(photo courtesy of Facebook group member Barbara Martinez)

Hi Tom-

For once, I truly do have great news. Thanks to the one-two punch of (A) massive amounts of public funds being poured down the gullets of the very same banks that darn-near eviscerated the global economy and (B) the hearings on The Hill this week over Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson’s alleged arm-twisting of BofA CEO Ken Lewis into swallowing all that nasty Merrill Lynch & Co toxic trash, everything is now safe and sane in the global banking sector. Just in time for our nation’s birthday! Seriously, one thing you can stop worrying about is the solvency of BofA, Citigroup, Wells Fargo, JP Morgan, Morgan Stanley and definitely #1 with a bullet Goldman Sachs.

In fact, things are so super that Goldman will be paying out record bonuses to its staff this year. And Citigroup (still chugging along as a sub-$4 stock) is increasing base salaries by 50%! How awesome is that? What’s extra super is that Goldman is chalking up all their record profits to “lack of competition” and “trading in foreign currency, bonds and fixed income products.” Of course that lack of competition probably has something to do with the sudden disappearance of global financial legends Bear Stearns and Lehman Brothers, both of which were allowed to die overnight while companies like AIG, BofA, Citigroup, Goldman, Wells, JPM and MS were all miraculously rescued by former Goldman Sachs CEO Hammerin’ Hank Paulson.

Now some might say the reason Bear was allowed to croak with nary a whisper of .gov assistance has something to with its refusal to participate in the last ginormous bank bailout when all the S&Ls went tits up under Ronald Reagan in the ‘80s—thereby breaking with the close-knit fraternity of Wall Street ibanks. Others might also point out that while Goldman had massive (maybe unsurvivable) counter-party risk exposure to AIG (which is now a ward of the state), it had virtually no meaningful positions with Lehman and in fact had been the longtime bitter competitor of the venerable ibank.

(Note: The Abyss fears no man in the galaxy but that doesn’t extend to the great Goldman Sachs plutocracy that has been running the economy (sometimes aground) for at least the last 3 administrations. I cautiously point out that the real big-baller-shot-caller is Goldman, whose alumni have run the country’s finances with seamless precision no matter which political party was in “power”—Clinton (Treasury Secretary Robert Rubin), George W . Bush (Treasury Secretary Paulson) or Obama (little Treasury Secretary Timmy Geithner was Rubin’s little Undersecretary protege under Clinton). Please see this piece of actual journalism that sums GS’s hegemony nicely.) http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

But back to the good news. It turns out that when you’ve got a shit ton of free .gov TARP money (from all those lazy-ass unemployed taxpayers—now closing in on 10% nationally) and there’s no one else really trading any significant volume in the market (except for your BFF, JPM), a company like Goldman can use public funds in high-risk, hi-frequency equities trading to inflate stock prices of partners (like frightened little Kenny’s BofA). Then, it can use its “Research Analyst” division to raise company ratings and make an even bigger shit ton of capital from its excellent “foresight” in owning BofA at $3 and front-running it to $12. And that’s not even counting the amazingly awesome transaction fees that come from all the banks’ kick-ass secondary offerings at their newly inflated, front-run, GS-approved valuations! Genius! Bonuses all around, fellas!

See Tom? Since Obama’s been elected he’s managed to stay the excellent course of Bill Clinton (who unwound the Glass-Steagall act prohibiting the co-mingling of commercial and investment banking interests, whoops!) and George W. (the W stands for Worst President Ever) in rewarding the super-rich with money from the poor and middle class to make the world a better, safer, more hopeful, more Goldman place. So roll me a fresh spliff of Green Shoots, my friend, I gotta good feeling about where this is headed…

Big bonus kisses,

The Abyss

PS: Since trading at its November ‘08 low of around $47, GS is now trading at almost $150! Hooray free-market capitalism! Way to pull yourself up by your own bootstraps, Goldie!