Michael Lewis on Goldman Sachs
Eduardo Moisés Peñalver July 28, 2009 - 11:19am
Michael Lewis channels his inner Goldman Sachs i-banker. Here's a taste:
Rumor No. 2: When the U.S. government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.The charge isnt merely insulting but ignorant. Less responsible journalists continue to bring up the $12.9 billion we received from AIG, as if that was some kind of big deal to us. But as our CFO David Viniar explained back in March, we were hedged. Our profits from AIG rounded to zero.People who dont work at Goldman Sachs, of course, find this implausible: How could $12.9 billion round to zero? Easy, but you just need to understand the mathematics.Lets assume AIG transferred $12,880,560,250.34 of taxpayer money to Goldman Sachs. A Goldman outsider, asked to round this number, might call it $12,880,560,250.00. Thats not how we look at it; at Goldman we always round to the nearest $50 billion, so anything less than $25 billion rounds to zero.Think of it that way and you can see that $12,880,560,250.34 isnt even close to not rounding to zero.
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About the Author
Eduardo Moisés Peñalver is the John P. Wilson Professor of Law at the University of Chicago Law School. He is the author of numerous books and articles on the subjects of property and land use law.