the smartest sociopaths in the room

The original article has many juicy tidbits beyond the bite-size items from CR.
I wonder if it will have any effect on their clients or if the attention spans of pension admins is too short.

Goldman "had no obligation to disclose how it was managing its risk, nor would investors have expected us to do so ... other market participants had access to the same information we did."

We'll put that on their tombstone. Hey, I've got an idea. Let's let aircraft mechanics take out life insurance policies on their passengers. Hey, don't look at me that way. The aircraft service logs and all the pertinent data is available to anyone willing to look at the same information the mechanics have.

JD: i added Mysterians to the glossary

Rob Dawg wrote:

Let's let aircraft mechanics take out life insurance policies on their passengers. Hey, don't look at me that way. The aircraft service logs and all the pertinent data is available to anyone willing to look at the same information the mechanics have.

Add in: And let's staff the FAA leadership with many of those same mechanics.

Rob Dawg wrote:

I've got an idea. Let's let aircraft mechanics take out life insurance policies on their passengers.

A better analogy might be doctors, nurses, technicians, and other medical staff betting on the outcomes of patients.

The ARS stuff makes me want to break things. To all here that don't know me, nope not invested, just a saver schmuck-no 401K even.

I've been following the ARS Bond shenanigans for sometime now, it appears no real consequences will result except of course to the buyers and for those the bonds were issued. arrrrgh.

The frustrating thing about ARS is that flawed basic structure of the damned things was obvious to anyone who had owned money market preferred in the 1980s and 1990s and lived thru a failed auction.

Having sold those securitized packages presumably gave them opportunity to understand what they contained... and that is what let them punk their own customers.
It is really hard to imagine sneakier, more dishonest or more unethical behavior.

Mornin' JD. Enjoying polylingual wordplay.

Henry Paulson took an chance
And gave the Unabankers 700 billion whacks.
When we saw what he had done
He gave his job to Geithner, to run.

The idea that a bank can logically separate its interests as an adviser/portfolio manager and its interests in investment banking has always been a bullshit charade.

I thought the McClatchy article would contain more than it actually did. So far as I can tell, everything there has been known for some time.

Looks like there are several MBS buyers in court already. Perhaps we'll get some trials in the next few years.

I'd like to see someone prove that what Goldman did was illegal or fraudulent. Until then, we're just bashing them for being winners.

So, a financial mysterian would be someone who maintains that the investment strategies of a firm too big to fail are intrinsically unknowable.

Rob Dawg...

right on target with the airline analogy.

But what insurer would take that trade...knowing what they know about you.

,rad pavel,

Financial-Fail-Safe is dangerous, if there are no boundaries vertically.

I'm saying that's just a fiction anyway. No matter what a firm says it is doing, it is still only one firm.

adornosghost (profile) wrote (in reply to...) on Sun, 11/1/2009 - 9:31 am

I like it, as it sums up capitalism, which rewards sociopathic behavior, and even idolizes the players.

Capitalism is not a philosophy, and cannot be the basis of ethics or a moral code, much less the behavior of an entire society. It is a mechanism of efficient exchange, an amoral instrument. We are neither.

GS theory: Heads I win, Tails you lose. Sums it up in a nice, concise manner.

MrM wrote:

Almost surely they have not done anything illegal - but that only shows that the current set of laws is deficient.

I don't know that. It may well be that Goldman made false and misleading statements when marketing MBS . . . or that they failed to disclose known material facts in filings with the SEC. The first would be fraudulent and the second illegal. Those allegations just haven't been proven yet.

As far as spreading the info far and wide, I totally agree. The press should do a better job exposing what it is that Goldman does . . . and how the AIG bailout used taxpayer dollars to line a lot of silk pockets . . . and how having Goldman executives at high levels of the government creates an inherent conflict of interest.

I think the American people are getting more pissed off by the day. I would just like to see their anger focused in the right direction, that is, against those who loot the system, legally or otherwise.

I keep waiting for the Teabaggers and the Left to realize they have a common enemy...Then it will be popcorn and pitchforks time. Well, assuming they can stop arguing over abortion and gays long enough to accomplish anythng.

California's huge public employees' retirement system, known as CALPERS, purchased $64.4 million in subprime mortgage-backed bonds from Goldman on March 1, 2007. While that represented a tiny percentage of the fund's holdings, in July CALPERS listed the bonds' value at $16.6 million, a drop of nearly 75 percent, according to documents obtained through a state public records request.

There's absolutely no way GS accurately described the nature of these bonds to the professional investment managers at CalPERS if their value has plunged by 75% in 2 years. If GS were smart they'd take this year's bonus pool and settle with everyone like they did Massachusetts. If CalPERS or even California were smart they'd put GS on a disqualified vendor list.

Time for hardball with the vampire squid. None of this court and lawyers crap. They thrive on it. Shunning is the way to deal with them. The vampire squid cannot come in unless you invite him.

That is exactly right.

Alumnusachs has their fingers all over money sacks everywhere, not unlike the railroads of Frank Norris "The Octopus"

They were yesterdays version as well. They and JPM had their dirty little squid prints all over the GD as well. They just keep morphing into a larger

I'm craving some fried Calamari right about now.

Bond Girl: I really appreciate your posts and insights...thank you.

Perhaps this is wny the Vampire Squid was so interested in getting one of their own as the head of the SEC Enforcement Division . No suspense wondering how they'll rule.

Bond Girl wrote:

Disclosure rules are often different for sophisiticated investors, who presumably do their own due diligence.

Anyone know the history of sophisticated-investors asset limits? ie the numbers. I've never seen a graph of those in real $$.

Tomorrow's White House Press Release:

Mr. V is appointed to the Supreme Court, effective immediately. Mr. V was former Manager of Business Processes at GS for nine months where he established the highest ethical standards. At the age of 23 he is the youngest person to have ever been appointed to the highest Court.

I'm not convinced that the investment managers at Calpers try to learn the details of anything they throw money at.

adornosghost wrote:

I like it, as it sums up capitalism, which rewards sociopathic behavior, and even idolizes the players.

As capitalism, so our society these last 20-odd years.

There is no question that hedge funds are one of the dominant participants in the
re-distribution of market risk. Among the most common risk distribution instru-
ments used by hedge funds are credit default swaps. Most simply, these are insur-
ance-like products that provide protection against default or bankruptcy, in that
they pay bondholders some form of compensation after a defined credit event. Use
of these instruments has grown substantially from about $631.5 billion in 2001 to
about $17.3 trillion in 2005. The significant growth in these securities does raise
some important public policy issues, which I will address below.

First, all involved need to continue efforts to better understand the rapidly evolv-
ing derivative and hedge fund industries. For example, estimates of the total size
of the notional value of over-the-counter derivative contracts outstanding vary wide-
ly. The President of the New York Federal Reserve Bank estimates the number at
$300 trillion. The Bank for International Settlements places the number at $270
trillion, while the International Swaps and Derivative Association estimates a no-
tional value of $219 trillion.
Even value at risk, which is a much smaller number, is subject to varying inter-
pretations and estimates.
When rounding errors for estimates for notional value of outstanding derivative
contracts are in the tens of trillions of dollars, it is hard to have total confidence
that we understand all the potential vulnerabilities that may exist in this industry.
Second, in his February 28, 2006, presentation on financial risk, Mr. Geithner
raises the possibility of a potential rush to the exit by highly leveraged derivative holders during a future period of market turmoil. This development could lead to
liquidity shortages and markets failing to clear efficiently. Liquidity shortages are
why markets melt down so fast and overshoot in some crises, as was the case in
the 1987 stock market debacle. Obviously the Federal Reserve can play a role in
addressing certain kinds of liquidity shortages in a crisis, but individual investors
should be mindful of the need for an adequate capital cushion to address potentially
unfavorable market developments. The issue of potential liquidity shortages during
a crisis is one that deserves further study.
As more and more investor groups and pension funds become involved in the de-
rivative business, after a long period of growth and economic stability, some inves-
tors may be tempted to take on risks that they do not fully understand. Should
early signs of possible vulnerability begin to appear, the most sophisticated inves-
tors will, of course, quickly shed risky investments. Remember for example, what
happened to Argentine bonds: Before the spectacular default, they ended up in the
hands of Belgian dentists and Italian pensioners. These hearings should serve as
a reminder to investors of the oldest lesson in business dealings: caveat emptor—
let the buyer beware. Complex derivatives are not a place for amateur investors.
There is an enduring connection between high yields and high risk.

Has it occurred to anyone that perhaps GS was reading CalculatedRisk in 2006?

Has it occurred to anyone that perhaps GS was reading CalculatedRisk in 2006?

I would be very surprised if the did not - if not for investment ideas (and let's agree that CR was not the only place that voiced concerns about the RE market), then certainly from the PR and Corporate Affairs perspective.

forensic analysis, does a lot of good for who? or what?

I was attempting to do some research before asking another stupid question regarding REITs. The reason this comes up as I'm aware some pension funds have exposure to these products-by how much I don't know. I wondered how linked in CRE is and how these are traded. I came across this:

The first plunge was bad enough. REIT stocks dropped 44%, almost twice the losses in the S&P 500, between New Year's and the market's nadir in March. That's because investors feared many of these trusts, which must pay out nearly all their earnings to shareholders leaving them with a thin cushion of capital, would go bust due to plummeting property values and loans you'd only agree to if you thought you could refinance them later. With a few exceptions, REITs didn't go bust. Instead, they convinced investors to buy their bonds and scoop up their stock. They also convinced regulators to let them pay dividends in stock instead of cash. For the most part, they're no longer in mortal danger, although the number of commercial mortgages coming due will rise substantially in the next few years and it will take a miracle for real estate prices to recover to what the mortgages say they're worth.

http://www.forbes.com/2009/10/30/real-estate-stocks-markets-equities-valuations.html

MrM, it's true that CR was not the only place that voiced concerns. I followed several bubble blogs that all led here in one way or another. There were plenty of warning signs out there in the ionosphere.

I guess I'm just amazed that so many bright people made so many stupid decisions along the way.

== Cthulhu .... that should be some fun!
(you heard the meme here first, folks)

I'm confused 'bout the squid icon?

,rad adornosghost,

I always feel like i'm floating on air skiing @ Heavenly, looking down on oh so many shades of blue. Years ago when I lived in Tahoe, I had a season pass to Homewood, and once in awhile, clouds would form like a pillow a few hundred feet above the lake, very cool looking.

Squid origin:
The Great American Bubble Machine : Rolling Stone 

When it comes time for a symbolic sacrifice FedGov politicians will throw GS under the bus rather than accept their share of the blame.

Wow, Rob - that is so wildly optimistic! Do you really see a plausible scenario when the politicians will have to choose between their survival and throwing GS under the bus?? That did not happen even at the peak of crisis, even when some Congressmen openly complained about the Congress being owned by the banks. Instead, Obama proudly said that he would protect the bankers against pitchforks and pleaded for their cooperation with his economic policies.

We are sooo far away from anything remotely close to even a hint of a need to pin blame publicly and politically on the big survivors - GS and JPM.

Juvenal Delinquent wrote:

Lift tickets are around $50-100 a day, prisoner of zenda restaurant & bar pricing

Makes that $70 season pass at Six Flags look like a bargain.

"We are sooo far away from anything remotely close to even a hint of a need to pin blame publicly and politically on the big survivors - GS and JPM."

So very true. Highlighted this week in the NYTimes book review is an admiring biography of Jamie Dimon, The Last Man Standing. Excepts from review....puking is optional after reading....

"the JPMorgan C.E.O. exercised more caution than many of his counterparts in the several years leading up to the bursting of the housing bubble. Then Dimon acted boldly in March 2008 to scoop up the remains of the wrecked investment bank Bear Stearns in a government-­orchestrated salvage operation that forestalled even greater panic. His generally savvy stewardship has left giant JPMorgan in a strong competitive position, earning him McDonald’s praise as a “hero,” a “financial philosopher” and a “moral and managerial compass for both his industry and the country itself.”

Juvenal Delinquent wrote:

So how does one deal with dirty rotten scoundrels that just happen to be in charge both politically and financially?

Obey them?

I guess I'm just amazed that so many bright people made so many stupid decisions along the way.

I think the pressure of meeting/beating quarterly earnings expectations, the need to dance while the music is playing is a big part of it. Many saw the crash was coming, but thought they would be able to get off this runaway train in time, while still making just a bit more money while it was running.

It is unfortunately true that the market can stay irrational far longer than an investor can stay solvent. Remember how in 1998-1999 Tiger Management lost its shirt betting against the dotcom bubble (and believing in US Airways' bright future)?

It is likely that 10-15% UE rate will prevail thru 2011. That together with GS and JPM connections, Mr. O and the democrats are ed. It is already having an effect on some races, NJ Governor's race, case in point?

MrM wrote:

I think the pressure of meeting/beating quarterly earnings expectations, the need to dance while the music is playing is a big part of it.

For me one word does it: greed.

You can't con an honest man. (Okay that's 7 words.)

fried wrote:

Then Dimon acted boldly in March 2008 to scoop up the remains of the wrecked investment bank Bear Stearns in a government-­orchestrated salvage operation that forestalled even greater panic. His generally savvy stewardship has left giant JPMorgan in a strong competitive position

old John Pierpont is smiling at this

sportsfan wrote:

Rob Dawg wrote:

The vampire squid meme has got to be a relations nightmare.

I wonder if they really care.

Be nice if they loved us but better they fear us than love us.

I'd love to get Timbabwe & Benjamins in a poker game, they both have amateurish tells that nobody ever told them about.

As for you ski freaks - go back country & do it for free - that's what I've done the last 25 years though I'm getting a bit old to do the distances required.

David Gregory isnt very good (his questions arent very pointed, and he doesnt really know how to follow up) but he is definitely pissed and on the attack. Mostly a useless argument, save for showing how evasive Timmay is. Definitely check this out on Meet the Press - no link yet - too busy with espresso to look. Timmay really doesnt sound very smart to me.

MrM wrote:

Ayn Rand at her best - the smartest and toughest few win, the rest have to pick up pieces.

or pick up cans for the deposit money

You slap your skins on the bottoms of your skis and climb 2,000 feet up the mountain on your own power and it takes you a few hours, as mother nature conditions apply, groomed slopes... what are those?

And then one glorious run to the bottom, and maybe do it again, but twice in one day is all you can do.

Go to a resort* and do it 25 times in a day.

*I'm a recovering resort skier, but am still addicted.

in addition ro Rob Dawgs excellent suggestion above

is it within the reach of congress to apply pressure needed to get Goldman removed from the list of primary dealers

banish them from the top of that food chain

Sorry Rob, we be un-needed tadpoles in a gigantic ocean.

Home > Markets > Primary Dealers
Primary Dealers List

Memorandum to all Primary Dealers and Recipients of the Weekly Press Release on Dealer Positions and Transactions

The latest list reflects the following changes:

List of the Primary Government Securities Dealers Reporting to the Government Securities Dealers Statistics Unit of the Federal Reserve Bank of New York

BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
RBC Capital Markets Corporation
RBS Securities Inc.
UBS Securities LLC.

sportsfan wrote:

They really do look like 'the smartest guys in the room' when they come out of a financial crash smelling so good.

They'd be bankrupt just like Lehman were it not for the AIG bailout.

There but by the grace of taxpayers goes Goldman.

Cheers,
prat

I had a package tour to ski the Florida Alps, but i'm afraid of widths.

From Wikipedia, here are some subsidiaries:

* The Ayco Company, L.P. (Financial Advisory)
* Cogentrix Energy (Energy)
* American Casino & Entertainment Properties (Casinos)
* CH James Restaurant Holdings (Quick Service Restaurant)
* Coffeyville Resources LLC (Oil Refinery)
* Myers Industries, Inc. (Plastic & Rubber)
* USI Holdings Corporation (Insurance & Finance)
* East Coast Power LLC (Energy)
* Queens Moat Houses (Hotels)
* Sequoia Credit Consolidation (Finance)
* Shineway Industrial Group (Meat Processing)
* Equity Inns, Inc. (Hotels)
* KarstadtQuelle property group (Retailer)
* Nursefinders Inc. (Healthcare)
* Latin Force Group, LLC (Media)
* Constellation Energy Group

lawyerliz wrote:

Are lots of people calling them vampire squid?

Squid Co. is a favorite over on zerohedge.

I was calling them The Douche Rocket until Taibi outflanked me.

EDIT: I mean, how do you compete with "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." It's almost like he writes for a living...

Cheers,
prat

GS owns Constellation, formerly Baltimore Gas & Electric?

Pandit: “We are not a troubled bank. We have a lot of assistance from the government."

Made off like a Pandit, eh?

Winston wrote:

here are some subsidiaries

So that would make them sub-squid-iaries..

Making money is good,
Making the most money is the highest good
Therefore, there is no evil in making the most money.

Are lots of people calling the vampire ?
Do they have any surprising subsidiaries we wouldn't know we
were dealing with?

Like the White House, SEC and Treasury?
Or Archon Group (Commercial Real Estate) Archon Group, L.P. is a leader in commercial real estate and multifamily real estate, retail development, credit investing, property management, hotels and hotel management ?
Or Cogentrix (Power Production) Cogentrix Energy ?

"I'll be here all week!"

Perhaps to tie in the "no squid" image with a list of the sub-squid-iaries...with a tip jar so we can get the legal counsel lined up in advance

I suspect that has more lawyers, guns and money than all of us here put together.

praetorian wrote:

They'd be bankrupt just like Lehman were it not for the AIG bailout.

I don't think so. They got, what, $12 billion from AIG, who would have paid some portion of that even in BK, and they'll make something around $50 billion this year.

They made money while other investors were being clobbered.

I'm trying to do actual research and find that out. Right now that is a list from wikipedia so it should be taken with more than a grain of salt.

In GS's case "made money" == steal in too many cases.

Betting against your own clients is stealing.

Conflict of interest anyone? This would get you disbarred
if you were an attorney.

Winston wrote:

I suspect that has more lawyers, guns and money than all of us here put together.

That's why I say above that we don't shoot it, we starve it. This is the Archimedes principal at work. If we can get GS barred from even one sizeable retirement fund we can use a popular groundswell to cascade that into a crippling banishment from their feeding grounds.

Winston wrote:

I'm trying to do actual research and find that out. Right now that is a list from wikipedia so it should be taken with more than a grain of salt.

I doubt GS has them as subsidiaries - they'd rather have somebody else hold the risk [say a hedge fund] and they get a chunk of relatively risk free invisible upside potential.

Winston
thanks for the list of vampire squid subsidiaries

i think we need to add two

the US treasury

and the Federal Reserve

no doubt, no doubt...

choice a:
YouTube - Kevin Bacon - Fraternity Paddle 

choice b:
Last Great Act of Defiance Small Poster
> Last Great Act of Defiance
> Real Florida Gifts - the MarshBunny Gift Shop

So why am I hearing this for the first time?

Saudis bought the US govt too?

Start developing this and let the middle East go to hell,
or whatever they feel like doing.

Ok, recession over!!

Firewalls are a farce. It is like saying that your left hand does not know what your right hand is doing. Anyone who believes in firewalls is a chump.

The real issue is how permeable the firewall is and how well the the leakages are hidden (i.e., no email or paper trail, but lots of unrecorded phone calls between people with bad memories and good lawyers).

NW

A large law firm is supposed to do a conflicts search when
it takes on a new client. I understand they really do this. Sometimes
they may goof up--somebody changes a name or something like
that--and they get into trouble.

If GS couldn't do this, the offending opponents should be sold off,
or one of them anyhow.

I think LAM is a penny stock salesmen

Thanks, added to my blog post.

EvilHenryPaulson wrote:

Shale oil is even harder/more expensive to extract than oil sands. Much much harder. Yes, the oil is technically in there and technically recoverable. It's just not profitable until oil is comfortably in the $ triple digits per barrel

When you consider how much energy is expended extracting tar sands oil, is it really worth the energy to extract oil shale?

man, the nutcases have invaded....

who would have paid some portion of that even in BK

how delusional is this thought

new rule. corporations cannot own other corporations
too much undesirable complexity

LONG
From Joe Nocera's article in the NYT

Short Memories at Goldman
By JOE NOCERA

"..
Then there was the fact that during their moment of maximum vulnerability, the government let Morgan Stanley and Goldman Sachs become bank holding companies — something it had earlier refused to allow Lehman Brothers to do. In practical terms, it wasn’t all that big a deal; it primarily meant the two firms were going to be regulated by the Federal Reserve rather than the Securities and Exchange Commission.

But in psychological terms, coming at a time when Wall Street was openly questioning whether Morgan and Goldman would be able to survive the panic, it was huge. It meant that the Federal Reserve was standing by the two firms, and it helped calm the storm.

More? How about the government’s decision to save A.I.G. — and make all the counterparties whole? Although Goldman insists that it had hedged its A.I.G. exposure, a collapse of the firm would have been devastating for the financial system, Goldman very much included. And of course the government wound up paying off all the A.I.G. counterparties at 100 cents on the dollar, which in Goldman’s case amounted to $12.9 billion.

Then there was the Term Asset-Backed Securities Loan Facility, set up by the Fed, which allowed firms to buy up distressed securities and sell them for a very healthy profit to someone who was part of the TALF program. You don’t think Goldman Sachs did plenty of that? Traders I know say Goldman traders were all over those assets — and made millions trading the securities.

Finally, there is the biggest benefit of all, a benefit that seems blazingly obvious to just about anybody who doesn’t work at Goldman Sachs. The government will never, ever let it fail. That’s what the events of last fall proved.
.."

Oh.

If you think (hope?) that the Ayn Rand philosophy hasbeen fully discredited by the latest series of crises, think again

CapitalistWith a $ - NY Times

A specter is haunting the Republican Party — the specter of John Galt. In Ayn Rand’s libertarian epic “Atlas Shrugged,” Galt, an inventor disgusted by creeping American collectivism, leads the country’s capitalists on a retributive strike. “We have granted you everything you demanded of us, we who had always been the givers, but have only now understood it,” Galt lectures the “looters” and “moochers” who make up the populace. “We have no demands to present you, no terms to bargain about, no compromise to reach. You have nothing to offer us. We do not need you.”
“Atlas Shrugged” was published 52 years ago, but in the Obama era, Rand’s angry message is more resonant than ever before. Sales of the book have reportedly spiked. At “tea parties” and other conservative protests, alongside the Obama-as-Joker signs, you will find placards reading “Atlas Shrugs” and “Ayn Rand Was Right.” Not long after the inauguration, as right-wing pundits like Glenn Beck were invoking Rand and issuing warnings of incipient socialism, Representative John Campbell, Republican of California, told a reporter that the prospect of rising taxes and government regulation meant “people are starting to feel like we’re living through the scenario that happened in ‘Atlas Shrugged.’ ”

GS isn't amoral, it's immoral to bet against your clients.

I don't care if the clients are stupid enough to sign a well-worded
clear waiver, it's still immoral.

Bond Girl wrote:

They would say pensions funds, etc. are sophisiticated investors. Not their problem. Very close to the same argument that the rating agencies would make.

Anyone with much experience dealing with pension funds and was willing to be honest would have to conclude that pension funds has a lot of money, but they are run unsophisticated investors who may or may not have fancy degrees and certification and who are easily bluffed into making stupid, herd-like investments that they do not understand since they are unwilling to admit what they do not know what they do do not know. The best investors and most successful portfolio managers that I've worked with have the self-confidence to admit that they do not understand an investment and then not invest in it. They do not let the sell-side brokers BS them into making stupid investments. Need to add a glossary entry on "jamming" brokerage clients.

doug r wrote:

When you consider how much energy is expended extracting tar sands oil, is it really worth the energy to extract oil shale?

Oil sands is not that bad. Energy output / input is 4:1 before upgrading, and energy value output/input is 2:1. In the last 5 years the research to improve efficiency really took off. There should be improvements going forward.

However, those techniques don't really apply to shale. I mean, we are talking about extracting microscopic pockets of oil from solid rock.
Honestly, it's probably more efficient to do what Sasol does and convert coal to oil.

How do the Randists get along with the Fundies?

EvilHenryPaulson wrote:

Honestly, it's probably more efficient to do what Sasol does and convert coal to oil.

Yes - definitely. And if you are concerned about CO2 then convert poplar trees & elephant grass to 'oil'. Same thing.

lawyerliz wrote:

How do the Randists get along with the Fundies?

Great! If they can make a buck or two off of them.

NorkaWest wrote:

Anyone with much experience dealing with pension funds and was willing to be honest would have to conclude that pension funds has a lot of money, but they are run unsophisticated investors who may or may not have fancy degrees and certification and who are easily bluffed into making stupid, herd-like investments that they do not understand since they are unwilling to admit what they do not know what they do do not know.

I'm not much for the monetarists (I'll take them over the keynesians) but I think this video is instructive:

YouTube - The 4 Ways to Spend Money by Milton Friedman

Cheers,
prat

How many cents on the dollar was AIG willing to pay GS under the threat of BK before the bailout?

It's a simple question.

sportsfan
I think I saw one article that quoted 40¢ on the dollar to close out swaps in general

EHP, if true, that would be about $5 billion, or $8 billion less than the government paid.

(The government's excuse, of course, is that the bailout eliminated the threat of BK.)

lawyerliz wrote:

40% is pretty good pickings in a bk.

But not as good as par - it is good to be king!

The process of extracting oil from oil shale is actually really simple. You heat it and it decomposes. You can either do this by mining it and then heating up the rock you extract (which is what everyone does) and collecting the resulting oil which is then processed like crude oil - the one drawback of this is that oil shale (which isn't really shale) doesn't yield a whole lot of oil and expands when heated so you when you're done you can't just put the rock back where you found it.

The other option is to try to heat the oil shale underground and extract the yummy, yummy liquid that results. The later is very hard to do, but various methods have been tried. My favorite approach for shear audacity is to mine underneath a formation, use explosives to shatter the formations, pump air into the voids and ignite the whole thing. The flames would progress through the oil shale, fueled by the shale and the air you pumped in, releasing the oil. I don't believe anyone has actually done this, but there were lots of people working on this approach in the 1970's.

OT, but interesting for anyone who might be worried about the amount of data in secret files...

Stasi files still cast shadow, 20 years after Berlin Wall fell
| Reuters

All:

I'm giving up on finding out what the subsquidiaries do/own. I haven't had enough this morning to get through that level of obfuscation.

EHP, I think they did announce it publicly in 2008. The McClatchy article seems to suggest they started the process in 2006, perhaps by buying swaps, and didn't disclose that at the time they were selling off their MBS holdings.

Buy short positions and sell long positions could have happened at different times.

Winston - I was a chem e in the early 80s & was in school in the 70s... familiar w/ it & none of this worked. Not a chance in hell any of it will be economically viable. It's great stimulus to have the gov't fund these kinds of experiments but the only value that comes out is it shuts everyone up for another generation or so [until the memory dims].

Time to find the old jimmy carter cardigans.

praetorian wrote:

I hold out hope that the internet may change this to some extent.

If Gutenberg couldn't change it what makes you think electronic Gutenberg will? They would have to change human nature... but maybe this time is different.

I hold out hope that the internet may change this to some extent. Having so much information and, especially, video indexed and available to everyone may have a salutary effect. That is assuming away an Idiocracy-like swamping via pornography, funniest home videos and cat pictures.

roflol

Did you see the mug shots of those two kids in Iowa who used magic markers on their faces to "disguise"them?

i hold out no hope.

In the 90s when I was in school I had a project related to oil shale and agree that all the in-situ methods proposed faced a huge number of problems and were probably dead ends. With expensive enough oil, strip mining the stuff might make sense but at those oil prices a LOT of other stuff makes sense first. I don't really expect to see oil shale be a major player in my lifetime, especially with the growing desire to reduce CO2 emissions.

if GS had gone net short MBS in 2006, where are the 2 years of hits to earnings hidden away
the truth is we went short in 2008 after Paulson met with the board in Moscow
it was later spun as the brightest strategist minds within GS had a spontaneous pow-wow and decided to do a 180° turn and short as fast and as much as possible
Occam's Razor

dryfly wrote:

They have to change human nature

Reading a book is hard. Watching video (and being able to project video) or reading/writing a blog is a different thing.

The housing bubble was the first bubble to occur in the internet era. Perhaps I'm just grasping for something to be optimistic about, but I feel like the next housing bubble will be much harder to deny or ignore.

And, of course, I don't think this time is different. I just think this technology is different.

Could be wrong. Certainly wouldn't be the first time.

Cheers,
prat

Winston wrote:

ith expensive enough oil, strip mining the stuff might make sense but at those oil prices a LOT of other stuff makes sense. I don't really expect to see oil shale be a major player in my lifetime, especially with the growing desire to reduce CO2 emissions.

One exception - the stuff might be real good as a source for chemical feedstocks. If 'we' go all Fischer-Tropsch then it will be difficult & expensive to build up large molecules... so I'd expect companies to mine tars & shale oils looking for 'ore' to extract larger molecules as an alternative. The economics are different and the scale required is multiple orders of magnitude smaller. I remember having this discussion w/ friends over beer circa 1980.

GDD9000 wrote:

Timmay really doesnt sound very smart to me.

he's not, his fund of knowledge is restricted to his experience which has been channeled from Rubin

he's just a stooge

I detect a little conspiracy theory in your Occam's Razor. You may be right, for I have no idea who did what when.

If, by virtue of my several comments on this thread, I seem to be defending or excusing or justifying GS and its actions, I can assure you that I am merely trying to discount some of the shrillness.

If there is to be an attack on GS, it should be made with the best arguments and most verifiable facts available.

GS was #2 in global MBS issuance
edit: couldn't find the reuters/bberg link in time, data is at Mortgage Rankings from Inside Mortgage Finance if you have a subscription

sportsfan wrote:

But then a whole lot of us wouldn't have survived that either (and I mean that in the most fundamental sense).

Not true at all, and one of the biggest myths of the bail out. Banking is plenty profitable, and the bankruptcies would have been wound down in the usual way, and strong hands (Buffett, etc.) would have acquired the good assets of the current banks. There are plenty of local and regional banks that the Fed could work with to ensure credit was being granted to the real economy, if that is what they care about.

What was preserved was the current, centralized banking cartel, with GS and JPM at its head. They are not providing liquidity. They are extracting liquidity.

Just because the ex-goldmanites in government can't imagine a world without GS doesn't mean that such a world can't exist. And, if free markets were allowed to operate properly, they wouldn't exist.

There but by the grace of the taxpayer goes Squid Co.

Cheers,
prat

volker the viking wrote:

I know I will

Me, too.

EvilHenryPaulson wrote:

Shale oil is even harder/more expensive to extract than oil sands. Much much harder. Yes, the oil is technically in there and technically recoverable. It's just not profitable until oil is comfortably in the $ triple digits per barrel.

EHP: i beg to differ with you on the economics of shale oil. It will not be profitable at $ triple digits per barrel since the development costs will rise to reflect the $ triple digit increase in energy costs. Cost increases match or exceed revenue increases destroying your ROI.

Only way a shale oil plant pencils out is if you build the plant "on spec" at today's low prices and then there is an oil supply issue and there is a surprise jump in oil prices.

I think that we're likely to use a lot less liquid fuel and that oil will remain dominant as a chemical industry feedstock, but you're right that if there is to be much use of oil shale in my lifetime it will probably be in that way.

dryfly wrote:

I think you are - people don't change much even when their 'tools' do [books & video are just tools].

Well, if you please, I'll keep holding out hope, as a noble lie that keeps me from spitting upon my hands, hoisting the black flag and getting on with the throat slitting.

Cheers,
prat

praetorian wrote:

Well, if you please, I'll keep holding out hope, as a noble lie that keeps me from spitting upon my hands, hoisting the black flag and getting on with the throat slitting.

I'll be looking for you on speak like a pirate day.

I would see us use oil for transportation, and replace petroleum with other sources of feedstocks.
You can make plastic, you can produce fertilizers without oil much more easily than you can replace the energy density of oil

dryfly wrote:

I'll be looking for you on speak like a pirate day.

Rather.

Cheers,
prat

sportsfan
I can confirm from 2 degrees of separation that there was indeed pure fear at the highest levels of US government and military around this time last year. It's partly the distance from that memory which has bred complacency of a H2 recovery, because while things are no better off, they don't have the fear of collapse

EvilHenryPaulson wrote:

as a feedstock chemical production. Which definitely doesn't make sense at this point in America with its large deposits of anthracite coal

According to folks I've talked to the chemistry of the two are very different. The coal doesn't have all the interesting chemical make up found in oil shale. Heck even oil sand doesn't have as 'interesting' a distribution of molecular weights & 'complexity' [better than coal though]. When mining for feedstock complexity is a good thing.

What holds it up now is that oil [even sour heavier crude] has that same complexity at a fraction of the cost and its right there at the 'tap' coming off at various distillate draws. Until that changes the Rocky Mountains are 'safe'.

As the NARM would likely say: GS folks are the wizards of scum! Make the ivy league proud for putting out such solid citizens.

I am voting against O and his GS party next time around. What a disappointment. Bought and sold like a slave.

Winston
You can reduce consumption by raising the price of oil. Meanwhile, with the higher price of oil the industrial plants switch over to cut more oil consumption because they can do it easier and cheaper than the transportation fleet (eg a jumbo jet isn't going to fly on power from wood pellets, or an 18 wheeler going to make a cross country trip on natgas before the chemical plant switches to lignin a waste byproduct from pulp&paper mills, to produce plastic)

sportsfan wrote:

I agree complacency in the U.S. is now the order of the day.

uh huh

anybody ever have Soviet guests way back when? took them shopping and watched them shut down at the enormity of the consumer choices

took one guy shopping for a Barbie. We went to the mall to the Barbie store. He looked and looked and his eyes glazed over, then he said--just want Barbie for my granddaughter

Similarly, try talking to your friends and co-workers or acquaintances about what's happening and you'll see the same emotional shutdown, eyes glazed, subject changed

oh well

anyone remember this
Goldman Sachs et al Downgraded To “junk” « newyorkscot

Thankfully they have a government, future employees ?, who can funnel money to them in a crisis.
~splat

Thanks for the interesting Oil Shale comments everyone...

Hearing more about BPL (broadband over powerlines) in the news. Anyone have experience with BPL internet service. It's hard to find any info with current BPL customers. Just wondering if recent push is for Federal dollars or a true competitive product to DSL and WiMax. Sounds interesting with the powerline interstruture in place.

mock turtle wrote:

my argument with father and brother...drill baby drill kinda guys... (brother geologist, father refining and sales) was that we should hold off additional develpment of alaska crude reserves

Mock Turtle: You're wrong, since you are ignoring the lead times involved in exploration and development on the Alaskan North Slope (ANS).

There is a 2-3 month window each year to barge heavy equipment and supplies to the ANS. If you lose the window, you lose year. It takes twice as long and costs multiple time more to develop these remote fields.

One factor everyone is working overtime to ignore is the legal requirement under the authorization for the Trans-Alaska Pipeline that the pipeline be removed and habitat restored at the end of its economic life. Prudhoe Bay and Kuparek fields are on the downside of their production curves. If there is no new oil from new fields to fill TAPs, the pipeline owners will have to decide when the pipeline has become uneconomic and must be dismantled. Once TAPs is removed. it will be uneconomic to rebuild it when and if we decide to exploit future ANS reserves.

No TAPs; No Alaska oil.

NW

PS: I spend 2 years early in my career doing supply and transportation economics and analysis for one of the companies that found and developed the ANS. Talk with your father and brother. See if they agree or disagree with my summary analysis.

volker the viking wrote:

you'll see the same emotional shutdown, eyes glazed, subject changed

Yes, although it may come from the preception that nothing can be done to change things.
We are a debt based society, people have mortgages, car loans, student loans, credit cards. That system is not going to change. Many of the very basics of survival are dependent on debt / credit. Most people can't fight that system.

In addition most people are much more moral that the eating them for lunch. That may be what changes. To our benifit or not?

Weekly Summary

Alaska production at ~1/3 of peak:
Alaska Field Production of Crude Oil(Thousand Barrels)

The Oil Shale Company spent a lot of time, money, and brain power on oil shale in the 1970s.

They finally faced up to reality and hard economics, settled for being a refining company.

Anyone bought any mogas from TOSCo lately?

1 currency now -yogi wrote:

I don't have subpoena power; most with that power work or worked for Goldman Sachs.

Yes, yogi, I agree that is a problem. I would like to see Geithner gone yesterday.

LAM wrote:

BPL (broadband over powerlines)

I heard that it screws up short-wave radio.

Not a problem, since we never have disasters and have to rely on short-wave operators for communications.

dryfly wrote:

Until that changes the Rocky Mountains are 'safe'.

I'm imaging how the weather on the great plains, midwest and east would change once they start mountaintop removal on the rockies.