They're doubling down again. And why shouldn't they? Ever Goldman Sachs took over the Treasury Department for the Obama administration, they can't lose! They get to bail themselves out! With taxpayer money! Yay! Reuters:

Goldman this week notched up its largest ever profit as a public company - $3.44 billion for the second quarter - but did it while taking on considerably more risk by a key measure.

Furthermore, Goldman set aside 48 percent of its total revenue, or $6.65 billion, to fund employee compensation, an amount that is not only titanic for a company that only recently was in receipt of direct government support but is, even more astonishingly, the same percentage as was doled out to employees in 2007, in the supposedly bad old pre-crisis days.

"Our model never really changed," Goldman Sachs Chief Financial Officer David Viniar told Bloomberg News. "We've said very consistently that our business model remained the same." I'll say.

Goldman's value-at-risk (VAR), a calculation which attempts to measure potential daily losses, increased to $245 million in the quarter, up from $185 million last May and just $127 million in the palmy days of February, 2007.

Doubling down...

Shareholder equity has also increased, so you could argue that there is a bigger cushion to buffer losses, but even so Goldman is taking on nearly 15 percent more VAR as compared to shareholder equity than in February 2007.

To be fair, leverage, the ratio of assets to shareholders equity, at the bank is falling and stands at 14.2 percent.

VAR has been widely criticized, not least because of claims it is poor at discounting the kinds of very rare events which ruin firms, but I think it is fair to use it as a proxy for changes in the direction of risk taking.

Goldman and virtually every other bank and investment bank around the world are creatures of government. They exist, whether they want to or not, only by grace of the taxpayers who, it has been demonstrated, stand ready to pick up the pieces when risk management fails.

One thing is certain: if regulators don't act there will be a lot of competitors gunning to make Goldman-like profits and not all of them will be as well managed or successful.

I wonder what the next bubble will be? And what will happen when it bursts...

NOTE You know, I'd introduce the term "moral hazard." But that would imply that these scum understand the word "moral." Not to mention the word "hazard."