Blankfein makes his case

The chairman and CEO of Goldman Sachs acquitted himself quite nicely on Charlie Rose. He was especially good at explaining the firm's role in making markets - specifically why arranging bets on a security going up or down is all part of the job. From the transcript:

LLOYD BLANKFEIN: If I'm trying to finance an offshore oil well, well, that oil well may work if oil is trading at $80, if I can sell the oil that comes out of the ground or out of the ocean at $80 a barrel. But if it comes out at $40 a barrel, I will go bankrupt. So no one will give me financing unless what, unless I can lock in the price of oil at $80 a barrel. So I am going to go to a market. I'm going to go to Goldman Sachs and say, I would like to sell oil forward at $80 a barrel. Is that person betting on the price of oil? I guess you could say that. But what is that person really doing? They are hedging a risk that will allow that company to go out and invest $10 billion in extracting oil out of the market. That person is selling oil, but as a result of selling oil forward, what does the world get? It gets more oil. Because now that person will invest in digging that well, and prior to that, they wouldn't be able to invest in digging the well, because they don't know what the price of oil will be in seven years. Now, in order to do that, you really need somebody to be on the other side. Who is going to buy that oil seven years forward? It could be another client. It could be somebody who uses oil. It could be a speculator. It could be Goldman Sachs taking the other side. But there's a real social purpose in doing that. This idea of transferring risk has a very big -- you could call it a casino. But if it is, it's a very socially important casino.