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Inside the Great American Bubble Machine: How Goldman Sachs has Engineered Every Major Market Manip
declaredemer
Member Posts: 2,698
INTRO
The title is very long, but it is necessary to convey a crucial point. Most, if not all of this material in this post is the result from reading Matt Taibbi's article in Rolling Stones magazine. I happen to know Matt Taibbi from his regular presence on Bill Maher's Real Time.
AN ASIDE: An unlikely source sent me this article via e-mail. Great friend of mine from college who actually worked on John McCain's campaign in Iowa (very high level). We have discussed Goldman Sachs numerous times over the years, and it was somewhat surprising to have him send me this article. I thought I should mention that as an aside for what it is worth - nada.
SOURCES:
The video is here: www.rollingstone.com/videos/player/28915225
The article is here: www.rollingstone.com/politics/story/28816321/inside_the_great_american_bubble_machine#
Another article of interest by Matt Taibbi: The Big Takeover: The Global Crisis Isn't About Money - It's About Power. How Wall Street Insiders Are Using the Bailout to Stage a Revolution. www.rollingstone.com/politics/story/26793903/the_big_takeover
NOTEWORTHY QUOTES:
The [Goldman Sach's] bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts.
All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going.
Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.
BUBBLES:
- The Great Depression (Goldman Sach's use of the "investment trust");
- Tech Stocks (Goldman Sachs underwrote --brought new tech companies to the public-- and used a practice known as "laddering" to bilk the public);
- The Housing Craze (created what is known as CDO (collateralized debt obligations), lobbied for deregulation, among many other things);
- Gas Prices (Goldman Sachs managed to trade oil, a commodity, not like a commodity but a speculative stock; new laws empowered by the Commodity Futures Trading Commission allowed speculation in the oil market; and then consumption of oil was not driving up oil prices but Goldman Sachs ability to use pension funds and heaviest of heavy hitters' money to drive prices up); and of course
- The Bailout Out (AIG received $85 billion in bailout dollars from the generous American taxpayer, which it gave at least $13 billion to Goldman Sachs; Goldman Sachs was then able to reorganize as a bank holding company, accessing not only billions in TARP FUNDS but generous loans from the FEDERAL RESERVE; thereafter the FEDERAL RESERVE then gave in loans or guaranteed trillions of dollars in the financial industry; no one knows exactly what is guaranteed or how much money was given because laws prevent the Congress from auditing the Fed; Goldman Sachs reorganization now means its regulator is the NY FEDERAL RESERVE, whose chairman at the time of its reorganization was a former employee of Goldman Sachs and the U.S. Treasury is the former Chairman of the NY FEDERAL RESERVE; the now new NY FEDERARL RESERVE Chairman is also a former Goldman Sachs employee; as I have explained before in posts, the GAAP (Generally Accepted Accounting Principles) were changed that allowed Goldman Sachs to eliminate billions in liabilities and claim billions in gains; Goldman Sachs then paid billions in bonuses and payouts to employees; although Goldman Sachs makes billions in profits, it only paid 14 million dollars in taxes in 2008 (that is utterly and completely astonishing, as one with a tax and accounting background).
- Global Warming (the new carboncredit market will allow players like Goldman Sachs to engage in casino-like speculation and rinse and repeat in this area as it has in other areas; Goldman Sachs already owns a 10% stake in CHICAGO CLIMATE EXCHANGE).
- CHICAGO CLIMATE EXCHANGE (Chicago Climate Exchange (CCX) operates North America’s only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide) www.chicagoclimatex.com/content.jsf.
Good luck!
Comments
You sir, just might be an enemy combatant. we're running this through the central database now. Welcome to the no-fly list.
Yours truly,
Department of Homeland Security & Oversight
As soon as I saw this I thought "Well, someones been reading the new RS" Matt Taibbi was on Real Time on Friday, I was glad I had already read the article because they talked about it briefly, it's a great article. Be ready though, it's very long.
On a related note, Goldman Sachs issued this a few days ago. It seems they've made the taxpayer a profit by their account.
True or False?
Hey declared, how about checking into this and see if they are telling the truth that they paid Obama (taxpayers) back at a 23% profit?
"TO MICHAEL!"
When do I get my cut?
Never? Oh.
Screwed again!
The old rules were, among other things: companies that make good economic decisions tend to prosper, and those that make bad decisions tend to suffer; secured debt means secured debt; the government referees the rules but does not dictate the outcome; you can expect to keep a large portion of the money you earn.
The new rules turn the old rules on their head. Companies that make bad decisions get federal money; companies that make good decisions get to pay for the subsidies. Secured debt means the government takes your money and gives it to the unions. The government picks the winners. You can expect to pay more in taxes to subsidize all this largess.
“Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.” –Ayn Rand, Atlas Shrugged.
Government largess spending or stimulus has the side effect or unintended consequences of crowding out the privet sector job creation.
It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in the people’s minds.
Trade in material assumptions for spiritual facts and make permanent progress.
When do I get my cut?
Never? Oh.
Screwed again!
You'll get your cut when healthcare is implemented, when troops guard you while you sleep tonight, when you get your mail tomorrow, when you can drive on roads that are paved, when police and fireman come to assist you, when you go to a library..
Oh. You've already been benefitting from most of that stuff since you were an infant in the United States?
Never mind. You still owe some more.
"TO MICHAEL!"
... But there is one thing you didn't count on. That is, the ingenuity of the average American. If everyone opens up a corporation and runs it into the ground, each of us will see huge profits from bailouts! Its all so clear now! The genius of it!
... But there is one thing you didn't count on. That is, the ingenuity of the average American. If everyone opens up a corporation and runs it into the ground, each of us will see huge profits from bailouts! Its all so clear now! The genius of it!
Sarcasm- 1.
Logic- 0.
Americans aren't supposed to get an "individual cut" from any of the loans. It's supposed to be added to the Treasury. This isn't a situation where the loans are paid back, then every American gets an Alaskan-style government handout of funds each year.
The "what's in it for me" angle does a bad service to your fellow American. The money is returned to the taxpayerS.. not taxpayER for the benefit of our nation overall. Not so people can go to Vegas and blow it on gambling and hookers.
"TO MICHAEL!"
That's practically a religious belief.
That money goes into a bankers pockets. Your local taxes pay for your services. National services are paid for with fiat money. You federal tax dollars are nothing more than payoff money so that guys with guns don't come drag you off to a concrete cage.
I have to say, I just finished reading that book. What an excellent insight into the future of our country with people that tout 'for the social good' the 'betterment of mankind' and 'social imperatives'. It really wakes you up to see how everything that has been done to our country that is for the social good is just working to destroy our country.
Who is John Galt? It damn sure aint popinjay lol.
When a piscating wizard floods every thread I can understand why people leave.
www.youtube.com/watch
Yes and no. We made a profit because these banks were near collapse at the time the stock warrants were issued. However, we sold them back to the banks at a much lower cost than the value the oversight panel suggested.
The Congressional Oversight Panel link is in my sig. Anyone who pays taxes should keep track of where their money is going and how it's being used.
"TO MICHAEL!"
Thanks for the answer Buzz.
One thing...
If you say we didn't gain a 23% profit, does that mean we didn't LOSE money either? Could it be that this was just a wash where the taxpayer neither gained or lost money?
Meaning that, it was orchestrated not to give a handout, but to get stocks, other banks and businesses to start lending to one another again, thereby inspiring consumer confidence?
After all, I know you understand that half of the problem with the markets in the last few months (housing, stock, commodities, etc) was mostly PERCEPTION that the market was bad so people didn't do business but hunkered down. Once people saw the government backed things, they loosened up their pursestrings and then they paid the government back in a sort of "show".
All to to do one thing: inspire confidence. So with that the government doesn't come out any better/worse, but the banking system grows stronger (as evidenced by Sach's profits) and capitalism actually wins in the end, not socialism?
I hope you follow what I'm asking here.
"TO MICHAEL!"
Not a lot of Ayn Rand readers here, eh?
I've only read The Fountainhead fully... working on Atlas atm.
I know a guy who told me he read a medical book, a mechanic's book and a book on astrophysics.
But it didn't make him a heartsurgeon, NASCAR chief or Stephen Hawking. In the end, he just went back to work driving the city bus on the 2-10 shift.
"TO MICHAEL!"
Actually, we (taxpayers) did make a profit. However, we didn't make as much as we should have. Basically, treasury gave the banks a sweet deal on the resell. The link explains it really well.
Yes, the bailout was to prevent nearly all banks from going bust and causing a depression. Treasury wants to get rid of these warrants because they aren't in the private banking business. The banks want these warrants back for several reasons; mostly because they can move away from government oversight and go back to business as usual, but also because the longer treasury holds them, the bigger the loss they will take when they eventually buy them back (provided the stock continues to rise).
In the end, it could be a mixed bag. Some banks will probably never rebuy their warrants because they will not survive. That being a concern, in some cases we should probably take any profit we can get now. However, with the bigger banks, we should have waited for a much better deal to offset any that go bust.
I have to say, I just finished reading that book. What an excellent insight into the future of our country with people that tout 'for the social good' the 'betterment of mankind' and 'social imperatives'. It really wakes you up to see how everything that has been done to our country that is for the social good is just working to destroy our country.
Who is John Galt? It damn sure aint popinjay lol.
Remember as well the book was written in 1957. Some of the best political forecasting ever put to print. I read it over twenty years ago and it has been chilling watching it happen, year after year, regardless of which party is in power. Downright creepy how it happens over and over again: government intervenes in the economy, supposedly for the good of the people; intervention makes matters worse; media generates the scare and pseudo-intellectual lefties blame capitalism, demanding more government action. Government acts, which of course makes matters worse, which leads to the media generating a scare and pseudo-intellectual lefties blaming capitalism...and so on.
The only countervailing factor is at the same time, more and more people are becoming educated in this. It's sort of a race against time if enough people will wake up and realize that they are being fooled by people who merely want power over them.
Who is John Galt? we all are in one manner or another.
Just remember our ally is Reason; and a powerful ally it is...
fishermage.blogspot.com
LOL not many. This sub-forum is the MMO culture's version of the Huffington Post or the DailyKos.
fishermage.blogspot.com
Please do not enter me into CODIS or NDIS or the interagency border inspection system or do not fly list or whatever other "central" database you are alluding to.
I AM INNOCENT!
I apologize for being facetious, but I really did not provide much in way of analysis or opinion.
As I mentioned, the Goldman Sachs corporate was able to not only receive billions of dollars in taxpayer money and reorganize as a federal bank holding company (chartered by the federal reserve) to access additional guarantees and borrow at the Fed's discount window rate. It in a weird, if not perverse way, Goldman Sachs has benefited remarkably from this crisis. Even more, the bankers lobbied Congress to pressure FASB to change accounting rules, thereby showing that Goldman Sachs actually had lower liabilities and higher profits. Depending on what accounting system you use, you could have a profit or a loss. It is sometimes hard for people to understand that because most people without fairly extensive accounting backgrounds think of everything in terms of a cash-based system; that is not the system we use. Goldman had 13 billion in CDOs insured by AIG, and when AIG was bailed-out, it quickly paid Goldman 13 billion. It should become apparent who is benefiting from YOUR generosity. I suppose the benefits are trickling-down to YOU, but I do not subscribe to that economic theory.
Goldman Sachs is supposedly achieving record profits and paying record bonuses while not disclosing to us, or the Congress, or anyone what it is doing with the free money. We have no idea what the extent of the Fed's guarantees, free money, and loans to Goldman Sachs are. This is not a conspiracy. This is pretty serious.
To return to YOUR point:
Yes. Goldman Sachs repaid the money it received from TARP, about the time Obama announced plans for a payout/compensation Czar. The fact Goldman "repaid" the TARP money, notwithstanding changes in GAAP to show fewer liabilities and greater profits, tells me it never needed it. And the government still has given Goldman billions in free loans, which I have previously posted about. It is in the form of preferred stocks with like no interest. All we know is that the Fed, backed by YOUR credit (ability to be taxed) has given trillions of dollars in guarantees and loans and free money. That still needs be paid for: the theory being, do not let Goldman fail, and when the economy recovers, all will be well. We are talking about trillions of dollars being gambled, and these rescues could be worse than anything.
Did Goldman repay its TARP funds? No. Not really. And, if they did, it was in total self-interest to just dismiss, even disregard, Obama's compensation limitations (even though most bankers who received generous taxpayer bail-outs were going to recharacterize the bonuses as compensation or compensation as bonuses to avoid the pay caps).
This is a genuine mess.
EDIT: TO be honest, I am surprised there is not a DOJ or even a Congressional investigation into Goldman Sachs, and even the Fed, in terms of the cause of the crisis and then their so-called solutions. It is like they got to engage in the most highly risk-taking behavior and obtain bail-outs and even reward from it. The joe the plumber and joe the sixpack, however, are out of homes, jobs, and even worse. This is serious. We are seeing a crumbling financial sector because of the financial sector's behavior and risk-taking (and, indeed, their knowledge that the credit of the U.S.A. (taxpayer) would be used to rescue them).
I'm waiting for someone to leave a copy of the magazine version in the Men's Room.
That is not for you to decide.
After reading both responses and going through Buzz' link, I'm going to have to accept his answer on the TARP and profits. It's not that you don't go into detail, but you contradict yourself while doing it. You said yes they repaid it, then later said no, they didn't which makes it totally ambiguous as I read it.
But thanks for the reply, I figured we made something on that money or at least came out flat even, neither losing or gaining in the long run. If that is the case that after all the numbers are fleshed out and the taxpayers didn't make or lose one single dime, then I won't feel so bad.
At the very least, it looks as if it got the economy moving as banks NOW are starting to lend and be MUCH more selective about it than before. Consumer confidence and Wall Street has repsonded and that's the two biggest things of importance. Jobs always follow a recession (especially one as long as this Bush one) so I know they will bounce back. That always takes time.
"TO MICHAEL!"
To return to YOUR point:
Yes. Goldman Sachs repaid the money it received from TARP, about the time Obama announced plans for a payout/compensation Czar.
Did Goldman repay its TARP funds? No. Not really. And, if they did, it was in total self-interest to just dismiss, even disregard, Obama's compensation limitations (even though most bankers who received generous taxpayer bail-outs were going to recharacterize the bonuses as compensation or compensation as bonuses to avoid the pay caps).
After reading both responses and going through Buzz' link, I'm going to have to accept his answer on the TARP and profits. It's not that you don't go into detail, but you contradict yourself while doing it. You said yes they repaid it, then later said no, they didn't which makes it totally ambiguous as I read it.
But thanks for the reply, I figured we made something on that money or at least came out flat even, neither losing or gaining in the long run. If that is the case that after all the numbers are fleshed out and the taxpayers didn't make or lose one single dime, then I won't feel so bad.
At the very least, it looks as if it got the economy moving as banks NOW are starting to lend and be MUCH more selective about it than before. Consumer confidence and Wall Street has repsonded and that's the two biggest things of importance. Jobs always follow a recession (especially one as long as this Bush one) so I know they will bounce back. That always takes time.
It seems ambiguous on the surface. My point is simple: repayment of the TARP funds was meaningless; proves (if anything) it was not needed; "reformed" (so much for health care reform) accounting rules allowed Goldman Sachs and other banks to show reduced liabilities and increased profits (nearly 4 billion in one quarter profits); still pay billions in bonuses and "compensation"; and pay around 14 million in taxes (even I cannot explain how a company, any company, makes 4 billion in profits in a single quarter, pays billions in bonuses, and only pays 14 million in taxes).
Worse, though, and I was alluding to this, repayment of the TARP funds could have been profits or could have been AIG bail-out funds that were funneled into Goldman Sachs. Taxpayer to Treasury to AIG to Goldman Sachs. It is why I said "not really." Sure, on paper, or on the surface, it appears they paid back the funds.
How are consumers, though, supposed to have confidence when they are (a) out of work, (b) out of a house, (c) out of money, (d) in debt, and (e) other? Giving bankers their money is not going to inspire "confidence" in the them. In fact, I suspect it has done the opposite effect. And bankers are not extending credit to the consumer. It is like the consumer/taxpayer bailed out the bankers, and now they cut off capital and credit.