June 17, 2008 – 8:31 pm

For Goldman Sachs, reporting fiscal second-quarter 2008 results chorused the same old refrain. They beat their own expectations:

Goldman Sachs low-balled its earnings estimate, …

But while expectations are subjective, lay offs and comparisons to prior quarters are not:

But this morning’s earnings, while better than expectation, are down 34% from its record fourth quarter of 2007 results, while the stock is down not quite 25% from its December peak. So to me, a lot of GS’s relative success is already priced into the stock.

For the stock to trade this morning as if it is coming off of an oversold decline, like many of the other brokerage firms and banks (which truly were oversold), seems a little silly. Further, given that what is ahead looks more like a marathon than the 50 yard dash, I would be careful to assume that even the best can and will remain perfect forever.

For the stock to trade this morning as if it is coming off of an oversold decline, was not a bit silly. It was a con job as Goldman Sachs cashed in on their own hype. As an added measure, Goldman waited until the stock price was at the highest before dropping this bomb.

U.S. stocks fell for the first time in four days as Goldman Sachs Group Inc. predicted banks will have to raise $65 billion in new capital to cover losses and housing starts and industrial production trailed forecasts.

That’s a nice little ancillary benefit for the world’s largest investment bank, which shows that size does matter. In case you still don’t believe that an honorable and upstanding Wall Street firm such as Sachs would pump and dump its own shares, see how they screwed their clients last year:

The magazine said that much of the focus was on Goldman’s trading revenue, which totaled a spectacular $8.23 billion, up 70% on the year-earlier quarter. Part of that increase was due to a bold bet that made money if mortgage-backed bonds and financial instruments tied to mortgage values fell in price. Because of the credit crunch, they did plunge in value, netting gains for Goldman that the banks said “more than offset” the losses it saw on the mortgages it was holding.

The long and short on that, Mildred, is this: Goldman went long on your house in your account, then they shorted it huge in their account with the inside knowledge that it would tank. So while it’s no wonder that Goldman seems immune, the fact that the bank had to fess up to $775M in write-downs from credit market losses says total immunity was not granted.

And let’s not forget all the movement of mark-to-market to mark-to-mickey mouse back in Q1.

…commercial real estate loans that were moved from Level 2, where assets are valued in part using market prices, to Level 3.” Goldman has $873 billion in assets. That means Goldman moved $8.73 billion in commercial real estate loans from Level 2 “Mark To Model” to Level 3 “Mark To Fantasy”.

That level 3 Ebola may still catch Goldman and a lot can still catch up to the Golden Gangster. The fact that nothing has is proof positive that the Golden One’s greatest asset is all the political connections it dangles in its deep blue pockets.

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