Goldman Sachs to US: Recession? What Recession?

Or as Terry Keenan puts it, “”What’s bad for America is good for Goldman.” I read this yesterday and I thought it was well worth bringing your attention to it. Terry Keenan, a host on Fox Business has a facinating article on how Goldman Sachs, one of the few investment bankers to not only survive the financial meltdown but thrive … and it is doing it on our backs. Make that out grandchildren backs.

The entire premise of the column is simple. When the government creates a program, like the stimulus or TARP for instance … it has to finance that debt with government securities. The more the Dems spend … the more they need to finance.

But someone has to be the middle man here. Someone has to find a market for these securities … and that someone is none other than  Goldman Sachs, the firm with more ties to the TARP program and the Obama administration than, well anyone. (Goldman alum include former NY Fed Chair Steven Friedman, when Tim Geithner was President, former Treasury Secretary Hank Paulson ,and Robert Rubin.)

Goldman gets the most attention for its deft handling of its own account, but a big chunk of its trading pie also involves the selling and trading of US government debt — federal, state and local. Indeed, as one of the biggest primary dealers of US Treasuries, Goldman Sachs has a huge vested interest in the United States digging a deeper and deeper hole.

These days, trading Uncle Sam’s IOUs is big business. It’s also one of the few growth markets on Wall Street. The IPO business, private equity and mergers and acquisitions have yet to recover from the credit crash.

By Goldman’s own estimates, the US will borrow a record $3.25 trillion in the current fiscal year — almost four times as much as in 2008.

With its biggest competitors in this market (Lehman Brothers and Bear Stearns) out of business, Goldman is a major toll collector on Washington’s red-ink railroad. Whitney labels it a “debt tsunami” that will lift Goldman’s fortunes going forward.

As Terry puts so simply and suscintlt  “In fact, to turn a famous phrase on its head, what’s bad for America is good for Goldman Sachs.” Read it all. It’s short.

2 replies
  1. sammy22
    sammy22 says:

    I seem to remember that G-S made a lot of money pre-TARP. Thought Jim would be singing the praises of the "free market system" on this one!

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