Here are a couple pretty good illustration of the bumper sticker “Too Big To Fail” and what it means in practice. First, we have Goldman Sachs, much maligned for an SEC civil suit and much scrutiny over betting against its own customers, and yet they made money on prop trading every single day in the first quarter of this year. It’s true that the SEC suit didn’t arise until April, but Goldman had many reasons for investors to be wary of their practices even before that announcement. However, enough of them enthusiastically jumped back in with the financial giant to make their trading desks more profitable than ever.
Goldman Sachs just revealed in an SEC filing that its traders made money on every single trading day last quarter, a record for the firm. Net revenue for trading was $25 million or higher in all of the first quarter’s 63 trading days with 35 of those days bringing in more $100 million, according to the filing.
Similarly, outside the financial world, BP may be spending millions upon millions to clean up that disastrous oil spill in the Gulf of Mexico, but the resultant expense won’t cause a dent in their bottom line:
BP said yesterday that it had already spent $350 million on the spill response, and the company’s stock has taken a big hit, but the “behemoth” company will almost certainly survive the disaster with little long term damage. BP’s daily profits dwarf the daily cost of spill response, and at the current rate, the company could cover the entire cost of cleanup thus far in just under four days of profits:
For now, at least, BP’s prodigious costs combating the oil spill in the Gulf are outweighed by prodigious profits.
On Monday, BP said it spent $350 million in the first 20 days of the spill response, about $17.5 million a day. It has paid 295 of the 4,700 claims received, for a total of $3.5 million. By contrast, in the first quarter of the year, the London-based oil giant’s profits averaged $93 million a day.
These are the kinds of percentages you would expect out of the Gilded Age prior to Teddy Roosevelt’s trust-busting. That’s because we’re living in a Second Gilded Age, and it has not yet produced enough champions willing to break up these massive conglomerates and hold them accountable for what they have caused throughout the nation and the world.