American finance as we knew it is gone. The crisis of 2007 eventually saw every major banking behemoth scandalized, restructured, bought out, bailed out, or shut down.
But as the drone bees like Lehman Brothers and Bear Stearns were sucked into the subprime swatter, Goldman Sachs was the queen bee that remained relatively unscathed... until now.
Goldman -- nicknamed "Master of the Universe" and "the most storied Wall Street institution" -- has started to taste the fate of her drones. Since July, the banking leader has been served $2 billion worth (and counting) in lawsuits from everyone from Allstate to AIG for alleged "ethical lapses" and "conflicts of interest" during the economic boom. Also:
- In August, Goldman's chief executive hired the same white-collar crime defense lawyer who represented the former accounting officer of Enron.
- In September, the bank became a focus of Occupy Wall Street protestors, who wave signs that read: "Goldman Sucks" and "Death to Lord Goldamort."
- On October 18, the bombshell reportedly went off as Goldman saw a 25% decline in third quarter revenue, its first quarterly loss since the start of the financial crisis AND only second-ever shortfall.
- "'We were blind-sided,' said Goldman Sachs’ Lloyd Blankfein of the financial crisis of 2008, likening the probability of such a collapse to four hurricanes hitting the East Coast in a single season. Blankfein was reminded by the chairman of the Financial Crisis Inquiry Committee that hurricanes are 'acts of God.' But Blankfein was supported by Jamie Dimon of JPMorgan Chase, 'Somehow, we just missed… that home prices don’t go up forever.'" (Ammon News)
Few mainstream commentators anticipated Goldman's recent decline. Yet it's hard to blame them, because they simply aren't equipped to anticipate trend changes. Most of the time they simply extrapolate the previous trend into the future. Goldman has been a Wall Street powerhouse for decades -- so why would that ever change?
Here's what EWI publications said to subscribers regarding the banking giant's lack of immunity to the financial flameout:
- January 2007 Elliott Wave Financial Forecast: "Corporate America beware! Sooner or later, shareholders and clients are going to rise up and reject you for so obscenely rewarding people who already have so much with even more."
- On July 13, 2007, Goldman Sachs' CEO and others assured: 'The subprime implosion is a contained, isolated, and temporary event with little risk of wider fallout." On July 27, 2007, EWI's Short Term Update released a price chart of Goldman Sachs stock and wrote: "Goldman is the picture of a new financial (dis)order falling into place."
Goldman shares peaked in October 2007 at $250 and plunged 81% to $47 in November 2008. From there, the stock rebounded to a high of $193 on October 14, 2009, soon before round two down.
- The November 2009 Elliott Wave Financial Forecast: "Goldman Sachs will experience an epic fall... The extreme recriminatory power of the next leg down... suggests that Goldman's dealings will become a lightening rod for public discontent."
Goldman's been the "Queen Bee" and the "Master of the banking Universe" -- so could its fate foretell the future of the entire banking sector?
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