Yglesias

Big Risks

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This seems like a mighty strange choice of words:

A big reason for Goldman Sachs’s blowout profits this year has been the willingness of its traders to take big risks — they have put more money on the line while other banks that suffered last year have reined in such moves. Executives say there are big strategic gaps opening up between banks on Wall Street that are taking on more risks, and those that are treading a safer path.

It’s not really a “risk,” though, is it when you’re operating with an implicit government guarantee to pull your ass out of the fire if your bets blow up. The federal government is taking a risk on these Goldman trades, they’ve just given Goldman the bulk of the upside.