The Magnanimity of the Magnificent...

-
Stop the haggling - we want to be generous!

That's the news coming out of Goldman Sachs' PR office today. They've bought back warrants from the feds for $1.1 billion - the full value as determined by the feds.

Just a few weeks ago, Goldman had wanted to pay just $650 million for the warrants.

Lloyd Blankfein, Goldman CEO, had this to say in the press release:

“This return is reflective of the government’s assistance, which benefitted the financial system, our firm and our shareholders,” said Lloyd C. Blankfein, Chairman and CEO. “We are grateful for the government efforts and are pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake.”

He added, “Because Goldman Sachs advises companies with their growth plans and raises capital to support that growth, the best and most sustainable operating environment for us is one where consumer and business confidence and economic growth flourish. We are committed to allocating capital and providing liquidity to our clients to help stimulate growth and job creation.”

Goldman was nice enough to calculate the return on the taxpayers investment in Goldman: 23 percent.

Nice to see TARP making some money for the government. The $500 million difference that Goldman decided to hand back to the feds pales in comparison, however, to the billions and billions that have flowed from Treasury to companies like Goldman (the AIG unwind - the $12.8 billion in AIG money that went to Goldman was all thanks to the feds! And TALF loans that they've used for some nice profits.)

I want the math geniuses at Goldman to calculate the return they've received thanks to the government's investment in them. Billions in profits going toward billions in bonuses. A far bigger return than the extra few millions they paid out (after much haggling) to the feds for the TARP warrants....

Other links to follow...

Zero Hedge's take...

Wall Street Journal story...

WaPo story on Wall Street bonuses...

WaPo story on the buy-back of the warrants...

Comments

Taunter said…
Pales in comparison to the billions we left on the table in this investment, to begin with:

http://tauntermedia.com/2009/07/25/bad-math-worse-investors/

If someone in Goldman's investing arms structured a deal as poorly on their account as Hank Paulson structured TARP on behalf of the taxpayer, he would be fired for his own safety.

Crazy thing is, people have such a psychological anchor around break-even that conventional wisdom is that we are seeing a good outcome.
July 26, 2009 at 1:48 AM
Post a Comment

Popular posts from this blog

The October Rose

-
Image
‘Tis the season to bring love and joy into the world – and here’s one of the loveliest stories of the year… It’s a story that begins in October 2008, when the economy is in a state of collapse; the culture is in crisis, and faith in humanity – at least, my faith in humanity – is at an all-time low. It is precisely at this time that my next-door neighbor, Annie Jennings, comes home from high school bearing an orange rose. She presents this flower to her mother, Ellen, with the announcement that she is one of the “Sweet 16,” a member of Libertyville High School’s Homecoming Court. Annie is not quite 18 years old, a high school senior with stick-straight, sandy blond hair, glasses and a big smile. We hire her to feed our cat whenever we head out of town and we leave knowing our cat is in very good hands. So when I learn of her selection as a member of the homecoming court, I am intrigued. This is the girl who watches my cat, after all. Ellen is curious about what it means to...
Read more

On the failure of "the invisible hand" to influence our financial sector

-
In Alan Greenspan's book, The Age of Turbulence , one of the issues he explores is the failure of economic populism in Latin America. Here are his thoughts: " The dictionary defines 'populism' as a political philosophy that supports the rights and power of the people, usually in opposition to a privileged elite. I see economic populism as a response by an impoverished populace to a failing society, one characterized by an economic elite who are perceived as oppressors. Under economic populism, the government accedes to the demands of the people, with little regard for either individual rights or the economic realities of how the wealth of a nation is increased or even sustained." So in Greenspan's view as a self-described Libertarian Republican, economic populism comes to life in "failing societies" that have significant income inequality and are dominated by an economic elite. And in Greenspan's mind, it is not the government that can make t...
Read more

"Good-bye to all that..."

-
Harry Patch died last week in England. It was the expected outcome for a man of 111. But it is a notable death because with Harry Patch goes the last living memory of trench warfare experienced nearly a century ago during The Great War - known now as World War 1. This story on CNN.com is a wonderful summary of Patch's life. He was a plumber before and after his stint in the trenches. He saw some of the worst warfare man has ever experienced: "He fought and was seriously wounded in Ypres, Belgium, in 1917 at the Battle of Passchendaele, in which 70,000 of his fellow soldiers died -- including three of his close friends." That's a placid little sentence to describe the slaughter of 70,000 men. A horror Patch refused to talk about until he turned 100 years old. Here's a YouTube video that shows some photos and film footage from the Battle of Passchendaele: You can hear the survivor's voice in this video shot at Passchendaele about two years ag...
Read more