Goldman Sacks the U.S.
[NOTE: This is a guest post by Dan Bischoff.]
Goldman Sachs (GS) is quietly alerting Washington politicians of its plan to fire employees in New York and a few other locations in order to hire 1,000 new workers in Singapore and expand its operations in Brazil and India. Why? Because it fears a backlash in the U.S. By "backlash," Goldman apparently means people seeing analogies to the way a parasite leaves when it has killed its host.
"We're a global business and we manage headcount in a way which most closely reflects the needs of our clients and where we see opportunties to serve our shareholders most effectively," a Goldman spokesman said. Most of the positions lost in New York will be high-paying, skilled positions in sales and investment banking.
Of course, the firm's commitment to the burgeoning businesses of Asia is obvious. Last March, just after the Fukushima nuclear plant began showering Tokyo with radioactive particles (residents were breathing in as many as ten hot particles a day in April), Goldman sent four executives to its offices there to tell employees that anyone who tried to relocate would lose their job.
Run, Blankfein, run!
But there are other reasons besides the still-expanding business climate in Asia for Goldman's decision. Chairman Lloyd Blankfein has become the poster child of the financial crisis in the U.S., a regular at congressional hearings and a kind of Nosferatu for movies made about the capitalist collapse, like Inside Job.
The firm was forced to pay the largest fine in SEC history last year -- $550 million -- to settle charges that it had misled investors in a subprime mortgage CDO deal, as well as reform its business practices here. Sen. Carl Levin just forwarded a damning report that included Goldman's role in the crisis to the Justice Department, with a specific query about whether Blankfein had committed perjury before his committee. Goldman's stock is down by 25% over the past year.
Oh, and then there's that whole "vampire squid" thing.
Getting while the getting is good
Goldman says it needs to cut $1 billion in costs in order to face expected new expenses. The underlying problem is almost certainly the increasing capital reserve requirements and new regulations about to take effect in the U.S., particularly those regarding proprietary trading.
Goldman's high frequency trading operations came under SEC review over two years ago; since that time, the volume of trading in American and European economies has fallen sharply, limiting the amount of money banks can make here. And, as I pointed out yesterday, QE2 is coming to an end June 30. No more queueing at the Fed discount window for Goldman.
Of course, I'm kidding about that. Nobody from Goldman Sachs has ever had to stand in a queue anywhere, at any time.
Dan Bischoff writes about art for the Star-Ledger in New Jersey; he was European editor for World Business and National Affairs editor for the Village Voice.