Clive Corcoran

Goldman Sachs: Following God or the Devil?

Much as it is sad to have to admit to it, the fact is that Goldman are better at gaming the system (your choice of the casino metaphor echoes Keynes' insight back in the 1930's about the nature of financial capitalism) than anyone else.
Blankfein's allusions to God's work was appalling PR but it was the punters i.e. pension and insurance fund managers, other trading desks less capable of "gaming" the system etc. that allowed this charade to happen... and it will keep happening.

Even the most sophisticated investors have a perverse combination of naivete and hubris which encourages them to believe that they will get out ahead of the crowd. That is why they fell victim to Goldman's ultimate leverage which is illustrated in your comment that "by putting an AAA rating and their brand-name on the “product” they explicitly said that the chance of the “investment” going wrong was miniscule.

40 Things to Expect in 2010

It's good to play with some radical scenarios and perhaps the most iconoclastic of all is when you said:
The whole notion of “I Promise to Pay” will come into question.
The extension of this trend will be that the notion of "we promise to pay" (i.e. the implicit undertaking made by all sovereign borrowers) will become paramount to the ongoing functioning of credit markets.
Any incidents that undermine the notion that the various key sovereign states that make up the collective "us" are good for the money, could be the wild card for 2010.

Financial World: Atlantic Widens While Pacific Narrows

One suspects that, just as in the case of Japan in the 90's following the massive bubble collapse in the Nikkei and real estate, some of the US banks have really horrendous balance sheets and the Administration is reluctant to have to finally come clean on the matter which is what would be implied in a break up and sale to third parties.

Interestingly it is the European Union's new financial regulation powers which is forcing the pace in the UK, although it is fair to say that Chancellor Darling is becoming increasingly exasperated by the fact that the UK basket case banks are not lending and hoarding cash to try to repair their balance sheets.

The gamble that the US is taking is that they may have underestimated the time required to repair the financial damage done over the last few years from bankers lending against collateral that is now seriously impaired. That in essence appears to have been the Japanese error and, as you suggest, it may turn out to be the American miscalculation as well.

ING Shows How Bank Dismemberment Is Done

Surprisingly (perhaps not on second thoughts!) the US Administration appears to be taking exactly the same path with its zombie banks as the Japanese did in the 90's.
As you suggest there is a way to "heal" the banking system but only with bold and fundamental re-structuring

Bailouts Through the Back Door

The quote cited from the book by Robert Pozen makes the sterilization of the Lehman debacle sound deceivingly simple.

PWC has about 250 people working full time on disentangling the Lehman mess and many hundreds of others (including ex Lehman staff) will be gainfully employed for a considerable period - with very considerable fees -sorting out the complex labyrinth of counter-parties to their trades. AIG's labyrinth went right to the "heart" of the financial system.

As John L suggests at the end of the day it came down to a "gut" level decision by Mr Paulson about who most needed to be protected.

Four Reasons We're Headed Even Higher

While I might agree with you that there will be a lot of clairvoyant pundits that are likely to be premature in calling the top I think you should not be quite so cavalier in the claim that "Financial armageddon is in the rear-view mirror"

With a debt/GDP ratio approaching 100% (and that's on a benign view of the size of the debt) and with a lackluster recovery at best, imho, there are still a lot more twists and turns to the rolling financial crisis ahead.

Struggling with Divergences

Some with a touch for melodrama could even describe the candlestick on he S&P 500 after Monday's session as a "gravestone doji".
It certainly isn't the most bullish stick in the repertoire

Why Congress Is Asking Bernanke Bogus Questions

The questions you pose are very good ones - but the answers would be way too long and difficult for sound bites.

Questioning Conventional Wisdom on Credit Default Swaps

All of the world's glaciers will surely melt sooner than financial engineers will accept that they cannot manage risk effectively and that custom OTC derivatives will be outlawed.

TARP for Regulators

Alas there can be no systemic guarantor of last resort - it would be a self-referential paradox.
The dis-illusionment will be complete once it is accepted that no-one can control the financial system. To think otherwise is to subscribe to the mythology of credentialism and asymmetric entitlements.

How Much of the Banks' Earnings Are Real?

I found most of your article to be very informative but this sentence stuck out like a sore thumb for me
"Bankers are really smart and the public is pigs waiting to be slaughtered."
It may have been meant ironically in two key respects I believe it to be wrong . First I don't believe that bankers are really smart they're just very well connected in Washington. Secondly the real slaughter of the public is taking place on the USA national balance sheet where obligations are being incurred without legitimate authority.