The New York Times gets an interesting scoop on the Goldman Sachs deal for a stake in Facebook—one that values it at a bubblicious 100 to 125 times trailing earnings.
Andrew Ross Sorkin and Susanne Craig report that a group inside Goldman turned down Facebook’s offer because of “the high valuation and… a mismatch with his investment criteria.” Now, other Goldman clients are queasy about the famously “clients first” firm:
The decision by Mr. Friedman, who holds a seat on the firm’s management committee, has raised concerns among some of Goldman’s most sophisticated clients who have been pitched on Facebook in recent days.
Several wealthy individuals approached about the offering said they had declined, in part, because of Mr. Friedman’s rejection. The clients spoke on the condition of anonymity out of fear that making a public comment would hurt their relationship with Goldman and their opportunity to have access to future investments.
— Charlie Gasparino, meantime, adds a new wrinkle to a Goldman story that may have helped give those most sophisticated clients their indigestion: the Abacus scandal.
Gasparino reports for Fox Business Network that ACA, the firm that was on the other side of the John Paulson bet, is suing Goldman for fraud and has documentary evidence in the form of Goldman emails.
Now where it goes further than the SEC lawsuit…they basically have emails where Goldman Sachs clearly is in the loop with ACA and ACA is clearly under the belief that Paulson is long the portfolio, not short. What these emails show, which is pretty interesting, is that Goldman did not correct ACA Capital in this belief.
ACA told Gasparino this:
We have documents that show Goldman Sachs told ACA (that) Paulson was long in ABACUS investment.
:
— Overlook the Business Insider-style sensationalism (“19 Facts About The Deindustrialization Of America That Will Blow Your Mind”) and check out this post on the demise of American manufacturing.
It’s from a site called The Economic Collapse, but each of the facts links to a mainstream media or other reputable source for its information. Some of its pretty eye-opening. Like this:
#4 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.
Or this:
#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.
Or how about this:
#1 The United States has lost approximately 42,400 factories since 2001.
(via Zero Hedge)
Robert Reich published an article way back which talked about a global class of symbolic analysts which were becoming isolated from the host countries they were born and based in.
http://www.commondreams.org/views05/1212-20.htm
Rortybomb recently linked to an Atlantic article which describes this new class in detail:
http://rortybomb.wordpress.com/2011/01/05/the-new-financial-elite-rubinites-and-the-democratic-party/
From the article:
"The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.
I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut."
At last summer’s Aspen Ideas Festival, Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, said that if he were starting from scratch, only 20 percent of his workforce would be domestic. “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.” Speaking at the same conference, Thomas Wilson, CEO of Allstate, also lamented this global reality: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business … American businesses will adapt.”...
A Wall Street investor who is a passionate Democrat recounted to me his bitter exchange with a Democratic leader in Congress who is involved in the tax-reform effort. “Screw you,” he told the lawmaker. “Even if you change the legislation, the government won’t get a single penny more from me in taxes. I’ll put my money into my foundation and spend it on good causes. My money isn’t going to be wasted in your deficit sinkhole.”...
You might say that the American plutocracy is experiencing its John Galt moment. Libertarians (and run-of-the-mill high-school nerds) will recall that Galt is the plutocratic hero of Ayn Rand’s 1957 novel, Atlas Shrugged. Tired of being dragged down by the parasitic, envious, and less talented lower classes, Galt and his fellow capitalists revolted, retreating to “Galt’s Gulch,” a refuge in the Rocky Mountains. There, they passed their days in secluded natural splendor, while the rest of the world, bereft of their genius and hard work, collapsed...
This plutocratic fantasy is, of course, just that: no matter how smart and innovative and industrious the super-elite may be, they can’t exist without the wider community. Even setting aside the financial bailouts recently supplied by the governments of the world, the rich need the rest of us as workers, clients, and consumers. Yet, as a metaphor, Galt’s Gulch has an ominous ring at a time when the business elite view themselves increasingly as a global community, distinguished by their unique talents and above such parochial concerns as national identity, or devoting “
#1 Posted by Thimbles, CJR on Thu 6 Jan 2011 at 11:08 PM
By the by, not to be coarse, but am I on some sort of sh*tlist? It seems that sometimes, when I comment on an old post, or in this case a new one, that the comment doesn't update on the "Recent Comments" list.
Is this a technical issue or is this being done in the hopes that I get the hint? Because if you all don't want these comments no more, all you have to do is ask.
You do have my email, I think.
#2 Posted by Thimbles, CJR on Thu 6 Jan 2011 at 11:41 PM
@Thimbles: Weird. It's definitely a technical issue. Thanks for bringing it up; I'll have our web guys take a look tomorrow.
#3 Posted by Justin Peters, CJR on Fri 7 Jan 2011 at 12:07 AM
Thimbles comment (the first one) is spot on. The question, as always, is what are we going to do about it. The idea people generally hear today, from elementary to business school, is to suck up: find a niche that is not being served and go to work for the very rich. They are the best customers--maybe the only ones.
The option seldom acknowledged is organized resistance. In broad terms, the labor movement won concessions only when workers were armed, and used their weapons. The late 1800s and the early part of last century were ugly times, and I'm no advocate of violence. But that's where the long-lost 40-hour week came from, and the minimum wage, and child labor laws (which, by the by, the Supreme Court had originally declared unconstitutional).
The irony: workers in places like China and South America can and do revolt now and then. It's likely that, as in the U.S., people in the Third World will demand more as they get more. I foresee a time when the Plutocrats return to the U.S. because our workforce is more docile.
By then, of course, wages here will be below those in China.
#4 Posted by edward ericson, CJR on Fri 7 Jan 2011 at 08:34 AM
According to wsj (Liz Rappaport, 1/11/11, "Goldman Opens Up To Mollify Its Critics"), GS has established "procedures to make sure the firm doesn't take advantage of clients". These consist of/derive from a '"matrix" that defines each client's level of "sophistication"'.
How does an assessment of a client's "sophistication" relate to whether the firm may or may not take advantage of that client? Shouldn't unsophisticated and sophisticated clients alike get the same non-exploitative service? Is this the gist of Goldman's "opening up," its attempt at "mollifying its critics?"
#5 Posted by David Kivisaari, CJR on Tue 11 Jan 2011 at 05:42 AM