Goldman Sachs Group Inc. reported a surge in third-quarter profit driven by trading and investments with the firm’s own money. The shares declined as earnings fell short of the bank’s record.
GS is a roulette wheel disguised as a bank holding company; it is one big moral hazard. Other banks are also successfully disguising their problems:
Citigroup Inc., the lender 34 percent owned by the U.S. government, posted a $101 million profit, defying expectations for a loss as the company added the smallest amount to loan-loss reserves in two years.
Watch out, Citi, those pitiful loan loss reserves aren't going to help much when CRE really starts cratering in 2010. And in a surprise development, the market responds rationally to this news:
U.S. stocks dropped, dragging benchmark indexes down from their highest levels in a year, as Goldman Sachs Group Inc. and Citigroup Inc. fell on earnings that disappointed some investors.
If the banking sector's health is peaking, a renewed downturn in the larger economy may not be far away. That's why I continue to add to my cash pile.
