Comments on: Goldman’s profits http://cafehayek.com/2009/10/goldmans-profits.html where orders emerge Mon, 16 Jan 2012 02:06:33 +0000 hourly 1 http://wordpress.org/?v= By: Ed http://cafehayek.com/2009/10/goldmans-profits.html/comment-page-1#comment-186252 Ed Sat, 17 Oct 2009 23:21:00 +0000 http://cafehayek.com/?p=6909#comment-186252 Goldman received $13bn from the government as its hedges against AIG wouldn't have paid out, since AIG didn't go bust. By deciding to bail out all the other (apparently) unhedged counterparties through AIG, surely they had to compensate Goldman, who would otherwise have been penalised for their own prudence and superior risk management. Obviously it's not ideal that the taxpayer funds this, but rewarding failure and screwing the successful really would be a bad state of affairs. Am I missing something? Goldman received $13bn from the government as its hedges against AIG wouldn’t have paid out, since AIG didn’t go bust. By deciding to bail out all the other (apparently) unhedged counterparties through AIG, surely they had to compensate Goldman, who would otherwise have been penalised for their own prudence and superior risk management. Obviously it’s not ideal that the taxpayer funds this, but rewarding failure and screwing the successful really would be a bad state of affairs.

Am I missing something?

]]> By: Greg Webb http://cafehayek.com/2009/10/goldmans-profits.html/comment-page-1#comment-186207 Greg Webb Sat, 17 Oct 2009 00:34:00 +0000 http://cafehayek.com/?p=6909#comment-186207 Russ, I agree with your view on Goldman Sachs. Goldman Sachs took very risky positions and lost, and the company should have declared bankruptcy. But, though the magic of federal government bailouts both directly with Goldman Sachs and indirectly with AIG, the company survived to make large profits and pay very large bonuses to economically undeserving executives. These overpaid executives have excellent political skills, but not so good risk identification and management skills. And, the government's intervention rewarded these fools handsomely. It also kept others from benefiting from Goldman's mistakes. This keeps the vicious circle going with idiot politicians using taxpayer money to bail out foolish executives in bad times and foolish executives using a portion of their bailout-funded bonuses as campaign contributions to keep idiots in political office. Russ, I agree with your view on Goldman Sachs. Goldman Sachs took very risky positions and lost, and the company should have declared bankruptcy. But, though the magic of federal government bailouts both directly with Goldman Sachs and indirectly with AIG, the company survived to make large profits and pay very large bonuses to economically undeserving executives. These overpaid executives have excellent political skills, but not so good risk identification and management skills. And, the government’s intervention rewarded these fools handsomely. It also kept others from benefiting from Goldman’s mistakes. This keeps the vicious circle going with idiot politicians using taxpayer money to bail out foolish executives in bad times and foolish executives using a portion of their bailout-funded bonuses as campaign contributions to keep idiots in political office.

]]> By: Kevin http://cafehayek.com/2009/10/goldmans-profits.html/comment-page-1#comment-186206 Kevin Fri, 16 Oct 2009 23:36:00 +0000 http://cafehayek.com/?p=6909#comment-186206 Sounds like that's a "no." I think this would have been a better foundation for the article than the $13B. It does beg the question, but since we can't know what would happen to firms' financial contracts if implicit government guarantees of some firms were pulled, some question begging is to be expected. Sounds like that’s a “no.”

I think this would have been a better foundation for the article than the $13B. It does beg the question, but since we can’t know what would happen to firms’ financial contracts if implicit government guarantees of some firms were pulled, some question begging is to be expected.

]]> By: Gary http://cafehayek.com/2009/10/goldmans-profits.html/comment-page-1#comment-186205 Gary Fri, 16 Oct 2009 23:29:00 +0000 http://cafehayek.com/?p=6909#comment-186205 Here's <a href="http://www.taxfoundation.org/news/show/22652.html" rel="nofollow">some tax share data</a>. The top 25% pay 86% of federal income taxes and the top 1% pay 40%. Perhaps the numbers change if we consider payroll taxes, so I'll wait to see what Russ has to say. Here’s some tax share data. The top 25% pay 86% of federal income taxes and the top 1% pay 40%. Perhaps the numbers change if we consider payroll taxes, so I’ll wait to see what Russ has to say.

]]> By: Methinks http://cafehayek.com/2009/10/goldmans-profits.html/comment-page-1#comment-186203 Methinks Fri, 16 Oct 2009 23:15:00 +0000 http://cafehayek.com/?p=6909#comment-186203 Oy. Sorry, I got distracted in the middle of writing this. This data does NOT say that the top quintile pays 54.2% of all taxes. What it says is the top quintile pays a higher percentage of its earnings in taxes and that taxes are progressive. So, even when payroll taxes are factored in, the top quintile pays significantly more. Oy. Sorry, I got distracted in the middle of writing this. This data does NOT say that the top quintile pays 54.2% of all taxes.

What it says is the top quintile pays a higher percentage of its earnings in taxes and that taxes are progressive. So, even when payroll taxes are factored in, the top quintile pays significantly more.

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