Nomi Prins On Goldman's Unsustainable Business Model

One of our favorites writes an excellent account of Goldman's unsustainable business model. (Those are my words so as not to put words in her mouth.) As we highlighted in our lengthy derivatives post some time ago, none of the Wall Street mega banks have sustainable business models. One should not conclude that Goldman is at a higher risk because of Nomi's article. In fact, the risk profile of all mega banks is very similar. In other words, what Goldman makes up in an excess risk profile, larger institutions make up in larger net exposures to risk.

I have written this no less than a dozen times in the last few months but there are clearly quantifiable reasons to believe these banks are not safe investments nor do they have a handle on their exposure to risk. Economic risk is increasing and that means their risk profiles are considerably underappreciated. There is every reason to believe future Wall Street bailouts will be necessary as the global crisis metastasizes.

Break up these incredible risks to the economy, risks to society's savings and even risks to our political structure. Most importantly, monopoly banks restrict the free flow of capital in the economy. This reduces economic opportunity for everyone.