Things are really looking up for Goldman Sachs! Earnings are up, bonuses are booming and thus far none of their executives' heads have been mounted upon a pike. Times just couldn't be better! But let's not overlook the value of some underreported commodities that the financial firm is trading on -- free passes from the press!
Take the New York Times, which filed a story this past Saturday that included this paragraph, which was apparently intended without irony:
A big reason for Goldman Sachs's blowout profits this year has been the willingness of its traders to take big risks -- they have put more money on the line while other banks that suffered last year have reined in such moves. Executives say there are big strategic gaps opening up between banks on Wall Street that are taking on more risks, and those that are treading a safer path.
Uhm... huh? There were "risks" involved, somehow? As Matt Yglesias points out:
It's not really a "risk," though, is it when you're operating with an implicit government guarantee to pull your ass out of the fire if your bets blow up. The federal government is taking a risk on these Goldman trades, they've just given Goldman the bulk of the upside.
For clues on how there wasn't much risk underlying what Goldman Sachs has been up to, the reporter of this piece, Graham Bowley, would have had to remember some of the reporting he did, you know... five minutes before he was asserting that Goldman was taking big risks that were paying off:
"All of this is facilitated by the Federal Reserve and the government, who really want financial institutions to get back to lending," said Gary Richardson, a research fellow at the National Bureau of Economic Research. "But we have just shown them that they can have the most frightening things happen to them, and we will throw trillions of dollars to protect them. I have big concerns about that."
I know! Remembering stuff: so hard! Anyway, similar amnesia is on display over at Fortune, reporting on its own interview with Goldman CEO Lloyd Blankfein:
Furor over bonuses shouldn't obscure the role Goldman Sachs plays in fostering global economic growth, CEO Lloyd Blankfein said Friday.
Blankfein, speaking at a breakfast conversation hosted by Fortune, emphasized that the investment firm serves "an important social purpose" by channeling pools of money held by pension funds and others to companies and governments around the world.
Those investments, Blankfein told Fortune's managing editor Andy Serwer, help create economic growth that creates wealth and lifts living standards.
"We contribute to growth," Blankfein said. "Once the economy starts to turn, we get very involved."
I guess that "growth" is the sort of "growth" that doesn't show up in the forms of spurred lending, or employment, or prosperity beyond the bonuses for which Goldman is "under pressure" for paying out to the executives, who, as I remind you, apparently took "big risks."
Blankfein "stressed" to Fortune that Goldman's success is predicated on "teamwork, performance and long-term thinking." There's just one little teensy thing that this high-performing team of long-term thinkers didn't apparently understand, despite all of their amazing talents:
As for Goldman's entanglement with the government, Blankfein said he didn't realize the $10 billion the Treasury lent the company last fall when the financial system was teetering would come with so many strings attached.
"Had I known it was this pregnant with this potential for backlash then I would not have liked it," he said.
Oh, well, sure! How could anyone have known that when a bunch of former Goldman Sachs executives filled the largest wheelbarrow on earth with taxpayer money to give to current Goldman Sachs executives, that there would have been any "strings attached" or "potential for backlash?" Why, that would have taken some sort of super-genius to figure out!
It is unknown at this time whether or not these valuable free presses can or will be carved up into tradeable credit-default swaps. But, yeah, probably!