I had breakfast last Friday with Mr Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs since 2006.  I should mention that there were a few others present. The Australian’s Andrew White referred to the breakfast as “a room full of board and investment banking luminaries”, not sure where I would fit in.

Lloyd joined Goldman Sachs as a result of a merger with J Aaron and Co, where he was a gold and coffee trader. While Goldman Sachs, founded in 1869, is rather unfairly known in some quarters as a “great vampire squid”, it has one of the largest philanthropic programs on Earth, $1.6 billion spent since 2008.

Goldman Sach’s net revenues in 2012 were USD35 billion with net earnings of USD7.4 billion. At December 2012 the Company had total assets of USD639 billion. It is arguably the most politically influential bank in the world today.

For those of you who didn’t attend the breakfast, I have summarised Lloyd’s presentation in note form below:

Goldman Sachs

Our fundamental business is investment banking and corporate advisory. As such it is largely dependent upon CEO confidence. M & A activity drives all areas of our business.

Risk Management

Risk management as practised prior to the GFC was shown to be inadequate. Don’t try to rate the probability of an event happening, but assume it will. If it is assumed that an improbable event will not occur, the probability of the event occurring is paradoxically increased.

In my opinion this was the most significant part of Lloyd’s presentation.


CEO confidence is low but rising. M & A activity is improving but still lower that average. A major reason for low confidence is the extreme consequences of mistakes in today’s environment. There is a lot of cash in the corporate sector but everyone is waiting for someone else to make a move. If this nexus is not broken shareholders will demand payout of unused cash on corporate balance sheets. This could be the circuit breaker.


Half a cycle behind the US and the structure of the Euro is a very complex problem. Europe has the history and the will to hold together, but perhaps not the structure or mechanism.


On the stimulus express. Very aggressive in creating more debt, but there is no other choice.


Growth will be sacrificed in favour of stability. The new leadership is confident and positive that it can successfully reform and restructure the economy.

SE Asia

Much of the savings from the region is invested elsewhere in the world. Therefore, there is not enough domestic investment in the region.


The economies of the 21st century. Growth will be high but uneven, leading to a high risk investment profile.

Ben Bernanke

He had no choice but to play the hand he was dealt. He has been successful and the US economy is growing and reducing debt. Bernanke has clearly flagged the taper and that is what the FED will do later this year. However this will be a slow and long process.

Last Word

A great summary of the world’s economies from a man who should know.