December 18, 2008 – Thursday – 9:01 PM
The Gold Standard

‘With the right hand out begging for bailout money, the left is hiding it offshore.’
Texas Democrat Rep. Lloyd Doggett, of the House Ways and Means Committee

Goldman Sachs, the Gold Standard on Wall Street, announced it’s first quarterly lose in it’s history, but it’s yearly earnings still showed a $2.3 billion profit. It may look like a big number, but for Goldman $2.3 billion is a large drop in earnings.

Let’s not drop too many tears for Goldman. They have been taking care of themselves. Last year, they paid their employees $10.9 billion in compensation. Not bad.

At Goldman Sachs, employee compensation made up 71% of total operating expenses in 2007. In the auto industry, by contrast, autoworker compensation makes up less than 10% of the cost of manufacturing a car. Hundreds of billions were given to the financial-services industry with barely a question about compensation; the auto bailout, however, was sunk on this issue alone.

But let’s not knock Goldman they after all may be the smartest guys in the room. In 2007 Goldman paid a tax rate of 34.1% , or $6 billion. This year, with profits of $2.3 billion, Goldman paid a tax rate of 1%, $14 million.

How?

Goldman attributed its lower tax rate to ‘more tax credits as a percentage of earnings’ and ‘changes in geographic earnings mix.’

What does that mean? They moved their money off shore. Ooops, sorry, they moved our money, $10 billion in bail out money, off shore, untaxed!

And who’s handing out the bail out money? Secretary Hank Paulson.

So?

Paulson was CEO of Goldman Sachs until mid-2006, and earned $35 million at the firm in 2005. He drew a $16.4 million salary in 2006 — even though he served as chief executive for just half the year.

As Goldman employees take home huge salaries, and are getting ready for their holidays, the big three are closing factories, shutting down operations for extended periods, just in time for their holidays.

Peace,
J

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