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Goldman's bailout earns $1.4bn profit for taxpayers

RightinNYC said:
I don't know what this means.



And it's my understanding that this doesn't have **** to do with what we're talking about, which is whether the easing of accounting rules allowed Goldman to manufacture $3.44b of profit on paper.

Goldman's 10-Q for last quarter is up, so why don't you hop over there and show me where it says that. Here, I'll even give you the link:

Goldman Sachs | Investors - Form 10-Qs
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This doesn't prove at all Goldman Sachs didn't benefit from the accounting standards. If for some reason you're so sure they didn't count their liabilities as assets, then what makes you so sure a counterparty to Goldman didn't as well? It's like you think Goldman Sachs sits in a bubble making money somehow, completely independent of all other institutions and individuals in the world.

Do you know if Goldman bought puts on AIG? Do you have ANY insight into the decisions Goldman made?
 
Liz Peeps said:
This doesn't prove at all Goldman Sachs didn't benefit from the accounting standards.
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That's fine, because I'm not trying to prove that they didn't. You, on the other hand, are claiming that they did. If you don't have anything to support that, I'm not going to entertain you anymore.

If for some reason you're so sure they didn't count their liabilities as assets, then what makes you so sure a counterparty to Goldman didn't as well? It's like you think Goldman Sachs sits in a bubble making money somehow, completely independent of all other institutions and individuals in the world.

Do you know if Goldman bought puts on AIG? Do you have ANY insight into the decisions Goldman made?
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Which has what to do with M2M?
 
RightinNYC said:
That's fine, because I'm not trying to prove that they didn't. You, on the other hand, are claiming that they did. If you don't have anything to support that, I'm not going to entertain you anymore.
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And yet you have no real insight to what happened, and feel satisified. Hmm, interesting.


Which has what to do with M2M?
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Because if any of Goldman counterparties are able to stay alive because of terrible accounting standards, it will essentially exist only to steal away capital in the market to pay off it's debt, even though they should default on their debts since in all reality they never should have been able to make it past the reckoning of their debt.

I know I know, all you're gonna say is a one word reply asking "link?" And no, it's dinner time. So cya.
 
RightinNYC said:
Setting aside the problems with your position that were raised in that thread, I don't see anything indicating that banks like JPMorgan or GS are "only profitable because they don't have to mark their liabilities to market value," which was my objection to LP's statement.
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That requires a bit of understanding of what M2M is. When the M2M rules were suspended, firms like GS and JPM don't have to take mandatory accounting right downs which hit the income statement. Previously, when the value of their L1 and L2 assets are impaired, the impairment reduces income. Not having to take the impairments no longer reduces income, and in some cases, into the red. I'm not so sure the impact now given the fact that much of the impairments have already been taken, but it's likely that there is still some significant impact or in this case, no longer significant impact.

I very much doubt that M2M is the reason why GS turned a profit last quarter.
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Partially. Some of it is due to accounting rules which allow firms to book income when the value of the debt they owe is much more than the value of the debt on the market.
 
obvious Child said:
That requires a bit of understanding of what M2M is. When the M2M rules were suspended, firms like GS and JPM don't have to take mandatory accounting right downs which hit the income statement. Previously, when the value of their L1 and L2 assets are impaired, the impairment reduces income. Not having to take the impairments no longer reduces income, and in some cases, into the red. I'm not so sure the impact now given the fact that much of the impairments have already been taken, but it's likely that there is still some significant impact or in this case, no longer significant impact.

Partially. Some of it is due to accounting rules which allow firms to book income when the value of the debt they owe is much more than the value of the debt on the market.
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I understand how the theory works. What I'm asking for is evidence that the effect of this shift was such that without it, they would not have turned a profit.

Even if we assume that everything you've said is true, we're no closer to knowing whether this shift allowed them to inflate their profits by $1 or by $1T.
 
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