COLUMN - Two cheers for Goldman Sachs: James Pethokoukis

-- James Pethokoukis is a Reuters columnist. The views expressed are his own --

By James Pethokoukis

WASHINGTON (Reuters) - The PR folks working for Big Oil have to be breathing a sigh of relief these days. All the populist outrage that is usually spewed at the Exxons and Halliburtons of the world is being redirected at Goldman Sachs -- and its gleaming, glittering $2.7 billion second-quarter profit amid the wreckage of the American financial system.

The specific charge is that Goldman is supposedly making big profits via risky trading activities financed, in effect, by Uncle Sam.

Two pieces of evidence here: First, Goldman's Value-at-Risk measure, a much-debated way of calculating daily losses, has been steadily increasing. (r.reuters.com/jyq98c )

Second, Goldman is benefiting from several government interventions and programs -- such as the guarantee of its debt, an ability to tap the Fed's discount window and its implicit too-big-to-fail status -- that give it access to supercheap capital (thus the snarky nicknames "Government Sachs" and "Goldie Mac").

To those who hate Goldman as a symbol for modern capitalism, that evidence is merely a current reaffirmation that the firm is a "great vampire squid wrapped around the face of humanity," as a recent Rolling Stone article put it.

Rather than an example of succubus capitalism, a more reasoned and clear-headed analysis would see Goldman's government-enabled success as a market distortion caused by an unprecedented government intervention into the private economy.

And to the extent that such fat profits would not exist without government and taxpayer backing, what should be government's response to the distortion? New regulations to limit trading activities, perhaps, or a bailout tax paid by Goldman and other TBTF firms (We're looking at you, JPMorgan.)