Skip to main content

Goldman Sachs is not a trading company

The big news in financial circles is one Greg Smith's scathing exit memo on departure from Goldman. According to Smith, as Matt Taibbi pointed out all those years ago, Goldman really is a morally bankrupt con operation that makes money by screwing its clients. Matt Yglesias theorizes that this is about a change in business strategy for them:
Translating out of indignationese, point c) is that trading is now the focus of the business. Points a) and b) are indicating that the client-advising side of the business is now compromised for the sake of the trading side. If that's true, then Smith is probably correct that clients will gravitate away from Goldman in the long term. But his claim that that spells death for the bank is wrong, that would just mean a further transformation of the focus of the business away from advising clients and toward trading.
Yglesias appears to be badly mistaken here. On a tip from one of his commenters (ht: shubik), I checked out Goldman's latest financial disclosure reports (for 2011), and in their 10-K form (pdf) there is a table describing their operations. Investment banking, investment management (both of which are for clients), and institutional client services make up 93 percent of Goldman's revenue. The latter by itself accounts for 60 percent. Their "investing and lending" section makes up 7 percent, but actually showed a $531 million loss, which might be why they closed two trading desks earlier this month.

So no, Goldman is not focused on trading, unless all those disclosures are also lies. For more possible explanations of how Goldman could still be in business, see Noah Smith.

Comments

Popular posts from this blog

Why Did Reality Winner Leak to the Intercept?

So Reality Winner, former NSA contractor, is in federal prison for leaking classified information — for five years and three months, the longest sentence of any whistleblower in history. She gave documents on how Russia had attempted to hack vendors of election machinery and software to The Intercept , which completely bungled basic security procedures (according to a recent New York Times piece from Ben Smith, the main fault lay with Matthew Cole and Richard Esposito ), leading to her capture within hours. Winner recently contracted COVID-19 in prison, and is reportedly suffering some lingering aftereffects. Glenn Greenwald has been furiously denying that he had anything at all to do with the Winner clusterfuck, and I recently got in an argument with him about it on Twitter. I read a New York story about Winner, which clearly implies that she was listening to the Intercepted podcast of March 22, 2017 , where Greenwald and Jeremy Scahill expressed skepticism about Russia actual...

The Setswana Grammar Manual

One of my few successes during my service here was formatting the Peace Corps South Africa grammar manual for Setswana, written mostly by Art Chambers, an SA16 volunteer.  For anyone wanting to learn Setswana, I reckon it's a pretty good primer, so I present it for free here .  If you think it sucks and you want to make changes, or you'd like to take a look at the raw TeX file, you can find it here .

On Refusing to Vote for Bloomberg

Billionaire Mike Bloomberg is attempting to buy the Democratic nomination. With something like $400 million in personal spending so far, that much is clear — and it appears to be working at least somewhat well, as he is nearing second place in national polls. I would guess that he will quickly into diminishing returns, but on the other hand spending on this level is totally unprecedented. At this burn rate he could easily spend more than the entire 2016 presidential election cost both parties before the primary is over. I published a piece today outlining why I would not vote for Bloomberg against Trump (I would vote for Sanders, Warren, Buttigieg, Klobuchar, or Biden), even though I live in a swing state. This got a lot of "vote blue no matter who" people riled up . They scolded me and demanded that I pre-commit to voting for Bloomberg should he win the nomination. The argument as I understand it is to try to make it as likely as possible that whatever Democrat wins t...