Humor: The noble public service of Goldman Sachs

Flip Side: Our guest today is Ron Rapacious, a Goldman Sachs partner. Ron, through September Goldman has set aside $16.7 billion to pay bonuses. How much do you expect to receive?

Rapacious: Only $20 to $25 million. They will probably screw me again.

FS: You deserve more?

RR: My department has already made $1.2 billion this year.

FS: What do you do to make so much money?

RR: Serving the public interest and spurring the American economy.

FS: How do you do that?

RR: By trading legal futures.

FS: What are legal futures?

RR: With advances in systems biology, DNA analysis, microfluidics, blood diagnostics, and nanotechnology, some diseases are becoming predictable and preventable. Therefore whenever one gets sick, one should sue. Someone — a doctor, a technician, a drug manufacturer, a tarot card reader, a motorcycle mechanic — should have predicted and prevented the disease.

Such lawsuits are enormously expensive, requiring reams of depositions and testimony from expert witnesses for-hire — systems biologists, DNA analysts, microfluidians, blood diagnosticians, nanotechnologists, and other professionals paid to lie.

To finance the lawsuits, lawyers sell off portions of the future settlement. Goldman Sachs buys, slices, dices, and leverages these future payment streams, mixing them in three types of publicly traded derivatives: CONS (Collateralized Obligation Notes), GYPS (Generalized Yearly Payment Securities), and SCAMS (Securitized Cumulatively Amortizing Monetized Securities).

FS: So you structure and issue CONS, GYPS, and SCAMS?

RR: Not me. A six year old could do that. Nonetheless, my shameless partners get bigger bonuses than I do for underwriting this garbage. Is there no justice in the world?

FS: Then what do you do?

RR: I trade GYPS, CONS, and SCAMS in the secondary market.

FS: How does trading complex derivative securities on the secondary market help society?

RR: It provides liquidity for buyers and sellers. Liquid secondary markets for complex derivative securities are the bedrock of American freedom and prosperity.

FS: How do you supply liquidity?

RR: Mostly I sell legal futures short. I bet that the price will go down and I can buy them back at a discount. Although being rated AAA, they are really trash. Thus far this year, we have made $700 million shorting legal futures.

FS: One part of Goldman issues these securities and another part shorts them? Isn’t this unethical?

RR: That not a word that we, at Goldman, understand. This is precisely what with did with subprime CMOs. We sold them to our valued clients, and then bought default swaps against them. This allowed us to escape the meltdown that killed Bear, Merrill, and Lehman.

FS: Goldman sold subprime CMOs to their clients and then bet against them? Now you are selling CONS, SCAMS, and GYPS to your clients and making $700 million by shorting them. Doesn’t this indicate that Goldman initially overcharged its clients?

RR: We should supply liquidity for free?

FS: But what about the clients?

RR: At Goldman, the clients always come first. We pride ourselves on taking care of our valued clients. That’s why we developed BOHICA, our new client service program. Whenever we think about the client, we think BOHICA.

FS: What does BOHICA stand for?

RR: Bend Over Here I Come Again. In the old days after we screwed a client, they would go to Merrill and Merrill would screw them; then they would go to Lehman and Lehman would screw them; then they would go to Bear, and Bear would screw them; finally they would return to Goldman and we would screw them again. Now there is nowhere else to go. It’s BOHICA, BOHICA , BOHICA all day long.

FS: So you make your money by screwing your clients?

RR (exasperated): No. We make our money by assuring that markets are efficient, liquid, and transparent. Efficient, liquid, and transparent free markets are the bedrock of American freedom and prosperity.

FS: If markets were efficient, liquid, and transparent, how could a trader make money?

RR: A trader couldn’t. We trade only in markets where we have the edge, the inside track, the lock. Once we have squeezed all the profits out, the markets are again efficient. It is really a public service. Our way of giving something back.

FS: At the height of the financial crisis, Goldman became a bank so it could off load bad assets to the Fed. Now being a bank, is Goldman loaning money to American businesses to create jobs?

RR: Not directly. We’re really not set up to do this nickel-dime stuff. However, by actively trading derivatives in the secondary market, we are indirectly benefiting every small business in the nation.

FS: Because actively traded derivative markets are the bedrock of American freedom and prosperity?