Don’t expect its CEO to walk Wall Street though with a tin cup in hand. While Goldman reports over $400 million loss this quarter, its treasury is healthy, and most of its more traditional investment banking and trading operations remain profitable, (although new regulations may be curtailing the latter over time). China Investment Goes Sour: The biggest reason for this quarter’s negative results is a losing investment in a Chinese bank. That though has not been unusual, as Chinese investments as a class have proven highly variable. And, the last few months have witnessed a retrenching in China’s equity markets overall – a drop of around 10%. Challenges from Both Sides? The greatest tests to Goldman’s dominance could be challenges from wealthier neighbors and poorer masses. The traditional trading/investment banking model has come under challenge from hedge funds of all colors and sizes, but that generally compete in the many of the same markets and for much of the same talent pool. Hedge funds fly largely under the radar of the protesters and regulators. With lower regulatory overhead and able to implement maximum profit (or if you like predatory strategies), the returns to investors, principals and employees are also higher. Firms have no loyalty to employees and vice versa in finance – mercenary rules of the game dictate that talent largely follows the greatest financial rewards. The second mounting challenge is the building antagonism toward Wall Street in the general public. Occupy Wall Street may be a passing moment or it could evolve into a serious threat to the way business is done. Goldman Sachs has become as much as any institution the symbol of Wall Street excess, even if it is now crowded in the shadows by an even more aggressive and hungry pack of hedge funds who are almost totally un-reigned by regulation and operate from various global bases employing a variety of hunting strategies. Posting Loss with a Purpose? The timing of Goldman Sach’s recognition of a substantial loss in its China bank investment is perceived by some as being too coincidental – perhaps timed by its top management to deflect popular anger at “Wall Street greed.” While Goldman Sachs’ equity price has been suffering a significant slide in the last months, (by almost 50%), the results today (October 18, 2011) actually moved the stock price slightly up. Goldman has been managing and dampening for a few weeks the expectations of its investor base and perhaps Occupy Wall Street protesters. The Greater Challenge to Goldman Sachs? I do believe that Goldman is concerned regarding the evolving regulatory environment, but not so much by the direct impact of “Occupy Wall Street.” They do recognize though that like the iconic bull on the corner of 25 Broadway (See PHOTO ABOVE), the firm has now become the symbol of discontent – a rather dramatic change from being celebrated as the top of the food chain of American capitalism. However, the greater challenge for Goldman now comes from the new breed of financial farms that had come to dominate the treetops of the global financial jungle but continue to operate largely still unrecognized. Goldman has for years partnered and/or made investments in these hedge funds, as means to profit and maintain its edge. It is no longer clear to what extent Goldman though continues to be perceived as a necessary partner in the rapidly evolving financial jungle. From my analysis, while each individual hedge fund probably is not dependent on Goldman, nonetheless, it is difficult to see how as a whole Wall Street would continue as is without Goldman – it is part of the “too big to fail” fabric but also a symbol – the lightning rod that attracts both the tribute and criticism. ARTICLE –“Global Recession? – Best of Times/Worst of Times” - diplomaticallyincorrect.org/films/blog_post/global-recession-best-of-times-worst-of-times-by-ambassador-mo/36338 By Ambassador Muhamed Sacirbey Facebook – Become a Fan at “Diplomatically Incorrect”

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 International Financial Crisis Channel - diplomaticallyincorrect.org/c/international-financial-crisis