tag:blogger.com,1999:blog-5880610.post536232065077733046..comments2024-01-13T18:57:18.243-05:00Comments on Information Processing: Goldman apologiaSteve Hsuhttp://www.blogger.com/profile/02428333897272913660noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-5880610.post-62836316319273221682009-07-22T23:55:17.599-04:002009-07-22T23:55:17.599-04:00We need to come up with a gold-plated euphemism fo...We need to come up with a gold-plated euphemism for the new "line of business" which Goldman is using to "earn" money these days. I kind of like the sound of "Sovereign Policy Arbitrage." Any other suggestions?<br /><br />Of course "monopoly" may also apply given the recently reduced competition in the bond underwriting business.Sethhttps://www.blogger.com/profile/16486234948199900568noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-11907296922634376772009-07-22T18:02:39.734-04:002009-07-22T18:02:39.734-04:00One thing Goldman Sachs could do to improve its im...One thing Goldman Sachs could do to improve its image would be to start announcing regulatory changes itself. The current disconnect to the government employees who announce Goldman Sachs's policies makes the government seem weak and indecisive. A little decisiveness would reduce uncertainty, help the economy, and probably assuage the concerns of people concerned about putting millionaires Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-22331825978017286432009-07-21T07:35:58.410-04:002009-07-21T07:35:58.410-04:00"I think no arb efficiency is welcome as long..."I think no arb efficiency is welcome as long as multi trillion contracts aren't written and exchanged with implicit taxpayer backstops to the balance sheets of these firms."<br /><br />In my remark I don't talk of no arb efficiency, but of fees. Actually, they act precisely in opposite direction, as higher fees enforces stronger "no arb"...<br /><br />Originally you Nicolashttps://www.blogger.com/profile/03434148024010872285noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-63200032951673085192009-07-20T19:05:39.233-04:002009-07-20T19:05:39.233-04:00Such a person could not give an explanation only a...Such a person could not give an explanation only a justification.<br /><br />The demand for accountants is completly factitious. They along with GS are economic rentiers.Ian Smithhttps://www.blogger.com/profile/06837467954881003505noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-35897500080504239592009-07-20T18:37:25.927-04:002009-07-20T18:37:25.927-04:00"I agree with you. I would argue though that ..."I agree with you. I would argue though that diminishing the fees are a worthy goal, if not a grand one. It is definitely economically productive if you end up paying less for the same service."<br /><br />I think no arb efficiency is welcome as long as multi trillion contracts aren't written and exchanged with implicit taxpayer backstops to the balance sheets of these firms.<br /><Siddharth Sharmahttps://www.blogger.com/profile/13873714722447430597noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-32463653225741788742009-07-20T17:00:08.524-04:002009-07-20T17:00:08.524-04:00These so-called "profits" are really jus...These so-called "profits" are really just laundered tax dollars. There are several more profitable quarters to come. <br /><br />Some say that Goldman Sachs should be broken into pieces, because it is too big to fail. The truth is that it is a parasitic worm that should be completely legislated out of existence. And any employees who can be caught should be jailed. I'm sure Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-22589241532012445452009-07-20T11:15:49.221-04:002009-07-20T11:15:49.221-04:00"It is becoming quite clear that capital mark..."It is becoming quite clear that capital markets are getting more efficient in the sense of "no free lunch", but not in the sense of "correct price"."<br /><br />I agree with you. I would argue though that diminishing the fees are a worthy goal, if not a grand one. It is definitely economically productive if you end up paying less for the same service.<br /><br />ForNicolashttps://www.blogger.com/profile/03434148024010872285noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-45837215622475705882009-07-20T10:58:27.960-04:002009-07-20T10:58:27.960-04:00I see one way where the case against Goldman makes...I see one way where the case against Goldman makes sense, which seems ignored by this "senior" quant.<br /><br />If you agree that finance has failed (a broad statement) and that Goldman just happened to be the best at sticking losses at other banks, that could be a valid case against them: they are just making profit because of governement's money backing the others.<br /><br />I Nicolashttps://www.blogger.com/profile/03434148024010872285noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-67767370039830716212009-07-20T10:49:50.686-04:002009-07-20T10:49:50.686-04:00it is also possible that GS is [s]lying[/s] provid...it is also possible that GS is [s]lying[/s] providing an excessively optimistic picture of how well they had hedged their losses and that getting everything from AIG was critical to their short term profitabilitySteinnhttps://www.blogger.com/profile/16082399006335997861noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-72898750846313299032009-07-20T10:34:29.753-04:002009-07-20T10:34:29.753-04:00SS: That's a nice way of putting it. Most fina...SS: That's a nice way of putting it. Most financial economists tend to use "no arbitrage" as the criteria for efficiency, but no arb does not imply that resources are efficiently allocated over the economy -- it could just mean that no one really knows the "correct" price. On the other hand, if no one knows the correct price, then perhaps society can't do any better (Steve Hsuhttps://www.blogger.com/profile/02428333897272913660noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-13747129132913048062009-07-20T07:12:06.445-04:002009-07-20T07:12:06.445-04:00"the economic value added here is that it ena..."the economic value added here is that it enables to lower the financing fees"<br /><br />I don't know if that really helps the real economy in all cases. <br /><br />It is becoming quite clear that capital markets are getting more efficient in the sense of "no free lunch", but not in the sense of "correct price".Siddharth Sharmahttps://www.blogger.com/profile/13873714722447430597noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-57716636364172437292009-07-19T22:24:00.187-04:002009-07-19T22:24:00.187-04:00"first question, how can a derivative market ..."first question, how can a derivative market that dwarfs the volume and value of the real, underlying, market be justified?"<br /><br />for some derivative products, like futures, there is no difference in nature between the derivative and the "real" market. one arbitrages the other close to perferction.<br /><br />the economic value added here is that it enables to lower the Nicolashttps://www.blogger.com/profile/03434148024010872285noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-52094133851822318332009-07-19T20:14:59.600-04:002009-07-19T20:14:59.600-04:00The 2.5B post-bailout collateral also shows up on ...The 2.5B post-bailout collateral also shows up on page 1 here: http://www.aig.com/aigweb/internet/en/files/CounterpartyAttachments031809_tcm385-155645.pdf<br /><br />I don't understand what the payments to GS of 5.6B on page 2, and 4.8B on page 4 mean...Peterhttps://www.blogger.com/profile/14961287677607345714noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-88331151435323896442009-07-19T19:54:13.579-04:002009-07-19T19:54:13.579-04:00yes i too would like to hear from LondonYoung or p...yes i too would like to hear from LondonYoung or prof Hsu or any other person in defense of goldman about the observation LondonYoung made at the end of his comment speculating that the regulation krugman advocates might impare or halt "economically productive trading"<br /><br />how about an explanation for just two of these "economically productive trading" schemes which i mock turtlehttps://www.blogger.com/profile/01958087436039299742noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-85385647063908489932009-07-19T18:43:22.663-04:002009-07-19T18:43:22.663-04:00"economically productive trading"
is th..."economically productive trading"<br /><br />is there any reasonably rigorous proof (comprehensive enough to prove how it happens in the real world, not in some ideal, constrained toy model) that the macro effects of complex derivative markets are productive in some way.<br /><br />i don't know of it and would like to see it.Siddharth Sharmahttps://www.blogger.com/profile/13873714722447430597noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-35730586630969165882009-07-19T15:41:16.229-04:002009-07-19T15:41:16.229-04:00It seems to me that the high compensation for fina...It seems to me that the high compensation for finance is directly related to a barrier to entry into the banking/finance system, which restricts competition to drive compensation downward. Now if this barrier is purely due to limited brain power, abilities or only a small subset can handle the pressure then I say all the power to them. However, I suspect that there are other factors that are Carson C. Chowhttps://www.blogger.com/profile/08464737817585277975noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-14051589294398033542009-07-19T14:06:28.690-04:002009-07-19T14:06:28.690-04:00it seems to me that LondonYoung argues that one wa...it seems to me that LondonYoung argues that one way or another goldman sachs would be made whole via a host of interwoven counterparty agreements except under the remote occurence of systemic meltdown, in which case the governments bailout of aig was no more beneficial to goldman than many other financial institutions<br /><br />the system is not a zero sum game contrary to the scientists among mock turtlehttps://www.blogger.com/profile/01958087436039299742noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-90223886373279858062009-07-19T12:08:59.557-04:002009-07-19T12:08:59.557-04:00It is ironic that the term "capitalism" ...It is ironic that the term "capitalism" is used in connection with the huge losses at so many banks recently.<br /><br />If these banks were owned by one person or a few people, that is capitalists, rather than by millions of powerless shareholders, all of these problems would never have occured.<br /><br />The power in operations for very large businesses has passed from the owner in Ian Smithhttps://www.blogger.com/profile/06837467954881003505noreply@blogger.com