty rate, PPI? The economy is a complete and utter stagflationary disaster! To think otherwise is very naive.

Now with respect to the financial system, aka "markets"(if you can even call them that anymore), sure bailouts transferred billions of dollars in tax revenues to private banks from the public. By lowering interest rates, driving investments higher the fed created a false "wealth effect" that is NOT sustainable, I repeat, NOT sustainable. PD's have been making millions every day through outrageous bond spreads(which are essentially being footed by taxpayers) since March 09 when QE started. This is a classic move of the Oligarchs and it has been done for thousands of years, only thing now is that it is being done on a much larger scale. When the Oligarchs loose wealth, they need to regain it by literally robbing the classes that are below them, because that's the only way they can. C'mon man....

Mar 19, 2011

No industry receives more in the way of hidden subsidies than Wall Street.

^wrong, union workers and farmers.

Mar 19, 2011
boutiquebank4life:

No industry receives more in the way of hidden subsidies than Wall Street.

^wrong, union workers and farmers.

are those hidden subsidies though?

Not that I am on his side. Personally, I think Goldman is managed incredibly well and their techniques are genius.

"Look, you're my best friend, so don't take this the wrong way. In twenty years, if you're still livin' here, comin' over to my house to watch the Patriots games, still workin' construction, I'll fuckin' kill you. That's not a threat, that's a fact.

Mar 19, 2011

Honestly I believe people just get pissed when they see a group of people doing so much better then them. I believe 90% of those people anti-wallstreet would change places with one of us in a heart beat and not look back.

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

Mar 21, 2011
1man2nv:

Honestly I believe people just get pissed when they see a group of people doing so much better then them. I believe 90% of those people anti-wallstreet would change places with one of us in a heart beat and not look back.

^ THIS

Mar 19, 2011
1man2nv:

I mean think about it Prop Trading has basically vanished

Not the entire truth there bud. Prop Trading has just been rolled up into a different part of the trading floor and still happens, just under another name.

Alexpasch:

And you don't find this the least bit shady? Why is the Fed essentially indirectly funding GS trading operations? (it's not GS, but all banks, it's a huge sham imo) It's essentially a wealth transfer from the government directly to the banks.

I never said I didn't Alex. I took the politically correct route in how I phrased it. Personally, I'm in agreement with you. It's shady and the banks should not be able to fund themselves via access to the Fed Window in order to transfer wealth from the taxpayers to the bankers.

Mar 21, 2011
Frieds:
1man2nv:

I mean think about it Prop Trading has basically vanished

Not the entire truth there bud. Prop Trading has just been rolled up into a different part of the trading floor and still happens, just under another name.

Alexpasch:

And you don't find this the least bit shady? Why is the Fed essentially indirectly funding GS trading operations? (it's not GS, but all banks, it's a huge sham imo) It's essentially a wealth transfer from the government directly to the banks.

I never said I didn't Alex. I took the politically correct route in how I phrased it. Personally, I'm in agreement with you. It's shady and the banks should not be able to fund themselves via access to the Fed Window in order to transfer wealth from the taxpayers to the bankers.

The Fed is collecting interest on these loans, yes?

Mar 19, 2011

Which is why we'll have QE until the moon and back... that's another story though.

Mar 19, 2011

Which division or group within Goldman then, makes most of the companies profits if it isnt IBD?

Mar 19, 2011
Nyctola:

Which division or group within Goldman then, makes most of the companies profits if it isnt IBD?

Prop trading hands down. Although because of the Frank Dodds Act prop trading is technically forbidden, Goldman (and probably other investment banks) still do it, based under a different "job heading".

Mar 19, 2011

From what I hear, S&T accounts for most of the revenue of BBs.

Mar 19, 2011

Chill, that's pretty true. The biggest portions of their income are derived from Prop Trading and FICC - Fixed Income, Commodities and Currencies. They also see a decent amount of money come in from their Derivatives and Options trading groups as well.

Mar 19, 2011
Frieds:

Chill, that's pretty true. The biggest portions of their income are derived from Prop Trading and FICC - Fixed Income, Commodities and Currencies. They also see a decent amount of money come in from their Derivatives and Options trading groups as well.

That doesnt make sense, FICC encompasses derivatives and options. Its FICC/Equities, derivatives is not an asset class. They also make quite a lot of money in Equities (Altho less than FICC, but this is expected considering FICC has more headcount)

Mar 19, 2011

Dodd-Frank...lol

Mar 19, 2011

I could be wrong, but I thought that although Goldman had access, they didn't actually use the fed discount window?

Mar 19, 2011

Derivs,

Mea Culpa for misspeaking, but I was not 100% sure if FICC held their Derivatives and Options groups or not. I would rather assume that they treated Derivatives and Options separately than I would assume that they are all part of the same group.

On the equities side, while they do make significant amount of money from their Equities group, the predominant amount of money comes from their Prop/"Flow Desk that is secretly doing Prop Trading".

JeffSkilling, I'm not sure, but it's always talked about as a whisper because the only people to know are the guys at the top. The rumor makes enough sense, particularly when you look at how much these banks are making on the Treasury Flip (Fed issues treasuries and then a few weeks later buys them back from the Primary Dealers in a trade at which the Primary Dealers, among which include Goldman, make a nice and tidy profit). Why not take risk free capital when all you need to do is ensure that you make at least enough to cover the Principal and Quarter of a Point rate?

KevinNYC, Do/Did you work for Goldman? You don't have a perfect quarter without doing something shady. Have you ever read Spear Leeds and Kellogg Prime Brokerage agreement? Or most prime brokerage agreements, in fact? There tends to be a "Trade Against" clause that allows the prime broker to use clients information against them. Their 2010 trade ideas were great, as their success rate was marginal at best. Why not use that and take the opposite side of the trade? Hell, how about that morning huddle? The fact is, they will find a way to do what they want under the guise of something publicly accepted that follows the rules.

Mar 21, 2011

they

are

jealous

Mar 21, 2011
UFOinsider:

they

are

jealous

Thats basically what it boils down to!

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

Mar 21, 2011

Actually I feel quite vindicated by this, they basically just said that investment bankers are "doing god's work."

Now if I could just convince the haters that trader=/=investment banker...

Mar 21, 2011
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Mar 22, 2011