Blankfein, the Goldman CEO who is doing "God's work," announced that his company would give $100m per year to the fund. The Financial Times pointed out that that represents one good day's trading - and that Goldman had 36 $100m-plus days in the third quarter of this year. Warren Buffett is also involved somehow, as a kind of bespectacled fig leaf.

It is hard to tell whether Blankfein believes his own spin. But he said the following:

What are we going to do to fulfill our commitment and our obligation to the world to be good allocators of capital and make sure we're doing the right thing, making sure we're helping the country pull out of recession, grow businesses that help generate jobs?

This is beyond mocking. Talking of which, yesterday it was revealed that not only did credit ratings agencies help engineer the economic collapse, by approving any old financial product, but also had a hand in the AIG bailout that helped get Goldman Sachs to the point where they could pay obscene bonuses again. The agencies seem to have caught the tone-deafness of the big banks. Ray McDaniel, CEO of agency Moody's, took home $7,376,555 in 2007 and $7,569,981 last year. You remember last year, you know, when the economy collapsed and everyone had less mone... oh.

CNBC's Charlie Gasparino reports in the Daily Beast that Blankfein is "obsessed" with the hits that Goldman's image has taken after getting a $10 billion capital injection from taxpayers and $13 billion out of the AIG bailout. He's "looks like shit" because he's so worried about what's going to happen in bonus season, when he has to distribute that $11 billion bonus reserve. He's looking for a "brand manager" to rescue the firm's image, and Goldman insiders say that anyone who's royally pissed off that Goldman is simply harvesting taxpayer money as profits and handing it out to its obscenely wealthy (and occasionally pedophilic) employees in the form of bonuses really just hates Jews:

People inside Goldman tell me that some senior executives say they believe the onslaught of negative stories detailing Goldman's manifold ties to upper levels of government, charges that it somehow fraudulently profited from the subprime crisis, and now the press about the firm's record earnings is so out of proportion to reality that the coverage contains an element of anti-Semitism-subtly playing off the racist myth of a conspiracy of Jewish bankers controlling the world for their own benefit.

Blankfein might simply use the bonus money to buy back Goldman stock, Gasparino says, though that would risk an employee exodus. Mo' money, mo' problems.

Maybe you were thinking like we were—That last night would a night for bottles popping all over town as Goldman's finest masters of the universe once again grabbed the city by the ballsack to celebrate yet another successful sodomizing of the American economy.

Nope. They're laying low, wisely we might add, something our pals at Cityfile learned when they contacted Goldman communications chief Lucas van Praag (Yep, that's really his name!) to find out where the party would be at, to which van Praag said the following:

Neither Lloyd Blankfein nor anyone else at Goldman Sachs has plans to celebrate our second quarter results.

Whoa! Well isn't that just a bucket of ice water poured down the ole britches?! Nevertheless, we have faith that the Goldmanites won't be able to contain their bonus-happy enthusiasm much longer and that they'll be back out on the town dropping what most people make in a month on bottles of fancy champagne before you know it. And when they do, we'd be very happy if you told us about it!

FInally, Matt Taibbi's much talked about Goldman article for Rolling Stone is finally up on the magazine's website. Go read it. Everyone should.

Lloyd Blankfein Plans to Make it a Bloackbuster Night [Cityfile]
The Great American Bubble Machine [Matt Taibbi/Rolling Stone]
pic via

Okay, so, today's Times byline orgy re-enactment of that coupla days a coupla weeks ago where suddenly every banker was like "OHSHTWRSCRWD" achieved two important things:

1. Reminded "Main Street" (Aside: irk you as much as it does yours true that the pols keep calling it "Main Street" when the whole reason this started is because there's NO SUCH THING anymore in this country?? Because everyone had to have his own house, recall?? Anyhoo) that, you know, every business in this freakin country operates on debt, not because they're spoiled delusional children like every last CEO on the Street except John Thain (which reminds me, Johnny Boy is staying on with the new Bank of AMerillca! See, you KNEW he wasn't in it for the nine figure pay package, aw…) but because DUH, because that's like the basis of all civilization or something!! And

2. Reminded Wall Street Just How Crazy it is with a creepy/inspiring (which? both?) anecdote about Black Thursday over at Goldisachs. Lloyd was freaking out, Goldman stock in freefall, etc. etc.…and then one o'clock rolls around and someone they identify as a "prankster" starts playing the "Star-Spangled Banner" over the loudspeaker. All the bankers are like, what?! Some even put their hands over their hearts. And at THAT VERY MOMENT, the stock stopped falling. Turned up a little even! Guess what had happened? That's right, a short-selling ban had just been announced!! Capitalism itself had been suspended! Think that means there's something Goldman guys find inspiring about this country… other than its free market?? Yeah probably not, but I thought about shedding a tear!

Okay so moving on, the big story is…well shucks, got a few hours? No of course not! We're all about to hit me baby one more time with another public appearance by everyone's fave fakenbaked ratings black gold governess!!! (Broad is like Merrill with the CDOs after even AIG stopped insuring them, we know she's bad for us, but we just can't stop.) So I'll make it quick: everyone, except maybe Buffett and John not to be confused with Hank Paulson, is screwed: every other hedge fund is screwed, Veronica Peterson of Columbia, Maryland, who is trying to pay a $4,450-a-month mortgage on fifty grand a year — hey, why not have a go at that, quant jocks? — is screweder, the market that is being artificially propped up by the continued short sale ban managed to fall 350 points today anyway, not that anyone is paying attention to the market because the entire private sector is too busy wondering where the heck they're supposed to find a line of credit when the entire financial system won't trust anyone but the guv-mint with its money anymore. Yikes! Oh, though if Veronica Peterson's story shook your faith in private enterprise, here's a doozy from the public sector: there's a special provision in the new bailout bill offering (SORELY-needed) tax relief to the makers of wooden arrows used in bow-n-arrow sets for children. Think you could poke someone's life out with one of them things?

Anyway, if I were really Serwer this is where I would actually round up a few MORE asides and tangents here and call them "Loose Change," but in the Web 2.0 era that gets to be your job! Although if Dismal Science wants offer himself for the position of Serwer's old standby source "Deep Blue" (sug. nickname change: "Deep Shit") he knows who to G-chat!

1. "Profit" is kind of a scam.

Profit, as they say in the business, is the "bottom line."* But when every financial institution in America can follow a decade of unprecedented "profits" with the threat of Universal Abject Ruin, you have to conclude the whole damn "bottom line" is bullshit. Yesterday the NYT ran a story about an obscure unit of the insurance company AIG that generated shitloads of profits in the boom years. It generated shitloads of profits because it sold "credit default swaps." Credit-default swaps protect the principal paid on a bond in the case of a default. AIG made shitloads selling them in the boom years because a lot of other guys on Wall Street were making shitloads of money rolling up mortgages into bonds, and a guy from Morgan Stanley called up a guy at AIG named Joseph Cassano, told him about these rolled-up mortgage security deals, and asked if AIG would be interested in getting into the business of insuring these mortgages in much the same way AIG insured the houses said mortgages had been taken out to buy. Because Morgan Stanley would totally buy that insurance! Goldman Sachs would also be interested. A few crafty hedge fund guys were interested too. Later that "interest" would yield a profit bonanza for the guys who were smart enough to load up on them!

But first the profit bonanza's was AIG's. By 2005, this unit of AIG generated three and a quarter billion dollars revenue. And you know what the operating profit margin on that revenue was? Fucking 83%. Eighty-three percent. That is after they paid everyone's salary and Blackberry bills and sleeper-class airfares and five-star hotel rooms and for all their office supplies. AIG shared the wealth with employees more, of course. At the end of the day people who worked in that unit brought home between a third and 44% of revenue. Forty-four percent!!! That is literally unreal. Isn't the whole point of having an "insurance" company that you save money like that to have on hand for disaster? What sort of insurance company makes an record-breaking profit the same year they're on the hook over a billion dollars for a record-breaking natural disaster? (An insurance company with a freakishly profitable near-impossible-to-understand unit that does not report to any insurance regulators, for one!)

Well anyway, Goldman ended up putting as much as twenty billion dollars "on the line" with AIG's CDS-es. Twenty billion dollars is just over a billion dollars less than Goldman gave out in Christmas bonuses last year because, in stark contrast to most other banks on Wall Street, Goldman had been so smart and prudent and visionary and bought CDS-es early and booked record profits. In any case, now Goldman was worried about AIG. Goldman stock could plummet if AIG went under! And Goldman CEO Lloyd Blankfein must have told his old boss Hank Paulson that, because Hank invited Lloyd to be the only investment banker in attendance at a special meeting two weeks ago about the fate of AIG. Hank saved the insurer, and while they were at it they made some sort of arrangement for Goldman and Morgan — the guys who hatched this whole plan in AIG's head to begin with! — to become "holding companies" that would be protected by the FDIC. This effectively eliminated investment banking, and one hopes, some of the heady profit margins with which it was once synonymous.

2. Because the system — like CNBC itself! — is rigged to reward fear of commitment.

On CNBC this announcement was met with a lot of talk about how investment bank stocks would no longer "justify" their huge price-earnings ratios because, as real banks instead of specialized "investment" banks, they wouldn't be able to continue to take such big risks and generate the same grotesquely large profit margins they once did. There is something seriously warped about that mentality, though. If you watch CNBC you probably buy into the notion that profits are somehow "the bottom line," that the pursuit of profit makes everything more efficient, that profits create jobs and therefore salaries should more closely track the "bottom line," and if everything ran more "like a business" then employees would be more "accountable." Maybe you buy into this notion because it seems rational; maybe you buy into this notion because it takes so goddamn long at the DMV, but whatever the case, if you are watching CNBC now, it might dawn on you that they are too panicked trying to relay to you all this pressing urgent information to give you the real story, which is that all those assumptions about profits and the bottom line and accountability get turned completely on their heads when it you impose upon them the term limits of the fiscal year and everyone gets to cash out. Nowhere is our national fear of commitment more readily apparent than our willingness to allow Hank Paulson to pay no taxes on a half billion dollars in Goldman stock options to take a government job for three years because we are so wary of investing such faith in an entrenched bureaucrat, only to have him hit us up for a line of credit when all that fear of commitment results in a whopping expression of our collective fear of commitment.

3. "Demand" is also a construct.

A corollary to the "profit" construct is the "demand" construct. A story: the other day my friend the NYSE trader was ruminating on the absurdity that the defining buzzword of the subprime mortgage crisis was "tranche." Yeah, why does everyone pronounce it funny? I wondered. Because it means 'slice' in French, he told me. When you are selling bonds assembled from the foggy promises of ignorant unskilled people to pay ever-increasing fees to ensure their continued residences in shitty overpriced tract homes in eastern San Diego for thirty fucking years — unskilled people who at best work themselves in real estate — it helps to pretty up the sales pitch with pretty French verbiage.

On the front of today's Wall Street Journal "Marketplace" section are two stories on top of one another that form a neat little parable about the nature of demand. One is about how fast food chains like McDonald's and Panera Bread are worried about the credit crisis because Bank of America and other banks have suddenly tightened lending to people whose plan to make money depends on opening evermore McDonald's and Panera Bread locations. Just below this story is another story about how food makers like Campbell's, Kellogg and Kraft are excited about the credit crunch, because it enables them to make the pitch to American consumers to spend more money on "value" foodstuffs such as Frosted Flakes and condensed soup, and those kinds of foods have huge profit margins because of course they are actually a terrible value to consumers, but that doesn't matter as long as some ad agency is being paid eight figures to come up with a folksy campaign reminding Americans what great "value" they're getting. Whatever the outcome of the credit crunch, the only logical takeaway of the two stories goes, Americans will continue eating junk.

Which reminds me: I could go for a tranche of pizza right now!

But the point is, demand is highly manipulable, and we are the masters of manipulation. We've convinced ourselves that if a lower-profit margin-generating division of a company is sold to a Japanese company or simply discontinued it is because that division — and thus the country — is "moving up the value ladder." In the market's ceaseless quest to ascend the value ladder America has, of course, left behind such resilient, and also arguably valuable, industries as the manufacture of sophisticated computer chips and the construction of half-billion dollar oil tankers and probably soon car manufacture, for Asians to occupy themselves working on.

4. Good people will be punished. Good people are always punished. Just ask the Jews.

The Asian countries, of course, are concerned about this. Just because they work six day weeks in sweltering assembly lines doesn't mean they aren't addicted to our demand. China keeps living standards artificially low to maintain high employment, and they build up excess reserves they have to invest it in our iffy financial system, and Chinese people are aware of this, which is why the government faces angry internet retaliation back home when those investments suffer, as they did when Blackstone stock started crashing a few months back.

Which brings me to the Jews. As any Chinese person could tell you, the Jews have long been associated with a knack for making money. But many Jews also pursue relatively unprofitable jobs, like running for Congress. Much has been made of the need for Congress to vote on a bailout package before the Jewish holidays, because there are 43 Jews in Congress, almost all of them Democrats, and as Barney Frank so wryly noted last week "It's a well-known rule; God will only hear your prayers if you're in your congressional district." Barney can say that because he is of course himself Jewish. Anyway, this morning on CNBC Charlie Gasparino was trying desperately to hammer home to viewers that Barney Frank was largely to credit for getting the bailout package done in time to save Wall Street. (Uh, or not!?!) Other anchors kept cutting Charlie off. As Frank himself just told the Washington Post, "You don't get credit for a disaster averted." You also don't get credit for holding your nose and doing the politically unpopular thing and trying to avert disaster if you did not have the votes to avert disaster because everyone hates everyone. However, Barney Frank does get credit for being funny just now. Sigh.

5. And despite the protestations of contrarian pundits it is hard to believe some sort of disaster was/is not at hand.

Because in a story on the Lehman bankruptcy today, the Wall Street Journal noted that the Tuesday morning following the announcement the London Interbank offered rate, the interest rate at which banks offer one another overnight loans, the interest rate to which some $300 trillion in contracts are anchored, rose from 3.11% the day before to 6.44% and "even at those rates, banks were balking at lending to one another." The two guys who actually calculate the Libor have not been on CNBC to my knowledge, but I bet I can tell you what they were thinking when they went through their spreadsheets that day: "Holy Fuck." (And maybe also: "Why again do we securitize mortgages?
Isn't the one book read by everyone in the entire finance industry sort of about how that was a bad idea?) In any case, nothing on CNBC managed to be quite so startling as this story. Maybe because they've desensitized everyone with their incessant re-loop of Jim Cramer's prescient freakout clip.

*Oh, a lot of finance guys will distract you by calling other metrics the "bottom line" — EBITDA or profit "from continuing operations" or during the internet era ha ha, blah blah "eyeballs" — but all that is accounting bullshit, and the whole system is accounting bullshit.

1. For instance, they totally rejected the worthless albeit true rumor about Merrill Lynch CEO John Thain's bad toupee and embraced the ex Goldman banker wholeheartedly. He looked like Clark Kent, therefore he would save his company with magical superpowers and common decency and it was really as simple as that.

2. Conversely, they did not like Lehman Brothers CEO Dick Fuld. Did not trust his eyebrows. And seized an early opportunity in June to lambaste him for being a style nazi. He was superficial! And people like that are always way too concerned about what other people think, and they overlook what's inside. Korean Development Bank was no more likely to save him from his deluded sense of reality than Elizabeth Wakefield was Bruce Patman.

3. Early into their shift steering the John Thain love train, they hired a prominent astrologer to see what was in his stars for the year. Just to make sure their instincts were correct. WERE THEY EVER.

The Merrill Lynch CEO's cool troubleshooting at the company looks like it will earn him performance-based compensation (maybe a bonus for his plan to solve the stock-drop debacle?), but the new moon this Friday that links the sun, moon, and a brilliant Uranus, will bring news of sudden changes in relation to Mr. Thain's career path, and he's going to respond in a way no one expects!

See, because this is Wall Street, where it is expected that CEOs are too busy smoking pot and playing bridge — and John Thain plays bridge!? — to notice when they need to sell their company rightthefucknow.

4. They pressed the Lehman Brothers is too obsessed with shopping to have a healthy balance sheet angle when CFO Erin Callan left abruptly. They did not particularly dislike Erin, but they did not approve of her nude lipstick. Indeed, it was ugly.

5. Yeah, and then in July the world's preeminent financial journalist of the era James Stewart advised readers to switch their money into undervalued financial stocks.

Those egghead debate team Pulitzer types always seem to miss out on the action. Sigh.

*And also, Jessica Pressler, who is, as I have disclosed previously, my BFF.