Did Goldman Sachs Have Anything to Do with Market Volatility?

This article was first published by me on Talkmarkets:

Did Goldman Sachs have anything to do with market volatility? Does a bear...? I think that you have to connect a few dots, but very few, to prove that Goldman Sachs, or at least its alumni, was instrumental in helping to create market volatility.

Whether for good or bad, those who did not listen to Lloyd Blankfein and bet on low VIX volatility, apparently lost their shirts.

First, we have to look at the many statements that Lloyd Blankfein, Goldman CEO said regarding the lack of volatility and the lack of profits at the firm. Here is a brief list:

Lloyd Blankfein: It's Quiet Out There...Too Quiet

Why Lloyd Blankfein Is Fretting About Low Low Rates

Goldman Sachs CEO Lloyd Blankfein Looks Like the Runt of Wall Street Litter


Whether for good or bad, those who did not listen to Lloyd Blankfein and bet on low VIX volatility, apparently lost their shirts in the big downturn.

Creative Commons 3.0 user Governor Jerchel

So, was Lloyd just a prophet, doing God's work as they say? Or was he helped along by strategically placed Goldman movers and cheerleaders in government? Clearly, folks like Ted Cruz who is married to a Goldman Sachs girl, and all those Goldman Sachs alumni who run the world, helped the prophet make his prophesy come true. God had nothing to do with it.

Gary Cohn, and Steve Mnuchin and lots of other Goldman Sachs' guys planned the big tax cuts for the rich, with no means to pay for it.

Even Steve Bannon was a Goldman guy. Was bludgeon the new normal a Goldman plan?

So, then, what has the tax cut done? It has destabilized the markets. Maybe it is trying to destabilize the economy. The runt of Wall Street is suddenly viable again. Interest rates are rising. People who bet on low volatility and slow growth have been decimated. People have to sell to unwind their leveraged trades. Goldman Sachs is in the business of facilitating buying and selling.

Now Warren Buffet owned Moody's is threatening to downgrade the credit of the United States. Dollar signs must be flashing in the eyes of Goldman Sachs employees with that news!

But let's remember the pain Goldman Sachs has caused over the years. From the article at Investopedia on the Goldman alum who run the world:

Mnuchin will be the third Treasury Secretary to emerge from Goldman in as many decades (Henry Fowler, who ran the department from 1965 to 1968, doesn't count, because he joined Goldman after leaving his government role). Hank Paulson, who headed the department from 2006 to 2009, became a partner at Goldman in 1982. Robert Rubin, Treasury Secretary from 1995 to 1999, was the bank's co-chairman from 1990 to 1992. He helped to arrange the repeal of the Glass-Steagall Act, which had separated commercial and investment banking.

You can legitimately despise Goldman Sachs,  and the alum, and you can rant, but if you invest, you better pay attention. That includes arrogant hedge funds that lost their shirts in the volatility debacle explained by another Goldman Sachs alumnus, Jim Cramer! 


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