Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.
Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time.
Goldman Sachs, which is facing a fraud lawsuit from the SEC related to the sale of a mortgage-linked security in 2007, generated $9.74 billion in trading revenue in the first quarter, exceeding all of its Wall Street competitors. Trading accounted for 76 percent of first-quarter revenue. The lack of trading losses could add to the perception that Goldman Sachs has an unfair advantage in the markets, said one shareholder.
Details here (if you’re interested).
Zero Hedge sums it up in one word: Unfuckingbelievable
Why is this important? Among other reasons, we are still in a recession. While the economy is slowly showing some signs of recovery, we have simply not had the enough economic growth to justify the explosion in the Dow average, which nearly doubled from 6600 in March 2009 to 11,200 only thirteen months later. In other words, it’s unlikely that enough wealth was being created by the US economy to pay for Goldman Sachs’ trade profits; someone else had to be losing money in order for GS to be making money every day for 63 consecutive days.
The Democrats still want to prosecute Goldman Sachs (and hedge fund Paulson & Co.) for derivatives trades and credit default swaps that took place three years ago. They ought to be looking at what Goldman Sachs has been doing for the last three months.
You may recall that Barack Obama received $1 million in donations from GS during the 2008 presidential campaign. “Blind eye,” anyone?
“Hope and change,” etc.
If you are interested in the mechanics of the post recession stock market, particularly why the DJIA has nearly doubled even though the economy is still in the dumps, Doug Ross has put together a disturbing post suggesting that major investment banks are deliberately gaming the market in order to artificially inflate stock prices and market performance indices.
Specifically, retail trading (individuals buying and selling relatively small numbers of shares) has been completely dwarfed by very high volume proprietary business-to-business trades between brokerage houses and investment banks. This has been a concern to market watchers for some time. And many people have speculated that it was a glitch in one of the computerized investment bank trading systems that caused the recent 1000 point plunge in the Dow.
I’m not a conspiracy monger, but I’m intelligent enough to know that Team Obama desperately needs signs of an economic recovery if the Democrats are to have any chance at all in this year’s mid-term elections. Just as the Clinton-era SEC turned a blind eye to the flimsy IPO’s that drove the late 1990’s tech bubble, is the Obama Justice Department and SEC also deliberately ignoring what appears to be (at best) an egregious case of crony capitalism in order to be able to claim that their policies have resulted in large-scale economic growth?