Goldman Sachs. Let’s review the record.
GS was involved with the Mexican bailout of 1995. Rubin drew criticism in Congress for using a Treasury Department account under his personal control to distribute $20 billion to bail out Mexican bonds
GS was led by Jon Corzine in the 1990s, the guy who bet $1.6B of his client’s money as CEO of MF Global from 2010 to 2011. MF Global went belly up in 2011.
In 2001-2003 Goldman engineers currency swaps with Greece designed to conceal part of the country’s ballooning debt-to-GDP ratio in order to conform to the rules. The Goldman swap was akin to a ‘liar loan’, where Greece could keep its troubles secret. I am sure Greece does not miss $5.1 B Euros right now do they ?
Made a profit of $4 billion by “betting” on a collapse in the sub-prime market. Let me guess… advising clients to invest in sub-prime mortgages helped.
Former GS Chairman Paulson then Treasury Secr. leads a $ trillion bail out of banks including Goldman Sachs . Goldman also received a $10 billion preferred stock investment from the U.S. Treasury in October 2008. Goldman Sachs, alongside other major US and international financial institutions, had received billions of dollars during the unwind of credit default swap (CDS) contracts purchased from AIG, including $12.9 billion from funds provided by the US Federal Reserve to bail out AIG.
Goldman Sachs received preferential treatment from the government by being the only Wall Street firm to have participated in the crucial September meetings at the New York Fed, which decided AIG’s fate. Goldman Sachs was one of the heaviest users of these loan facilities called (PDCF), the first Fed facility ever to provide overnight loans to investment banks, loaned Goldman Sachs a total of $589 billion against collateral such as corporate market instruments and mortgage-backed securities.
The former head of Goldman Sachs US equity derivatives who left GS in March stated that ”…senior management described clients as “muppets” and colleagues callously talked about “ripping their clients off”.
Now Goldman Sachs has suggested its clients sell Gold on the basis that the gold cycle will turn in 2013 thanks to improving US growth offsetting the need for further Fed easing. I wonder if I should believe them ?
Gold miners have been beaten up rather badly of late. I would hold off buying gold or gold stocks until January.
