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Why everyone loves to hate Goldman Sachs

|Includes: Goldman Sachs Group Inc. (GS)

In the movie Devil's Advocate, the character of Kevin Lomax says to the Jury in defense of his client - "I don't like Alexander Cullen. I don't think he's a nice person. But this isn't a popularity contest; it's a murder trial". I feel the same way about Goldman Sachs.
But this post is not about Goldman Sachs; This post is about people who are now baying for Goldman's blood. SEC charges have drawn the first blood and now everyone from big banks, insurers to politicians are asking for more.

First lets talk about the big banks and insurers that bought the CDOs and insured the bonds. These giant institutes were trading against then a nobody hedge fund manager John Paulson whose expertise were merger arbitrage, not mortgage bonds. From 2004-2007, John Paulson was derided by everybody for betting against the housing market. He had been slowly bleeding money to buy protective insurance which was used to grant bonuses to the employees of these banks and insurers. When the bottom fell out, and these entities were bailed out by the government, they are playing victims? These entities are acting stupid as if big bear John Paulson and Goldman Sachs defrauded them. These banks and insurers are not stupid, they are criminals. It is because of the greed of the executives of these entities for small profits and bonuses that the whole economy of the country almost collapsed. But of course now that US Government owns 80% of AIG, they cant really be the bad guys, it must be Goldman Sachs and John Paulson.

Now lets talk about the politicians who are demanding that heads are rolled, fines are slapped and bans are placed on Goldman. Yes I was outraged when Goldman paid 4.7 billion $ to its employees while they were bailed out by the taxpayers but then again what would you expect Goldman to do with billions of the profit they make? Talking about big profits, who is supplying Goldman with cheap money? Who gave Goldman 100c on a dollar for the puts they bought from AIG? If Goldman benefits from government's corruption, you can't blame Goldman for it.
Politicians across the Atlantic are as populist as this side. One of them called Goldman "morally bankrupt" and demanded a ban on Goldman getting government projects. One must realize that Goldman Sachs is a corporation. Its job is not being "morally wealthy" but to make profit like every other corporation. If Goldman Sachs is "morally bankrupt" so is every government in the world. It is funny that politicians can get away with a lot more outrageous behavior and then have the gall to call others "morally bankrupt".

To sum it up, the problem that everyone has with Goldman Sachs is not how they deal with their clients or how they trade using proprietary software programs or how they compensate their employees but that they make profit. A lot of it.


Disclosure: Long GS