December 16, 2008 – 8:19 pm

Superman is dead, Mighty Casey Struck Out, and Goldman Sachs has now reported its first quarterly loss as a publicly traded corporation. They are busy spinning the same song as every other mortal on the Street. They think the loss is good news because it could have been much worse. Income in the entire company suffered and write-downs overwrote revenue from from all sources, resulting in a $1.58B revenue hit.

Writedowns topped $5 billion, and revenue from investment banking businesses, including merger advisory and underwriting, dropped 31 percent.

Then the bank, infamous for its aggressive compensation schedule, decimated it in the wake of the Q4 results.

Amid these declines, Goldman slashed its compensation and benefits spending for the year by 46 percent to around $10.93 billion, or $364,000 per employee.

And in what must have seemed like piling on, Moody’s cut Goldman’s credit rating after the bank reported and it was too late for investors to do anything.

Moody’s Investors Service cut its Goldman credit rating to A1 from Aa3 and said the firm’s outlook remains “negative,” citing its vulnerability to credit markets and a difficult operating environment.

Meanwhile, Goldman’s minions blame the switch from investment banking for the quarterly loss.

“We were an investment bank for 139 years and a bank holding company for three months. We’re still a little new at this game,” Chief Financial Officer DavidViniar said on a conference call with reporters.

And note the bank still generated a fiscal year 2008 it profit despite the difficult conditions.

“Our results for the fourth quarter reflect extraordinarily difficult operating conditions, including a sharp decline in values across virtually every asset class,” said LloydBlankfein, chairman and CEO of Goldman. “While our quarterly performance obviously didn’t meet our expectations, Goldman Sachs remained profitable during one of the most challenging years in our industry’s history.”

We point out that it is not Goldman Sachs that has changed, but rather the credit conditions as Blankfein says. Without Warren Buffett and Uncle Sam, Goldman Sachs most certainly would not have turned a profit for the year. Warren put $5B of cold cash into Goldman on October 1, just two days after Goldman sold shares to raise up $5.75 billion. By the old math that’s $10.75B in two days, makes you wonder what the rush is all about don’t it.

And of course, Goldman Sachs’ most potent profit generator, insider connections, were in play again. In addition to the $10B hand out from Uncle Sam, the bank was able to raise $3B disguised as a rescue of AIG, orchestrated by CEO and US Treasury secretary Henry Paulson.

The largest recipients were Societe Generale, which got $4.83 billion, Goldman Sachs with $2.97 billion, Deutsche Bank AG with $2.92 billion, Calyon Securities with $1.89 billion and Merrill Lynch & Co. with $1.32 billion, the person said.

And you can be sure that Goldman will continue to play both ends and sell out their clients at every profitable opportunity. Then in the “have too much gall to believe if I didn’t see it myself” category, we have the Golden Tin Man with one hand held out to wage earners for a bailout while using the other hand to push profits to off shore tax havens.

which got $10 billion and debt guarantees from the U.S. government in October, expects to pay $14 million in taxes worldwide for 2008 compared with $6 billion in 2007.The company’s effective income tax rate dropped to 1 percent from 34.1 percent, New York-based Goldman Sachs said today in a statement. The firm reported a $2.3 billion profit for the year after paying $10.9 billion in employee compensation and benefits.

So it wasn’t only profits that fell at Goldman Sachs. The tax rate also dove straight to the one percent mark.

The tax-rate decline may raise some eyebrows because of the support the U.S. government has provided to Goldman Sachs and other companies this year, Willens said.

“It’s not very good public relations,”

I think we all know by now that public relations is not what concerns the Golden Godfather.

So, the credit bubble has burst and Goldman Sachs has become a bank. This means that its insiders have got theirs and gotten out. Now they’re sticking the rest of the spear to us.


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