Sydney – Speaking at a conference organized by the Australian Institute of Company Directors Goldman Sachs (NYSE: GS) CEO, Lloyd Blankfein, told a group of business leaders on Saturday that business confidence remained ‘very low’ among companies in the United States. The head of the global investment bank was quoted as saying ‘it’s a very poor time to take risk, and without risk-taking there’s less growth. In other words, growth I believe is established but it’s not great growth, and the kind of confidence that we’re seeing that’s resulting in transactions – the nature of the transactions are relatively low risk.’
Meanwhile, industry insiders claim that Goldman is attempting to control aluminum prices through a complex of warehouses it owns outside Detroit; by controlling the time it takes for buyers receive delivery of the metal. Since 2010, when Goldman purchased the warehouse company, the average delivery time has increased from six weeks to more than 16 months. As the spot price of aluminum because the price is calculated by a formula that includes a premium based on storage costs, the longer delivery times have led to higher costs for aluminum. In a recent Senate committee hearing, an official from MillerCoors (NYSE:TAP) stated that the difficulty in getting metal supplies had cost it and other companies $3 billion last year.
While Goldman’s actions are technically within the rules of the London Metal Exchange (LME), the exchange has proposed changing its rules in a move to force warehouses to reduce their delays. The LME regulates the operation of a network of aluminum warehouses around the world. On Friday, JPMorgan Chase & Co. (NYSE: JPM) announced that it was exploring selling or spinning out its physical commodity business.
In related news, the trial of Fabrice Tourre, a former Goldman Vice President currently being prosecuted by the Securities and Exchange Commission (SEC) in connection with an investment package that lost more than $ 1 billion, while the bank actively bet against its own customers, adjourned on Friday and is expected to continue on 29 June. Goldman Sachs was a key player in financial products associated with the US sub-prime mortgage crisis that sparked the global financial crisis.
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