Goldman: Unstoppable

We knew that Goldman Sachs had been very successful shorting the mortgage market; we also knew that Goldman's asset-management arm was very unsucccessful this summer playing the stock market. And we're also used, by now, to Goldman setting new records for investment-bank profitability.

So the fact that Goldman Sachs earned $3.22 billion between September and November is incredibly impressive but also somehow unsurprising. The bit which jumped out at me was the way in which equity trading revenues soared by 22% in the quarter, to $2.59 billion, even as global stock-market prices and volumes were more or less flat. While the Goldman Sachs special sauce is hard to export, it seems to be as potent and pervasive as ever within the confines of 85 Broad Street. Just look at how they're doing in M&A, which helped drive financial-advisory revenues to $1.97 billion for the quarter:

Goldman, the No. 1 adviser in worldwide announced mergers and acquisitions for the seventh consecutive year, arranged $417.9 billion of takeovers completed during the fourth quarter, more than double a year earlier, according to data compiled by Bloomberg.

In a way, it's easy to understand how the likes of Ben Stein will look at these kind of numbers with suspicion. How is it possible that Goldman can mint money while everybody else – including Goldman's clients – is taking a bath? Surely there must be something nefarious going on!

But of course these numbers also prove that the last thing Goldman wants or needs is an economic slowdown – there's no way that Goldman is going to arrange $400 billion of takeovers per quarter if the US economy slips into a recession. Note that essentially $0 of that $3.22 billion came from economic research. If you do want to look for dodgy dealings, I really don't think that Goldman's economists are going to be a particularly fruitful place to start your search.