Posted on 01/06/2011 1:14:08 PM PST by nickcarraway
Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social-networking company is now worth $50 billion. Goldman is also creating a fund that will offer its high-net-worth clients an opportunity to invest in Facebook.
On the face of it, this might seem just like what the financial sector is supposed to be doing – channeling money into productive enterprise. The Securities and Exchange Commission is reportedly looking at the way private investors will be involved, but there are more deeply unsettling factors at work here.
Remember that Goldman Sachs is now a bank-holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (see Andrew Ross Sorkin’s blow-by-blow account in “Too Big to Fail” for the details.)
This means that it has essentially unfettered access to the Federal Reserve’s discount window – that is, it can borrow against all kinds of assets in its portfolio, effectively ensuring it has government-provided liquidity at any time.
Any financial institution with such access to such government support is likely to take on excessive risk – this is the heart of what is commonly referred to as the problem of “moral hazard.” If you are fully insured against adverse events, you will be less careful.
Goldman Sachs is undoubtedly too big to fail – in the sense that if it were on the brink of failure now or in the near future, it would receive extraordinary government support and its creditors (at the very least) would be fully protected.
In all likelihood, under the current administration and its foreseeable successors, shareholders, executives, and traders would also receive generous help at the moment of duress. No one wants to experience another “Lehman moment.”
(Excerpt) Read more at economix.blogs.nytimes.com ...
I hope no one believes that it's capitalism when the government gives advantages to certain parties.
I think anyone who links their RL information to any site on the interwebz is NUCKING FUTZ!
I am FD2003 but there are maybe 3 people, all of whom I trust, who can link that to my RL name and information.
Reminder: The interwebz are ETERNAL. Your every statement, be it on a virtual “wall” or in your self-important “about me” (or whatever the heck it is) area is picked up and cached by Google, Yahoo, Bing, etc. in microseconds and will be here forever. Talk about act in anger, repent at leisure...
> Why Are Taxpayers Subsidizing Facebook, and the Next Bubble?
That’s easy.
Because Facebook and Next Bubble are owned by Leftists.
That is also true if I post on FR.
Was there ever a time in history that we were giving Billion dollar valuations to websites that had no business?
Does anyone remember the NASDAQ bubble, wel here we go again.
Was there ever a time in history that we were giving Billion dollar valuations to websites that had no business?
Does anyone remember the NASDAQ bubble, well here we go again.
Facebook may be overvalued, but the numbers that have been leaking out suggest they made $400-500 million inprofit in 2010, which is a real business.
They aren't.
>>That is also true if I post on FR. <<
LOL!!! Check my posting history, especially on CREVO and Palin threads :) And I was SOBER (well, mostly)!
I don't think Facebook's CEO has any intention of going public any time soon.
“And noone wants to experience another “Lehman Moment””.
And what gets me was how when from 2007 to 2008, both Lehman and Goldman Sachs increased their CEO’s salaries by many $millions, the one failed and the other prospered.
“Silicon Valley”
Well, Goldman had it’s nervous moments. But it helps when you’re a branch of the government.
Here’s why
Barack’s Wall Street Problem is Now America’s
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
Good description, an IP address and information phishing honeypot!
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