Goldman Disappears December

Gone. Vanished. Kaput. That's what the boy (and girl) wonders at Goldman did to the month of December - they disappeared it Pablo Escobar-style. Via Floyd Norris, we learn that when Goldman Sachs switched from being an investment bank to a bank holding company, it changed its fiscal year from beginning in December to January. So its Q4 2008 earnings go through November 30, 2008, and its Q1 2009 earnings begin on January 1, 2009.

What happened in December then? Write-downs. Lots of write-downs. Over a billion dollars worth, pre-tax. So much for that $1.8 billion first quarter profit. But now we know why they pay them the big bucks. They turn financial chicanery into an art.

Math Can Do Anything?

Can math better predict financial markets? IBM seems to think so. Maybe they've missed this whole global financial meltdown thing. Or haven't had time to read Nassim Taleb's Black Swan. If they had, maybe they would have noticed that an over-reliance on financial models that turned out to have little predictive value played a key role in helping traders justify the insane bets they were making both to themselves and to their shockingly negligent risk managers. Floyd Norris nails it: this commerical makes IBM look really stupid.