By Michael McCune
The “too-big-to-fail” poster child is at it again. Goldman Sachs must be considered the ultimate inside insider of history. The company helped Greece “rearrange” if debt to hide the true size and scope so the country could gain admittance to the Euro Union, the company is trying to help Italy cope with its unmanageable debt burden so it can qualify for a hefty loan from all the dollars the Federal Reserve is printing and, if you listen to them talk (for a price of course), they tout their own company like it is the greatest thing since Eve was created for Adam.
But behind the scenes, the players that work Goldman Sachs are abandoning the ship faster than rats. Goldman, unabashedly, buys its own stock to boost the market price, not to assure a solid base of treasury stock for the business. It rewards its workers with shares in the company for performance. This is all perfectly legal. But the price of said stock has dropped by nearly 40% recently and the workers who have been blessed with performance stock are selling them as fast as the law allows, almost 200,000 insider shares in a month, before the performance reward is lost completely.
Goldman Sachs had no division escape the decline. Equity Underwriting in the last quarter dropped by 65%, Investing And Lending dropped 55%, Investment Banking down 42%, Financial Advisory down 25%, Fixed Income down 18% as were Investment Management and Institutional Client areas. The star in its lineup was Equities Trading which dropped a mere 15%. That’s a lot of holes in the Goldman hull.
Goldman, who is on a first name basis with most of our representatives and senators in DC–they wait for Goldman to get back to them–is dropping revenues faster than one can reach terminal speed jumping out of a plane. Earnings are a few heartbeats behind in this race for obscurity in this once proud company. The only place Goldman’s name and reputation has not taken a hit yet is (no shocker here) DC.
Comparing figures for the last three years, Goldman’s net income was a hefty $13.4 billion in ’09. It slipped by $5 billion in ’10 and then pared another $4 billion in ’11. That’s more than a 60% drop in net income for one of the golden spoon crowd in 24 months. As this was developing during the government’s announced economic recovery period, one must wonder if the vultures at Goldman’s are only capable of making positive decisions when they find a freshly dead entity which has not started to smell or decompose so they can prop it up and dress it up for the gullible central bankers of the world.
The U.S.A. economic trouble goes deeper than Goldman; as stated, it is only the poster child. President Obama on NBC Sunday declared his “policies are working, we just need four more years to finish the job.” Was the “policies” reference to the green policies that boosted solar technology (with money taken from taxpayers) which then filed for bankruptcy before making one last donation to the Democratic party or green policies that brought an ungrateful American populace the life-changing Volt automobile which will light you up in more ways than intended, or was it a reference to the massive infusions of fiat, companies like Goldman Sachs, was awarded? Obama, as usual without his teleprompter, was not forthcoming with details but statements like he made are always better if you can provide hard data.
Let’s look at Obama’s two hard claims made during the interview: that his policies have “created” 3.5 million jobs and “brought the unemployment rate down.” If you count temporary gains in the jobs market as “created jobs” then he might be able to stand on that one but the official unemployment rate has dropped over 4 million people from the rolls in the last three years and that many again have returned to school so aren’t being counted either. The percentage of Americans participating in the job market has dropped to the lowest level ever recorded, less than 45% of all Americans are considered in the “jobs market”. So a “jobs” claim of any type at this time is only valid if one employs Washington’s warped accounting where “budget cuts” don’t actually mean any real, physical cuts in the amount of money a particular agency enjoys but only a decrease in the amount of increase it is in line to receive.
The unemployment rate is a total Washington fabrication but all Administrations, whether Republican or Democratic, play the same game in which there are no impartial referees. Where you can easily check out the validity of the Administration’s claims is along Main Street. Main Street continues to lag behind Washington and Wall Street because it wasn’t on the guest list to receive an infusion of fiat it has so diligently supplied Washington. This political tinkering also insures America’s economy will be similar to Humpty Dumpty after his fall from the wall…nobody, not Obama or Bernanke or even the IMF will be able to put this thing back together again. It will be decades before it regains any semblence of what has passed for normal.
The average American will never know how many companies were actually the recipients of government cash from the stimulus or QE2 or the on-going printing, too many of them have been aided behind closed doors in windowless rooms. But the track record of those companies acknowledged, particularly the plums known as Goldman Sachs and Solyndra, is horrendous. Either the government unluckily picked a whole bunch of losers or Obama’s policies had nothing to do with earning him “another term.” Either way, thanks to Harry Truman, we know where the “buck stops”.
In the first six weeks of 2012, housing prices continued to fall across the country and mortgage-backed security holders are tightening their belts in anticipation of another round of valuation drops, energy and food prices are climbing but Washington doesn’t count them in the inflation rate so they don’t count, “manufactured inventory” levels accounted for more than 75% of the GDP rise last year (these are goods sitting on warehouse shelves but not delivered to any retailer meaning the manufacturer’s were too optimistic the economy was gaining steam) and the dreaded hyperinflation specter is preparing to pounce on a weakening dollar. The consensus among nationally-recognized economists about the coinciding of these events is damning but be sure the Administration will find another country requiring American military intervention to divert attention from its’ failed domestic policies.
Goldman’s inside shareholders’ abandonment of their Goldman holdings is the biggest indictment yet against giving this Administration four more years. How many more of the “too-big-to-fail” crowd will drop their tagline if the economic recovery doesn’t recover from the severe case of depression it has…and rather quickly?
