Some observers, including analysts for Goldman Sachs, say that the growth of AI since the height of the pandemic is now proving to be a bubble, like dotcom stocks in the late Clinton years or mortgage based derivatives in 2006-07. What is a bubble? By standard definition it is a growth in value of an asset that occurs after the speculative demand has surpassed the operational demand for same. If I buy X as a speculator at a price higher than the operational value of X can support I may be willing to make an operationally foolish deal in the expectation (on the speculation) that there will be a "greater fool" to whom I can then sell it. In such a situation, sooner or later the biggest fools ARE the ones who are holding X. What happens to its value then you can fill in for yourself. Clearly there is money still entering the field. The Peoples Republic of China is incubating a group of companies that it proudly calls the "little AI dragons," with seed money of...
Posts
The newly elected Congresscritter for New York's 3d district to the US House of Representatives is George Santos. As most of the literate world knows by now, George Santos is a liar. Bigly. Wherever his account of his life can be placed up against documentable facts, his account falls apart. His response to the disclosure of some of his lies is that, yes, he did tell untruths, create "embellishments" etc., but no he is not a fraud and did nothing criminal. Okay: Santos' lies are what we have come to expect from politicians and are not the biggest story in recent history. It is not even the biggest story of this hour concerning the still-unorganized House of Representatives of the 118th Congress. But I do have to say a few words about Santos. Or, specifically, TWO words with a little embellishment. The two words are: Goldman Sachs ? I am surprised that anyone would tell the lie that he told about having worked at Goldman Sachs. Republicans of "the base" h...
In a London courtroom on Friday, October 14, a judge found for Goldman Sachs in a much watched case that pitted that notorious investment bank against late Qaddafi and post-Qaddafi Libya. Here's a Dealbook story on the ruling. Here's the first 120 pages of the decision by Judge Vivien Rose . The roots of the case go back well before the revolution in Libya in 2011, and before the global financial crisis of 2007-08. The roots of it go back to the period 2003-04 when the western industrialized countries began lifting their sanctions against Libya, became willing to buy its oil and accept its money in their banking institution's coffers. In this period, Libya created the Libya Investment Authority (LIA), a sovereign wealth fund. Goldman Sachs was one of many institutions that, in Judge Rose's words, "beat a path to the door" of the LIA with bright ideas as to how it should invest that money, The LIA in this litigation has portrayed itself as a bunch ...
Eaglevale Partners, a hedge fund founded by three veterans of Goldman Sachs, acknowledged in a recent letter to its investors that it has made "incorrect" calls on Greece, and Eaglevale's main fund has taken hits as a consequence. A smaller fund within the firm's stable, one aimed specifically at Greek opportunities, has taken something more than a mere 'hit.' It has taken a clobbering, losing half its value last year. This would not be news, outside of the hedge fund world anyway, except that one of the three founders of Eaglevale is Marc Mezvinsky, the husband of Chelsea Clinton, and thus the son-in-law of a formidable power couple. His partners are Bennett Grau (whose previous experience is in the commodities trading world chiefly) and Mark Mallon. One of the investors in the dedicated Greek fund is Marc Lasry, a billionaire who has been a donor to Clinton family political campaigns. I haven't said anything new here. The facts I've just stated...
Temasek, an investment company managing Singapore's surplus revenues, has bought a significant stake in a high-tech trading company: that is, 10% of Virtu. Here's what Reuters said about the deal on Sunday . Virtu's CEO is happy about this. "Temasek is an ideal partner for Virtu," etc. Why? Because Virtu is expanding "into new asset classes and geographies." But what comes to my mind is that Virtu is the kind of operation that serves as the missing 'bad guy' in Michael Lewis' book, Flash Boys. Lewis' book plays up the market distortions, the "rigging" of markets in his term, that can be accomplished through contemporary electronic/algorithmic wizardry. When the emphasis is on the speed for the wizardly machinations, this is called "high-frequency trading," though speed itself may not be quite as 'of the essence' as that term suggests. One feature of Lewis' book that many readers found odd was tha...
I see from a recent "Heard on the Street" column that the investment bank Goldman Sachs has an operational unit that it calls "the Federation." As explained in the column, the Federation combines range of back office activities that do not generate revenue themselves but are nonetheless of great significance: accounting, legal, compliance, risk management etc. Goldman Sach's management committee is apparently divided three ways: representatives from sales and trading, reps from investment banking, and those from the Federation. The HOTS column cannot help but make Star Wars references here (a powerful organization known simply as the Trade Federation is manipulated by Sith Lords, an important plot point in the three prequel movies.). Personally, I would have made Star Trek references instead. The Federation of Planets, after all, constitute the good guys of that universe, not puppets of the bad guys. Still, to each his own. Anyway, the news conten...
... looks fabulous. For a story on the opening of the trial, go here: Dealbook. By the way, if you already know the basics of the Tourre trial, if you make a point of following such things, you are excused. because I don't plan on getting very deeply into this today. For those of you still with me then, the central figure in the photo nearby is Fabrice Tourre, who was famous not too long ago. Indeed, one might have thought that his trial would be a major circus. But the circuses are elsewhere just now. What with Zimmerman's acquittal, a new royal baby, the latest news about Mr. Weiner, and the bankruptcy of Detroit, the Tourre trial is passing under the radar. Tourre was a mid-level trader at Goldman Sachs who was involved in some of the Abacus trades. He and Goldman have gone their separate ways. But Goldman Sachs is still paying for his defense costs. This sounds awkward. What if his best defense is to pass the buck upward? At any rate, To...