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1 The Firecracker Report
We invite you to visit our new blog at The Firecracker Report.  We the Taxpayer Deserve 80% of Goldman
’
s Profits
A quick look at Goldman Sachs' financials shows that Trading activities accounted for awhopping 77% percent of its YTD revenues, while investment banking represented a mere9% (see chart below).So why is Goldman still classified as a bank? Does Goldman provide ANY socially oreconomically important banking service? Why then did it get a $10bn government bailoutand access to the Fed
‟ 
s liquidity? Why is the FDIC continuing to subsidize Goldman
‟ 
s $30bndebt raise, to fund its casino like behavior? And amidst all these questions, perhaps themost important one - How does Goldman Sachs a hedge fund, have the
power to createmoney
by continuing to masquerade as a bank?Has Bernanke
‟ 
s vision gone so bad that he can
‟ 
t tell a hedge fund apart from a bank?Unfortunately yes. So bright are the
 “
brightest of the brightest
” 
that work at Goldman, thatthey have simply blinded the Fed, the FDIC, the Treasury and the Congress.So what are we the taxpayer supposed to do when those we have entrusted with to driveour bus are all BLIND? Should we let them drive us off the cliff? Hell No! ...At least notwithout making us some money in the process! After all we are a country of pseudo-capitalists, who
don‟t
care about the social consequences of our self-centered decisions. Sohere is our suggestion:We all agree that Goldman Sachs is really a hedge fund whose investors are the taxpayers.It is our money that they gamble with - we gave them 1) access to 10-100x* leverage bycalling them a bank 2)$10bn TARP bailout 3)$30bn in FDIC subsidized dirt cheap debt4)$13bn from AIG, 5) unlimited access to the Fed
‟ 
s liquidity and 6)
 “
if-you-fail-we
‟ 
ll catchya
” 
, too big to fail taxpayer rescue guarantee.
 
 
2 The Firecracker ReportAnd since Goldman is such a darn good hedge fund (the best of the best) that theyconsistently thrash the market, we say let them continue. Why stop the gravy train?However, what good is a cash cow if you
don‟t
milk it? So we propose that just like a truehedge fund, Goldman Sachs should give up 80% of its profits to its investors (thetaxpayers) and keep a management fee of 20%. So how much have we earned so far? Let
‟ 
sdo a quick calculation:YTD Goldman
‟ 
s operating earnings (before compensation expense) = $29.1bn.% of earnings owed to taxpayer = 80% = $23.3bn.So folks, Goldman owes us $23.3bn from their YTD earnings. We say that is pretty adequatecompensation for the HARDWORKING American taxpayer. That would leave $5.8bn (pre-tax) for Goldman Sachs employees and shareholders. And after Goldman pays out 50% of these earnings as bonus, the shareholder gets to pocket $2.9bn pre-tax (vs. the current$12.4bn). Notice that in this scenario Goldman
‟ 
s bonus payout to its employees will be~$2.9 billion vs. their current stash of $16.7bn. We will be TOTALLY OK with that amount.And as for, Goldman
‟ 
s stock - it will have to adjust by falling oh
…
about 75% or so, whichwill leave it at ~$45. Not too bad at all.
Notes
* Trading entities in the futures markets can leverage their positions a 100x or more.
About the Firecracker Report
The Firecracker Report is a financial and geopolitical analysis blog started by a team of ex-
 
Wall Streeter‟s with extensive banking and investing experience. We strongly feel that in the
current era of corporatized propaganda driven
news the „real‟ news often goes unreported.
We have therefore chosen to lend our voices and join the growing ranks of independentbloggers that aim to bring insightful commentary and analysis to their readers.We invite you to visit our blog and would love to hear your thoughts and comments. We can
 
be reached at firecracker.report@gmail.com 
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