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

[JurisDoctorOfDoom]

Wow, I ran down to buy a print version but they were sold out. This begs to be read, I feel a bit uncomfortable linking to it as my guess is RS purposely did not post it online to see if they could drive purchases of the print edition. I think this is great idea on their part, I've been saying for ages if the MSM would do real journalism (like this article) and just hold off on posting stuff to the web we junkies would be forced to run down to the local bookstore or newstands to get a print edition. Inevitably somebody posts it the web but it is usually NOT in a manner that is easy on the eyes so many of us will go buy the print version.

Anyway, this is true first order major league quality journalism here, Matt Taibbi is a brave man:

http://seekingalpha.com/article/145484-goldman-sachs-the-wall-street-bubble-mafia

http://greenlightadvisor.com/glablog/2009/06/26/goldman-sachs-engineering-every-major-market-manipulation-since-the-great-depression

ADDENDUM, 9/111/2009

Rolling Stone has now posted the article to its site in its entirety, a brief excerpt:

. . . any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine

[JurisDoctorOfDoom]

At Matt's blog, this is just unbelievable:

After my Rolling Stone piece about Goldman, Sachs hit the newsstands last week (unfortunately the piece is not yet up on the magazine’s web site, so I can’t link to it yet — but it is out in print), I started to get a lot of mail. Most of it was thoughtful and respectful criticism, although there was an amusingly large number of people writing in impassioned defense of their right, under our American system, to be ripped off by large impersonal financial companies. "If my pension fund is buying [crap mortgages] from Goldman, and my pension fund loses lots of value, that’s not Goldman’s fault," wrote one reader. "No one is forcing anyone to buy anything. The only thing Goldman is guilty of is making profits."

I’m not even going to go there — the psychology of a human being who would take the time to actually write in a complaint like that is so bizarre that it would take more time than I have today to even begin discussing it.

A bit later, about what happened when he tried to contact GS to get their "side of the story":

. . . here is the response that we got:

"Your questions are couched in such a way that presupposes the conclusions and suggests the people you spoke with have an agenda or do not fully understand the issues.”

You have to have swallowed half a lifetime of carefully-worded p.r. statements to see the message written between the lines here. That this is a non-denial denial is obvious, but what’s more notable here is that they didn’t stop with just a flat “no comment,” which they easily could have done. No, they had to go a little further than that and — and this is pure Goldman, just outstanding stuff — make it clear that both I and my sources are simply not as smart as they are and don’t understand what we’re talking about. So the rough translation here is, “No comment, but if you were as smart as us, you wouldn’t be asking these questions.”

Source: http://trueslant.com/matttaibbi/2009/06/30/on-giving-goldman-a-chance/

[Jeromie]

 The Great American Bubble Machine just like the  crude oil bubble a year ago that was caused by peak oil.    If you have been around the money business you know that folks like GS are absolutely unsurpassable about the media plants needed in the  info networks to keep a bubble moving and shrinking so that money can be made on the movement.    Add in the unreported trades via the ICE  last year and anything was and is possible.

[pamela]

http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

it's here.

[theozarker]

Someone else had a thread on this story last week.  Can't remember who or which forum it was in, but the article blew me away.  That Taibbi is still alive speaks volulmes about the arrogance of GS - they don't give a rat's ass that they've been exposed.

Linda

[Jeromie]

Matt Taibbi has written a great piece.  I do think his explanation of the income taxes of $14 mn in 2008 is probably  beyond his  ability to  understand.  First if all he does not understand the difference between a   Tax Provision or  charge against earnings on a GAAP basis and a tax payment.    The GS Tax Provision for 2006 was 34.49 %. The Tax Provision for 2007 was 34.11 % The Tax  Provision for 2008 was .60 %.


Now , would you not think that the auditors had that kind of a fluctuation tied down in spades plus ?   I produced a similar fluctuation twice in my career and  they hauled my ass from here to kingdom come before " signing off". I am sure some people at  GS  really got the pillory for such a stupid faux paux.   The only set of major  factors that  would enable that kind of tax benefit to be booked on a GAAP basis  would have happened because GS was forced to book the recovery of the  tax as a tax asset.  That could only be the future and current USE by GS of the Net Operating Loss Carry  Over  as a  technical result  of the acquisition made in 2009.       Now what might that acquisition have been?

But he sure did nail down that oil bubble that was a bustin out all over last year when oil supplies were going up and  usage was tamping down.

[Zac]

This version is a bit easier to read:

http://www.scribd.com/doc/13648019/Matt-Taibbi-The-Big-Takeover

[BlueOwl]

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.

[Arraya]

GS is very peak aware.  It appears to me they are playing a little cat and mouse game with oil.  When oil fell last july there were three major fundamental shifts and a major market malfunction in a short period of time along with the dollar strengthening.  I think you could argue that it was overshot and was bubble like but then again you could also argue the market has no idea how to price something as irreplaceable as crude. Peak oil has not been priced in, and probably never will.  In reality, high oil prices are an anti-bubble that prevents them from blowing another fiat currency bubbles because energy scarcity destroys the value of fiat.

[Jeromie]

Just to get beyond generalities, I looked at the just the Tax Provision  summary page.  

Ok Goldman  Sachs recorded tax  expenses as liabilities for payment of taxes  of   $1,7777 mn.    Goldman  Sachs  recorded  future tax recoveries on GAAP losses in 2008 that were NOT tax return losses on 2008 of $1,763 mn for a net  tax expense of $14.    Furthermore did  record usage of net operating loss carry forwards of   acquisitions of $172 mn in 2008 with no details as to whom the  subsidiaries were.    However, the acquired subsidiaries had $2.59 bn  of net operating loss carryforwards, $97 mn of which was included in the $172 mn total  above.   By the way, it is usually difficult to not provide taxes on foreign  earnings because you usually must provide taxes for future repatriation of earnings in tax havens even if  you do not plan to repatriate in a general sense.    Any profits not needed in the foreign business must be provided for in consolidation.

Tax consolidations were my forte and damned complicated ones too.

Anyway, Taibbi blew it on this aspect of his article because the   Current Foreign Taxes Payable provision was $1.954 bn.  The  US  Federal and State Current Tax Provision was negative or a refund of $287 bn.

Took me 20 minutes to get this far and I am not the author.  Where were his researcher's?   He needs an air tight article.  Playboy would never have been so  careless.



There is some rather air tight  parts of this Tax Provision that show up as a Tax Asset Category for the first time where I would need to go into the main annual report.  They show a new FIN48 Tax Asset in 2008 of $625 mn and Foreign Tax Credits Asset of  $334  mn in 2008 that together explain the low 2008 Tax Provision.   These benefits total $959 mn and are the  explanation of the low 2008 tax rate percentage.  I was not going to mention this as being too complicated.   But these are carved out pieces of  booked tax assets OF $1763bn mentioned above.   These are new and did not occur in 2007.

[Jeromie]

Blue  Owl they provided for tax payments based on how their 2008 tax returns will work out of  $1.777 bn for Federal, State and Foreign jurisdictions.  That is their taxable incomes for 2008 are estimated to be far HIGHER than the financial statement income for 2008.   On the basis of the  current tax provision recorded , the current provision is 1777/2336 or 76%  their GAAP income. So obviously, their taxable income aggregate is more than double their financial  statement income.

[BlueOwl]

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

So my dumbass knuckle-dragging response is "To Heck with elaborate tax codes!"

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

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


edited-cuz I was a little moody last night.

[Jeromie]

If we fucked elaborate tax codes there would be no way to even publish a global consolidated financial statement. There are hundreds to thousands of companies consolidated here  in  multiple layers.  GS could have one parent in  Britain with 100 local office subsidiaries that file separately in Britain. All are  consolidated here  because by  attribution GS owns them. Add anothr 100 in Japan  that file consolidated in Japan.  Every country has  their tax laws that are then filtered though a Tax Treaty with the United States.  Then we have the United  States Tax Code.

I feel the same way most of the time because I say fuck electronics but the world could give a shit  about my kiss off.  The fucking shit is here to stay and  no one could give a shit if I agree or not.


Believe me, what I talk about  here is hardly complex because it is the final summary. the condensing of the whole tax expense calculation split into six  six parts.   Currently Payable/ Refundable and Non Currently Payable/   Refundable  Federal ,State and Foreign  Income Taxes.

[BlueOwl]

there would be no way to even publish a global consolidated financial statement.

And?

Where has the 'global consolidated financial statement' got us? 

ALL of it is worthless.  Worse.  Parasitic. 

Humans are FAR older than "global consolidated financial statements".  To hell with them.  If other failed things have to die with them, so be it.



edited-cuz I was a little moody last night.

[Jeromie]

Obviously others need this shit and have an economic need for the financial statement and you or I do not. I have no connection to GS.   I did make my living in this area though although  dealing with foreign in great detail is long past. I do try and keep up with the  geopolitical aspects though.

 Perhaps it was a mistake to comment.