New Rolling Stone article on Goldman Sachs, a true *BLOCK-F--KING-BUSTER*

[jcs44]

OK, I'm a fucking dumbass knuckle dragging redneck.  You haven't made me feel ONE percent better.

So my dumbass knuckle-dragging response is "Fuck elaborate tax codes!"

Seriously.  It's ridiculous.  It's pure beauracracy screaming for abuse.  That's it.  Nothing more.  Fuck the ideology of big business and innovation and movers and shakers.  Seriously, fuck it.

That paradigm has burned itself at the stake.  The only thing left is for its worshipers to do the same.

I just wanted to chime in that I'm with you. I consider myself fairly financially intelligent, but usually can't follow Jeromie's posts. He's on another level.

Elaborate tax codes and global consolidated financial statements are that way for a reason. They're designed so that when you throw out so many technical buzz words along with formulas, calculations, future tax credits based on past earnings or losses, blah blah blah, our eyes glaze over and we just forget about it because it appears so complex, it makes us feel too stupid and we'd better just shut up and leave it to the smartest guys in the room that know exactly what this simple stuff means before we end up looking even more foolish in front of them.

Manipulating markets to make a profit as the article indicates GS has done for an eternity now is supposed to be illegal, unless you are too big to prosecute or have all of your guys running the body of government that should be at the forefront of investigating you.

[doctor zaius]

So Goldman Sachs is an evil corporation raping and pillaging the economy. That's unfettered capitalism for ya.

[Grower]

No, Jeromie, I don't think it was a mistake to comment. I learn a lot, even if it's how much I don't know, which is not nothing.

[Jeromie]

When you get down to the  nitty gritty here , I bet the  things Taibbi discusses are themselves legal. GS people are far too smart to do illegally what they can arrange to do legally. They have the relationships to accomplish that.   Has there ever , ever been a  society where that has not been the case in varying ways, of course?    The bugaboo for these people though is when fewer and fewer even bother with the rules and just do not bother and resort to from cunning and ruthlessness.   Then we have as the Chinese saying " a withdrawl of the mandate of heaven'. Then some new less greedy and more soothing elites take over after unspeakable ruthlessness to the prior elites  and their supporters.   One thing never changes though, the  social cycle repeats itself. The laborers are ruled by a loose succession of Warrior to Intellectual to Acquistor  when the   acquisitors  are overthrown by the  laborer's and the cycle repeats itself. This particlar summary is the Social Cycle Theory of  the Indian thinker P R Sarkar.    One of many cycle theories, not perfect, none are, but the overall best  generality in my view.

 

[Jeromie]

A simple look at the estimated  currently payable income tax expense by  GS  divided by the prior years  combined tax rate of 34 % times 100 indicates an estimated taxable income for tax payment purposes of $5,226 mn.   Financial statement income before income taxes was $2,336 mn. Thus in certified financial statements filed with the SEC and financial authorities all over the world, in dollars, the taxable income of GS was more than double  the financial statement  pre income tax net profit.


They plan on paying $1,777 mn net not $14 mn.     So on that basis do the posters here pay 76 % in income taxes?

[funkyspec]

Taibbi used to write for an English-language alternative weekly in Moscow, The Exile, when I had an absurd dot-com job that required me to spend time between SF and Moscow. Even then he could do some great journalism, but was also hysterically funny. Matt and his partner Mark Ames provided some of the best pillorying of the MSM I have ever read. They used to do a yearly "tournament" during the NCAA March Madness where they would start with a pool of English-language Moscow-based journalists and put them in brackets. Each week they would take a story written by each journalist in the bracket. The journalist who wrote the worst story advanced to the next stage until there was only one.

God, this is another brilliant piece written by Taibbi in 2001, pre- 9/11, weaving together horse sperm, an Indonesian massacre and the New York Times in a hilarious story that seems so prescient today as the Western way of life collapses:  http://exiledonline.com/old-exile/113/lead.php

[JurisDoctorOfDoom]

Taibbi used to write for an English-language alternative weekly in Moscow, The Exile, when I had an absurd dot-com job that required me to spend time between SF and Moscow. Even then he could do some great journalism, but was also hysterically funny. Matt and his partner Mark Ames provided some of the best pillorying of the MSM I have ever read. They used to do a yearly "tournament" during the NCAA March Madness where they would start with a pool of English-language Moscow-based journalists and put them in brackets. Each week they would take a story written by each journalist in the bracket. The journalist who wrote the worst story advanced to the next stage until there was only one.

God, this is another brilliant piece written by Taibbi in 2001, pre- 9/11, weaving together horse sperm, an Indonesian massacre and the New York Times in a hilarious story that seems so prescient today as the Western way of life collapses:  http://exiledonline.com/old-exile/113/lead.php

The Exile is *by far* my favorite publication!  I've never seen any magazine manage to mix such incredibly insightful and informative articles with violent homoerotic schadenfraude (sp?) and mix them together in such a humorous way, like they di when covering Tim Geithner's trip to China "Geithner lifts ass for Chinese banking masters" or what was going to happen to Joseph Cassano (AIG derivatives guy) when he lands in prison.

[BlueOwl]

(my apologies for the tone last night.  i was 'in a mood' and it's not my usual style, i hope, to be so combative and profane.  Perhaps I need about 2 hours in walstreetpro2's bashin' garage)

http://www.youtube.com/user/walstreetpro2

[Jeromie]

While looking into the Taibbi  fiasco on GS taxes paid, I  was  reminded by the tax   asset analysis, that a HUGE  amount of compensation and bonuses deducted on their income statement are not deducted. The major tax asset account of GS is the deferred deductions for comp at $ 3,732 mn.   Thus 3732/ 34 X 100 using the standard rate , bonuses not paid out but accrued  on the   Balance Sheet total around $10, 976 mn. Those unpaid bonuses are legal debts too.  These bonuses are paid out under long term deferral arrangements or are paid in the ensuing year. Deferred compensation is  generally deductible when paid.

Taibbi really shot himself in the asshole by being so careless when taking on the likes of GS.    Even though I like his article , I am going to see how far I can go trashing it. Bet, I can since the tax faux pas has driven a Mack truck through the  tax discussion.

[fredd58]

While looking into the Taibbi  fiasco on GS taxes paid, I  was  reminded by the tax   asset analysis, that a HUGE  amount of compensation and bonuses deducted on their income statement are not deducted. The major tax asset account of GS is the deferred deductions for comp at $ 3,732 mn.   Thus 3732/ 34 X 100 using the standard rate , bonuses not paid out but accrued  on the   Balance Sheet total around $10, 976 mn. Those unpaid bonuses are legal debts too.  These bonuses are paid out under long term deferral arrangements or are paid in the ensuing year. Deferred compensation is  generally deductible when paid.

Taibbi really shot himself in the asshole by being so careless when taking on the likes of GS.    Even though I like his article , I am going to see how far I can go trashing it. Bet, I can since the tax faux pas has driven a Mack truck through the  tax discussion.

I really don't understand this obsessive focus on what GS paid in taxes for 2008 - who gives a shit? I don't care if they paid $14 m or $14 b. I don't know what Taibbi was looking at when he gave this number - my guess is you aren't privy to that either. I would strongly suspect that he HAS done some serious research into that. The guy is not an idiot, and cannot be ignorant of the consequences of either falsifying or misrepresenting this number.
Either way, whether he's right or wrong, to my mind it should not detract from what he has done with this article - to my mind, it is brilliant and courageous, and I have to applaud the man in spades for doing this. He's done what NOBODY in the MSM has done for decades - expose the naked emperor, so to speak.
And, just for the record, minus all the incredibly complex language Jeromie, could you tell us what GS did, in fact, pay in taxes for 2008? Did they actually PAY the $1.777 b tab or not? Have they actually paid anything? I guess I don't understand the statement that they "plan" on paying it...
One more question - if their tax bill on $2.336 b is actually $1.777 b - how could that be? Why would they be subject to 76% tax rate, when most US corporations may nothing or next to nothing in taxes? I just don't understand this, it seems like a flagrant disconnect from their usual business methods of rampant greed and damn the consequences, political connections and flagrant interference or outright insertion of laws, regs, etc that outrageously favor GS.

[mtlouie]

Your explanation of GS's tax rate, Jeromie, does not reassure me -- just the opposite.  The very opposite.  There are no complicated reasons why I pay 0.6% in taxes in a year --- because I NEVER pay 0.6% a year.  More like 30-some%.

As stated from another link on this site today: we're all just tax livestock.  Well, I guess Not "all" of us.  Some of us, are, apparently, butchers eating the rest of us in steaks, rounds, roasts, and ground.

WTF does goldman sachs do for me?  For anyone?   Parasites.  For every GS employee you could replace each with 10,000 pure waste welfare recipients, the stereotypical Cadillac queen with 10 kids and a large screen TV, and come out money ahead.  WAY ahead.


edited-cuz I was a little moody last night.

Someone did some research into how much Americans actually pay in all taxes versus those HORRID socialist countries in Europe.  We actually pay more than ANY country in Europe.  They've just managed to couch it in sales tax, gasoline tax, property tax, income tax (local, state, federal,) tax, tax, tax, tax, tax, et al.  And most of it trickles up to TPTB- as in Halliburton gets no-bid contracts, etc.

We are idiots.  That's all there is to it.  The U.S. has been the most vast social experiment ever, and it's a joy to behold, isn't it?

[Jeromie]

It is simple enough Fredd, It goes to a major defective argument in Taibbi's piece.    He made a big deal out of GS  paying only  $14 million in taxes on a pre tax net income of $2.336 bn.   In actual fact, the taxes actually paid or to be paid on 2008 income tax calculations  were officially provided at a net of $1.776 bn.  This could have been checked out in a few minutes by reading  Note 16 to the GS Annual  Report.   It says the piece is blithering incompetant emotionalism . If you are going to muckrake , do it well.


Similarly  Taibbi makes much of laddering  which is probably universal  among investment banks. 

Still, these people manipulate the shit wherever they can and in ways that are mostly legal or impossible to get a  conviction on. 


 Fredd, these financials are on the accrual basis. Thus the components of their financial basis income tax are what they will pay based on their income tax returns for 2008  plus or minus the effect on deferred tax accounting.    There are huge differences in caclulating the taxable incomes . 

 On an accrual basis GS will pay taxes for 2008 of $1777 mn net of any  refunds.     The current payments for 2007 were $6.876 bn.    The 2007 payments due on a cash basis  2008 were the tax liability  remaining after estimated tax payments in 2007.   Lets say that was 25 % of $6,876  mn  or $1719 mn PLUS the estimated payments on 2008 income taxes made in the ,year of 75 % of $1.777 mn or $1,333 mn.  The sum of the two is $3,052 mn.    Thus , it can be safely determined that GS made income  tax payments of at least $3, 052 mn which is far greater than their   GAAP pretax profits. 

In short they PAID $3 billion in income taxes in 2008 and not $14 million as claimed by Matt Taibbi.  Taibbi  ruins  a great possible muckraking piece by misunderstanding taxes paid .   That  GS PAID only $14 million in income taxes was the ultimate insult to the public that he wanted to present.

By the way , the results shown for tax expense are the requirements of GAAP accounting for Income Taxes. They have been  around for a century.

[Jeromie]

By the way, the GS  2008 annual report is on their website.  Note 16 - Income Taxes   is on pages 129-130 of the report.   Notes  to the Financial Statements.   So, it is obvious Taibbi did  probably no research at al on income taxes or did not have an understanding of financial statements  which he should have possessed.  It took me only a few minutes.  All easily available if you know where to look.

Just so you can check me out. Here are the components of the GS 2008 Income tax expense provision.   

Currently payable US Federal                            $ (278)
Currently Payable State                                         91
Currently Payable Foreign                                    1964

Total Currently Payable                                       $1 777



Deferred US Federal                                           $(880)
Deferred State and Local                                         (92)
Deferred Non US                                                  (791)

Total Deferred                                                      $(1763)


Net income tax  expense                                         $14


So you see I was not conjuring, Taibbi was.   Note he explains that they picked up almost no taxes from foreign shenanigans.   Note that  foreign taxes were provided for payment  totalling $1964 mn.  So here Taibbi is full of shit.








                                               

[IO]

Taibbi gets slammed pretty hard in the Sovereign Society Offshore A-Letter:

"So Matt Taibbi…where to begin?

Well, the guy curses a lot.

And Kurt Vonnegut said that foul language invites readers to ignore you. Oh yeah, he’s also the guy that wrote “The 52 Funniest Things about the Upcoming Death of The Pope.”
…

Yeah…if I lost you there, I don’t blame you.

I really think this guy is the mainstream print media’s version of a shock jock. Which is a crying shame…because they could really do much better…

I mean to say that it’s not surprising that his father – Mike Taibbi – was an NBC reporter. Because this definitely isn’t a case of the cream rising to the top.

Taibbi, the younger, seems to have come from a pretty “canned” experience in America’s education complex and gone on to live a pretty “canned” life as a bleeding-heart liberal…one who’s never had to wonder where his next meal would come from.

Because it takes that particular brand of bratty pseudo-intellectualism to wing around the kind of absolutes Taibbi uses in his article. At least from his perspective, everything is pretty black and white…"

"Whether Goldman Sachs is evil, bad, nefarious, or a vampire squid; none of these things matter…

Whether they personally blew all of the bubbles Taibbi accuses (even though they didn’t)…whether they have an “implicit” responsibility to preserve the ecosystem in which they do business (an issue we can’t even agree on for people in general)…again, these topics great for pseudo-intellectual debate, but they doesn’t really matter.

What does matter is that Goldman’s #1 responsibility is this; Get Money.

They’re in business, they’re “long-term greedy” and they’re still lovin’ it. Hey, they’re getting plenty of money, so job one is getting done. Who cares if the financial system is imploding? Goldman expects 2009 to be its most profitable year ever.

But there’s another, much more unique player in the financial system…the only one with an explicit responsibility to preserve our economy and financial system…

You guessed it; the government.

And they’ve also got the power to force institutions like Goldman to take on that responsibility as well. To keep those very institutions from turning into the kind of nightmare Taibbi describes.

But did the government do that? Did they force banks to tread more carefully?

No. They did the opposite. If anything, you could find a mountain of evidence indicting specific government officials for flaunting that responsibility…for doing the opposite of what it dictated. I’d start with Larry Summers and Robert Rubin. I wonder why the author didn’t.

And as he’s quick to point out, administrations like the CFTC were a bit too primitive and ill equipped to deal with the sneaky ways of Goldman’s greedy legal teams, traders and execs. When given a plausible excuse for removing speculative limits, the CFTC yielded.

The author goes on to call Goldman all sorts of names and tries to lead the reader to his own political conclusions, but frankly, he lost me there…

Taibbi definitely had high hopes for this article…writing it like an all-encompassing riot act listing all of Goldman’s past sins. There are many.

But thanks to his status as mainstream reporter, he was obligated to tell the story according to the facts. And the facts don’t point to a single, malicious business institution as the perpetrator of today’s crisis. To follow the trail that far and stop would be asinine…

Rather, the facts point to a larger problem. To a corrupt, inept and manipulated system; of which mega-villains like Goldman Sachs are just a single symptom.

No Mr. Taibbi. Pace yourself. There’s definitely more outrage to come, and it may not have anything to do with Goldman.

Here’s to hoping your underlying political agenda will allow you to gripe about it…and that you stumble upon some more meaningful conclusions next time around."

[Jeromie]

Fredd  . As  you can see from the 2008 GS tax provision that but for deferred tax accounting required by GAAP, Gs plans on paying out taxes on  2008 taxable incomes of $1,7777   on Pre Tax Earnings of $2.336 bn.   That is 76 % just as I posted.   They were planning on writing  or have written checks for 2008 income taxes due of $1,777mn.


When going after  someone hammer and tong you must be right to make the hit.