UBS, Citigroup, JPMorgan etc have agreed (or are close to agreeing) to buy back billions in auction rate securities from their clients. As these people are relative peons compared to the God-like creatures serviced by Goldman Sachs, a fact which must be reinforced at all times lest the GLCs get testy, you would think that the master of the universe would be scrambling to not only reimburse their investors, but to secure a big enough space to assemble them all for the purposes of administering fellatio as an added way of saying sorry and to remind them of the added value in going Gold.* But you would think WRONG! Oh yes, the Journal reports that an unintended bit of comedy emerging from this whole auction rate securities shitstorm is the fact that "for once, Wall Street isn't bending over backward for its richest clients," with Goldman so far "refusing to buy back clients' auction-rate paper."
And that's making Goldman's clients mad, and also confused, you know, because they've never been treated like this before! Some of them probably almost want to say it's oddly thrilling but obviously would never admit to that and probably couldn't articulate it anyway. And besides, even if they did like it on some level, they like money more which is why Carl Everett, for instance, who has been satisfied with the firm's service until now is saying stuff like, "That's disappointing to me-- my expectation is for the Goldman Sachs brand."
Of course-- and I say "of course" not knowing my ass from my elbows vis-a-vis auction-rate securities-- Goldman's probably going to suck it up eventually and acquiesce to Everett and Co.'s demands (even though what they should do is say, "Fuck you, you get NOTHING" and put their clients on a diet of tough love, which people respond to in the long run). Until then, let's all sit back and enjoy the accompanying graphic to the Journal article which, if you look closely, illustrates a Goldman investor crying. Somebody came to work today.
Goldman Balks at Helping Rich Clients Recover From 'Auction Rate' Securities [WSJ]
*Giants Stadium isn't available and while MSG is free, its surface will not provide the desired turf--burn effect on the knees of those attempting to repent for their sins. Radio City Music Hall is said to be a contender.
Posted by guest , Aug 14, 2008 10:28AM
Too long, didn't read.
Posted by guest , Aug 14, 2008 10:29AM
@1- you're annoying.
Posted by guest , Aug 14, 2008 10:32AM
Actually, I'm thinking no harm, no foul here. Problem with the ARS's is liquidity - decent returns esp now, but you currently cant get yr hands on the cash. Problem for a typical retail client with liquidity needs. But GS clients are not truly retail, but instead very high net worth and shouldn't be bothered by that.
Posted by guest , Aug 14, 2008 10:33AM
Goldman couldn't tell a jar of mayo from a jar on fluffernutter!
Posted by guest , Aug 14, 2008 10:34AM
@3-- exactly...which is why they should quit their bitching.
Posted by guest , Aug 14, 2008 10:49AM
@3&5
Customer is always right, unless he's wrong and even then don't tell em they're wrong. In that case think on your feet and come up with a solution.
Posted by guest , Aug 14, 2008 10:52AM
#3, you are missing the point again.
You can be a billionaire with investments in all kinds of assets. However, you also need some cash lying around to pay bills at teh end of the month (EVERYONE needs to do that).
That cash lying around had been invested into ARS. Of course these folks can liquidate some other assets but the point is that they will have to liquidate SOMETHING. And they would very much rather they dont have to liquidate anything else and get back their cash.
Posted by guest , Aug 14, 2008 10:52AM
im suprised Goldman has not down graded Hellmans mayo,It seems thats all they do these days is dwn grade all the important instutionsthat America great
Posted by guest , Aug 14, 2008 10:56AM
@8- shut up, you douche.
Posted by guest , Aug 14, 2008 11:02AM
7 I'll agree to disagree. I'm not buying the story that every last dollar of the hypothetical billionaire's liquid assets is in ARS's. Also, I'm gonna go on a limb here (ok everyone, get ready to start s**tting on me..) but they could also borrow on margin and the interest may in fact be deductible, meaning that after tax they have a positive carry.
Posted by guest , Aug 14, 2008 11:05AM
@"Giants Stadium isn't available and while MSG is free, its surface will not provide the desired turf--burn effect on the knees of those attempting to repent for their sins. Radio City Music Hall is said to be a contender."
what about the Staples Center?
Posted by guest , Aug 14, 2008 11:05AM
# 9 you are a douche. # 8 is right
Posted by guest , Aug 14, 2008 11:07AM
Rock on Goldman...buyer beware...they were marketed as cash equivilents because they were at the time...markets evolve, this one dissolved...risk...that's why it's called investing and not winning
Posted by guest , Aug 14, 2008 11:08AM
11 I was thinking more on the lines of St. Patrick's Cathedral. The pews are already equipped for kneeling.
Posted by guest , Aug 14, 2008 11:14AM
#9 wht do work for those D- Bags and rght back at you Ball Breath
Posted by guest , Aug 14, 2008 11:15AM
aAlot of people are going to get a hearty laugh once GS starts to sputter, its only a matter of time. Someone/thing is going to come down on them, this whole facade about them having the smartest people is a bunch of BS. There are brillaint minds all over the street hurting right now. Im sure the fact that they were shorting subprime while selling it to institutional clients helped them out a few quarters ago. Bunch of s-bags
Posted by guest , Aug 14, 2008 11:22AM
17 Wishful thinking. I'm on the client side so I have no bias. I can tell you without a doubt that GS is head and shoulders above the rest. There is nothing that they don't do at least a little better than everyone else.
Posted by EconAnalyst , Aug 14, 2008 11:34AM
The issue is not just liquidity. If they had their money locked up for years in a high yield security there would not be an issue.
The max. rates for most ARS are 175% of 1-Mo LIBOR (for Munis) or 150 bps over LIBOR (for Student Loans).
That's a negative spread over 10Y treasury.
Posted by guest , Aug 14, 2008 11:40AM
Isnt 175% of LIBOR tax free a great return? And I have a problem with your 10 year comparison. As I'm sure you know, the issuers have incentives to unwind and refinance but the market is not cooperating so the process is being slowed. I doubt though that that it will take 10 years to work itself out. This is not a problem for a high net worth investor.
Posted by guest , Aug 14, 2008 12:33PM
17 Why are you talking to yourself?
Posted by MuniShe , Aug 14, 2008 12:50PM
Max rates vary dramatically and the ones that have not been converted have the lower max rates. No incentive for issuers to convert, the investors get screwed for not reading the fine print.
We were laughing about the lack of GS name in the news yesterday ... And they pushed this stuff the same as everyone else. Just pushed it with a bit more disclosure compared to some of the other shops.
Posted by guest , Aug 14, 2008 1:20PM
MuniShe Help me here: why wouldn't a tax exempt issuer have an incentive to convert if they're borrowing at L+175? or is that not a low max rate.
Posted by MuniShe , Aug 14, 2008 1:28PM
Tax exempt issuers will convert if they can save off of where they would issue long term fixed ... can just call that 5%. The problems come in when they have swaps attached to the VRDNs or ARS that create an extra cost to conversion.
Also, most issuers are angry that they got talked into these products and then screwed so they have no incentive to help the brokers out who are now going to have to hold these products on their balance sheets.
Posted by guest , Aug 14, 2008 1:32PM
23 Got it. Thanks.
Posted by MuniShe , Aug 14, 2008 1:32PM
just noticed i wrote that first part wrong ... but assuming the ppl here are smart enough to get it. in the middle of trades ... back to work.
Posted by guest , Aug 14, 2008 2:05PM
I was hoping Carl Everett would be the baseball player, but alas, he's just some washed-up tech exec.
Posted by guest , Aug 14, 2008 8:51PM
Their ARS out performed their hedge fund Global Alpha with about the same degree of liquidity and lower fees. So that's pretty good.
Posted by guest , Aug 15, 2008 5:31AM
I think Bess would be excellent at maintaining investor relationships.
"Don't like it? TOUGH. Bawl your eyes out."
Let tough love weave its magic spell.
Posted by guest , Aug 15, 2008 11:16AM
Goldman is Goldman. Anyone who has a account there knows that your account/relationship plays second fiddle to Goldmans P&L.......Ask any trader ..any ceo...any hedge fund...They think that all there employees are replaceable ..and people do bussiness because of the Goldman culture which is one that we put Goldman first client second....They make a good percent of there money trading along and ahead of there clients...WALL STREET SAGE
Posted by guest , Aug 15, 2008 11:17AM
Goldman is Goldman. Anyone who has a account there knows that your account/relationship plays second fiddle to Goldmans P&L.......Ask any trader ..any ceo...any hedge fund...They think that all there employees are replaceable ..and people do bussiness because of the Goldman culture which is one that we put Goldman first client second....They make a good percent of there money trading along and ahead of there clients...WALL STREET SAGE
Posted by guest , Aug 15, 2008 11:17AM
Goldman is Goldman. Anyone who has a account there knows that your account/relationship plays second fiddle to Goldmans P&L.......Ask any trader ..any ceo...any hedge fund...They think that all there employees are replaceable ..and people do bussiness because of the Goldman culture which is one that we put Goldman first client second....They make a good percent of there money trading along and ahead of there clients...WALL STREET SAGE
Posted by guest , Aug 15, 2008 11:17AM
Goldman is Goldman. Anyone who has a account there knows that your account/relationship plays second fiddle to Goldmans P&L.......Ask any trader ..any ceo...any hedge fund...They think that all there employees are replaceable ..and people do bussiness because of the Goldman culture which is one that we put Goldman first client second....They make a good percent of there money trading along and ahead of there clients...WALL STREET SAGE
Posted by guest , Aug 15, 2008 11:18AM
Goldman is Goldman. Anyone who has a account there knows that your account/relationship plays second fiddle to Goldmans P&L.......Ask any trader ..any ceo...any hedge fund...They think that all there employees are replaceable ..and people do bussiness because of the Goldman culture which is one that we put Goldman first client second....They make a good percent of there money trading along and ahead of there clients...WALL STREET SAGE
Posted by guest , Aug 15, 2008 11:24AM
I'm always suspicious of the quality of the underlying wisdom when its a double post. 29-33 - a quint. Nuf said.
Posted by guest , Aug 15, 2008 5:10PM
I figure Scaturro, who heads their Private Client group, must be pissed off beyond belief -- but who cares.
Posted by guest , Aug 15, 2008 5:11PM
I figure Scaturro, who heads GS's Private Client group, must be pissed off beyond belief -- but who cares.
Posted by guest , Aug 15, 2008 5:11PM
I figure Scaturro, who heads GS's Private Client group, must be pissed off beyond belief -- but who cares.
Posted by guest , Aug 15, 2008 6:09PM
"I think Bess would be excellent at maintaining investor relationships.
"Don't like it? TOUGH. Bawl your eyes out."
Let tough love weave its magic spell."
couldn't agree more.
Posted by guest , Aug 18, 2008 5:48PM
17 - I heard people say the same thing about Enron some time ago