What she just said...

Occupy Wall Street protestor using something other than a manila colored pizza box to denounce the corrupt state of affairs that is now America's corporate plutocracy.

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The topics inveighed by the left are vast and given the MSM's collusion in disseminating propaganda and controlling the public narrative on subjects of interest to the corporate state, usually very little coherent messaging makes it into the public consciousness.  However, people across the world, not just in authoritarian countries, are protesting en mass to the reckless and destructive practices of our authoritarian and/or corporate overlords.  Unlike the bullshit machine during the Iraq invasion where the venal and pliant press stenographed the Bush imperium's falsehoods on Iraqi mushroom clouds and fantastical weapons of mass destruction, the fruits of our economic discord are apparent for all to see.  The nations of the world are sliding into a new period of stagnation and decline.  Unemployment, social mobility, declining wages, and reduced prosperity are evident for all to see.  While society crumbles, multinational corporations are sitting on trillions of dollars of liquid capital, financial houses are given nearly unlimited protection by the state for their incompetence, and the wealthiest beneficiaries of the past 30-years of deregulation and financialization of western economies bemoan any increase in their tax rates.

The elite are firmly aware that for them to stay in power demands that the masses are fully unaware of how dire a situation they are in.  Institutional propagandists denounce the protestors as "dangerous" and predicated on mob rule.  Many are asking what the objectives of the movement are about (psst... its about greedy stupid bankers and their congressional whores, motherfucker!).  Daniel Indiviglio at The Atlantic is already calling the protests a waste of time, given that they are unfocused, the financial industry owns congress, and of course the big lie, that America really, really needs behemoth "to big to fail" monstrosities like Bank of America, Citibank, or Goldman Sachs, because as he states, the rest of the economy is just useless unproductive crap. To enforce the objectives of the corporate state, NY city police department was more than happy in assaulting, brutalizing, and arresting innocent civilians who exercised their first amendment rights.  This is nothing new for the NYPD, which has a long record (i.e. the 2004 Republican presidential election convention) of crushing pubic dissidence and violating the civil rights of protestors.

Many people realize the system is fundamentally rigged against them and the composition of the protestors and their supporters reflects this fact:

The crowd—while represented widely in the media as white, liberal college kids—is surprisingly diverse, including raging grannies, street kids, union workers, professors, ex-bankers, longtime activists, human rights lawyers, Native American band members and ex-military. Political views span the spectrum, from anarchist to right-wing libertarian—complicating efforts toward any kind of unifying objective or mantra.

Chris Hedges, Pulitzer prize winning journalist and author, had this to say about the occupation:

The real people who are scared are the power elite. Of course, they’re trying to make you scared and us scared. But I can tell you, having been a reporter for the New York Times, that on the inside they’re very, very frightened. They do not want movements like this to grow, and they understand on some level — whether it’s subconscious or, in other cases, even overt — that the criminal class in this country has seized power.

I am not optimistic that any particular resistance to the corporate state can succeed in changing the current trends.   If history is a guide, it is more likely that the people will turn on those protesting and disclosing the rampant corruption, rather than on their own imbecile leaders.  As long as people remain confused, uneducated, and ignorant to the current situation, the crypto-fascists, corporate fraud-mongers, and militarists driving policy will remain in the driver's seat.

NYT's Book Review of Matt Taibbi's "Griftopia"

The New York Times Sunday Book Review looks at Matt Taibbi's newest publication "Griftopia"

The reviewer summarizes the book with the following:

In “Griftopia,” a relentlessly disturbing, penetrating exploration of the root causes of the trauma that upended economic security in millions of American homes, Taibbi argues that what unfolded was far from accidental. Rather, the nation suffered the equivalent of a hostile takeover of key areas of its commercial life by investment banking houses, while regulators and members of Congress abdicated their responsibilities either because they were influenced by campaign cash or because they believed the fairy tale that unsupervised markets always work best. The result, Taibbi asserts, was a thieves’ paradise — Griftopia.

Taibbi takes on the zombie lie, pushed by right-wing hacks, that the banks were forced to sell subprime mortgages to poor people and that Fannie Mae and Fredie Mac were the root causes of the crisis.

Taibbi persuasively dismisses the argument that the financial crisis was caused by poor people with a taste for real estate, delineating how Wall Street eagerly handed out mortgages to anyone with a pulse, and then used the home loans as the material for a far more lucrative enterprise — the exotic investments known as derivatives. The derivatives market depended upon a steady supply of mortgages. But when too many of the bets went bad, Wall Street persuaded the Treasury to construct bailouts that Taibbi describes as a “labyrinthine financial sewage system designed to stick us all with the raw waste and pump clean water back to Wall Street.”

The book attacks the mindless Tea-Party movement, calls Alan Greenspan the biggest asshole in the universe, delves into America's bubble machine typified by the original vampire-squid, Goldman Sachs, and considers how Obama's health care initiative is nothing less than a boondoggle for the toxic-sludge dealers in big-Pharma and the nickle-and-dime kleptomaniacs in the so-called insurance business.  As emotionally cathartic as it is to find someone who will call the biggest thieves and crooks on the planet, what they truly are. It is Taibbi's constant attack on the enterprises of American capitalism, those revered and sacrosanct temples, in which he viciously and relentlessly dismantles and exposes as being little more than high-end criminal rings, that is most satisfying.

An excellent read.  I hope someone was generous enough to put it under your Christmas tree.

Charlie Rose interviews Charles Ferguson of the "Inside Job"

http://www.charlierose.com/view/content/11321

The above link is to a recent interview (29 November 2010) between Charlie Rose and Charles Ferguson who produced the well reviewed documentary on the origins of the financial collapse of 2008 and the subsequent global bailout of the financial industry by governments across the world.

He states specifically, "the film is about the systemic corruption of the United States by the financial industry and the consequences of that systemic corruption."

In the interview Ferguson makes it clear that the corruption of America and its legislative and regulatory processes are profound.  He makes the case that much of what happened would not have occurred if the businessmen behind these monolithic investment banks were not so incompetent and blinded by greed and the US government had not abdicated its role, as an agent for fairness, in properly regulating the whole industry.  The actions taken by the government was to save the banks and the elite bankers, while allowing the rest of the population to fend for itself.  The bankers, with the exception of Lehman Brothers, were not made to make any sacrifices.

Ferguson further contends that "massive criminal fraud" was undertaken. Despite the nauseating proclamations by the financial industry and their media stooges, it is clear that both government and the largest corporations in America engaged in what may stand as the largest criminal event of the past quarter century. The reality is that none of these people, given the political climate and entrenched corruption of government, will be held accountable for their actions in destroying trillions of dollars of wealth, eliminating millions of jobs, and pushing families off the cliff.  When ordinary people lose their health care, lose their homes, lose their life savings, and end up destitute, the same people who caused this mayhem will snicker and call the rest of the population parasites!

I've said it numerous times on this blog, that only when people recognize the true nature of corporations in their society and begin to combat the force of coruption through monied politics, will things change.

Quote of the Day: Chomsky on the Financial Fraudsters

The capitalist class in the ’50s was sort of part of a social contract. It was part of the tenor of the times… Changes have taken place since then… In the financial institutions, which by now dominate the economic system, the management level repeatedly acts in ways which will destroy their own institutions if it’ll increase their benefits, and benefits are not small. You know, you take a look at the revenue of, say, Goldman Sachs – a very high percentage of it just goes to payment of management and bonuses. There was a time traditionally – say, GM in the 1950s – it was trying to develop a consumer base that would be loyal and lasting and they were thinking in terms of an institution that would remain and grow and thrive in the society. By now, a lot of the investment firms – bankers, hedge funds – are perfectly happy to destroy what they’re in and come out with huge, tremendous benefits. That’s a new stage of capitalism.

- Noam Chomsky on today's Casino-capitalists. (link: h/t Felix Salmon)

Matt Taibbi explains the Financial sector's hold on Democrats

I personally think the reason Rick Sanchez got cut from CNN was that he rubbed some of the MSM top honchos the wrong way during his time at the anchor desk.  Populism is fine for the plutocrats when it works to their advantage, as in the case of the ignorant and deranged Tea Party advocates.  However, when discussions of the collusion between those at the top of the economic pyramid (i.e. the banks) and government officials begin, which leads to the magnification of the nexus of institutional corruption, the grand-poobahs get antsy. 

Consider the above video with Sanchez and Rolling Stone magazine contributor and author Matt Taibbi, where the discussion veers into understanding the basis of the 2009 financial sector bailout pursued by the Obama administration. In it, Sanchez makes the connection that Washington DC is effectively corporate controlled territory. He notes that Goldman Sachs and other bankers wield inordinate levels of power over the legislative and executive branches and control the system through campaign contributions to both parties and the installation of their people into key government portfolios. There was no requirement for Obama to bring people like Larry Summers, who had been an architect of the deregulatory fiasco of the 1990's that lead to this current economic malaise, into the fold.  There was no requirement to appoint Tim Geithner as Secretary of the Treasury or to re-appoint Ben Bernanke, other than it appeased the poobahs on Wall Street.

For all the talk of change, the Obama administration made sure that corporate America knew that the new sheriff in town was going to be the same as the old one.  They let it be known that "Greed was still good," and regardless of how the economy reacted, all the merry sociopaths, looking down at us little people from the glass towers in the Financial District, would still get all their bonuses that would allow them to feed their insatiable want for coke, hookers, and good times.

All this nonsensical talk that Obama is somehow a socialist is the musings of truly stupid people.  The facts are plain to see that this administration is not terribly different than any of its Republican or Democratic predecessors.  The facts are also clear that it is the greedheads at the top of the financial food chain who have been the winners for the past 30 years.  When the next economic calamity arises in the near future, we'll see who gets saved again and who the ignorant masses will blame for it.

Quote of the Day: Roubini on Financial Regulations

Unless we make these radical [financial system] reforms, new Gordon Gekkos – and Charles Ponzis – will emerge. For each chastised and born-again Gekko – as the Gekko in the new Wall Street [movie by Oliver Stone] is – hundreds of meaner and greedier ones will be born.

- Nouriel Roubini, Gordon Gekko is Reborn, Project Syndicate

What Roubini is expounding, is that all the ethics and certification programs that have been touted for MBA students, will amount to nothing, unless the prime motivators for excessive risk and greed generation are curtailed.  He suggests four areas that must be effectively dealt with:

1. Compensation schemes for individuals must be realigned so that, "bonuses based on medium-term results of risky trades and investments must supplant bonuses based on short-term outcomes."
2. Reconstituting Glass-Steagall like regulations -which the watered down Volcker rule did not achieve in the recent financial system reform legislation- to separate the commercial banks, investment banks, and the institutions engaged in hedge fund-like casino capitalism.
3. The enormous conflict of interest that currently exists between financial firms and markets, needs to be resolved, permitting greater transparency to reign and allowing confidence in the overall market to be established.
4. Allowing all businesses, including their employees and shareholders, to understand that the government -that being the people's money- will not go towards bailing out their poor decisions; i.e. there should not exist too big too fail.

Since, the US government has not engaged in any meaningful regulatory scheme to ensure that the above occurs, and has in fact gone in the opposite direction in relation to some of these points, we can only assume that the concept of regulatory capture can now be extended to the US Congress as a whole and the office of the President of the United States.  The financial industry alone has spent $251 million this past year to manipulate the legislative process in their favor.  Collectively, they spent more than any other industry group between the months of April and June ($126 million).  Goldman Sachs and  JP Morgan Chase alone, spent in the first half of 2010 as much as they spent all last year (2009) chasing down congressmen, senators, and those involved in regulatory decision making.

The game is rigged folks.  If you think any of these rich, pretentious assholes in the corner office of these banks or in the House of Representatives care about the little people on the street or democracy, you probably still think voting for Democrats or Republicans will make a difference.  It won't.

Quote of the Day: Ellsberg on Obama

Daniel Ellsberg, the legendary Vietnam era whistleblower, is now 79 and has a few choice words for Mr. Obama.  In the English edition of Der Speigel, Mr. Ellsberg says Mr. Obama,when it comes to "civil liberties, violations of the constitution and the wars in the Middle East" is nothing less than Dubya's third term.  He further elaborates:

He's a good politician. He said what he needed to say to get elected, and now he's just taking advantage of the office. Like any administration before, his administration caters to the profits of big corporations like BP and Goldman Sachs... His early campaign contributions, the big corporate contributions, came from Wall Street. They got their money's worth.

To those who are unfamilar with "The Pentagon Papers", here is a quick recap.  In 1971 Ellsberg, a former US military analyst, triggered a national crisis by releasing to the New York Times and other newspapers, what has now become known as the "Pentagon Papers."  The 7,000 page classified Pentagon document, commissioned by then-Defense Secretary Robert McNamara,  revealed that the US government knew the Vietnam War was ultimately unwinnable. The Nixon White House fought the publication of the documents to the Supreme Court and when that proved unsuccessful, proceeded to smear and persecute Ellsberg.

Sen. Bernie Sanders on Bernanke

Sen. Bernie Sanders (I-VT) wrote on the (27th January, 2010) op-ed pages of USA Today, of his opposition to the re-appointment of Mr. Bernanke to Chairman of the Federal Reserve Bank of the USA.  He skewers Bernanke for his failure to be forthright about his activities as FED Chairman in the aftermath of the 2008 collapse and for not adequately addressing  the deregulatory mantra that still holds sway amongst FED officials and Wall Street. 

Despite what appeared to be a growing chorus of dissention, Mr Bernanke was reappointed by the Senate on Thursday evening; although with a historic number of oppositional votes (30 nays).  Stock markets responded favorably that the Global Arsonist had been given another term to evade accountability and ensure the wily casino-capitalists of Wall Street, including Goldman Sachs Group Inc. and Wells Fargo & Co. which also saw their stocks rise, are well taken care of by friends in high places.

Opposing view: Bernanke must go

Fed chair was asleep at the switch. Don’t reward him with a new term.
By Bernie Sanders

Today, the United States is in the midst of the worst economic crisis since the Great Depression. More than 17% of the American workforce is either unemployed or underemployed. Millions more have lost their homes, their savings, their health care and their pensions.

The immediate cause of this economic disaster is the greed, recklessness and illegal behavior of the largest financial institutions in the country. One of the major functions of the Federal Reserve is to protect the safety and soundness of our financial institutions and to oversee their actions. It is clear to almost everyone that Chairman Bernanke was asleep at the switch while Wall Street became the largest gambling casino in the history of the world and hurtled into insolvency. His failure to adequately regulate financial institutions should not be rewarded with a reappointment.

As part of the huge taxpayer bailout of Wall Street, the Fed provided trillions of dollars in virtually zero-interest loans to large financial institutions. Bernanke consistently has refused to provide the transparency needed so that the American people can learn which banks received those loans. Our democracy cannot tolerate this kind of secrecy. We need a new Fed chairman who believes in transparency.

As the country desperately tries to work its way out of this severe recession, the Federal Reserve has the capability of playing a significant role in improving the economy for working families and small- and medium-sized businesses.

Today, it could protect consumers by lowering outrageously high credit card interest rates that millions are paying.

Today, it could help create millions of new jobs by providing low-interest loans to credit-worthy small businesses.

Today, at a time when four of the largest financial institutions issue two-thirds of the credit cards and half the mortgages, and when three out of the four largest are even bigger now that when we bailed them out last year, the Fed could begin the process of breaking up these "too big to fail" banks so we will never have to bail them out again.

We need a new Fed chairman who understands that his or her major task is to protect ordinary Americans, and not just Wall Street CEOs. Ben Bernanke must go.

Sen. Bernie Sanders, I-Vt., serves on the Budget Committee and has placed a procedural hold on the Bernanke nomination

Global Arsonist named TIME's man of the year!

For the majority of the year the managers of America's economic news have been issuing headline-after-headline declaring that 'green shoots' were upon us, jobs growth was around the corner, consumer confidence was returning, the banks were once again sound, and corporate profits are once again booming. To date, none of these exaggerations have been remotely correct; including the statement by Ben Bernanke, "that the recession is very likely over."

In terms of understanding propaganda, 2009 has been another boom year. Much like the Bush years, where government lackeys bemoaned the fact that little good-news was being reported about the Iraq war, the Obama administration has likewise, with the collusion of mainstream media (MSM), produced voluminous statements to create the public perception that the global economy was on the mend. This week Ben Bernanke, chairman of the Federal Reserve, was named TIME magazine's man of the year. To the glee of media bobble-heads everywhere, Mr. Bernanke has single-handily prevented America from sliding into a depression. Endless articles have now been written about how in the darkest moments after the collapse of Lehman Brothers, Bernanke marshaled all the power of his office to save capitalism and right the debt-laden banks from implosion. It's a compelling narrative, but one that is completely false.

Bernanke, Greenspan, and the rest of the laissez-faire economists of the Federal Reserve not only ignored regulating the housing bubble and the "shadow economy" that included the toxic assets that brought down Bear Sterns and Lehman Brothers, but encouraged the expansion of these bubbles. Bernanke served as one of the Fed's governors from 2002 to 2005, and then did a brief stint as head of the Council of Economic Advisers before taking over as Fed chair in early 2006. There were few people in government who were better situated to correct the "irrational exuberance" in the markets than this man.

In the fourth quarter of 2007, Bernanke repeated to congress and the media that there was no need to cut interest rates and that there was no recession on the horizon. Weeks later, he cut interest rates. He remained steadfast afterwards that the economy in 2008 would be "strengthening as the effects of tighter credit and the housing credit began to wane." However, his actions and private statements belied the opposite was occurring. Two months after he gave his prepared statements to Congress, the greatest economic downturn since the Great Depression began December 2007.

When the September Crisis of 2008 unfolded, the FED loaned at least $2 Trillion dollars to both US and foreign banks. Economist Dean Baker, co-director of the Center for Economic and Policy Research, elaborates on Bernanke's perfidy at this critical juncture:

[Bernanke] has refused to provide the public, or even the relevant congressional committees, with information on the trillions of dollars in loans that were made through the Fed's special lending facilities. While anyone can go to the Treasury's website and see how much each bank received through Tarp and under what terms, Bernanke refuses to share any information on the loans that banks and other institutions received from the Fed.

Where we do have information, it is not encouraging. At the peak of the financial crisis in October, Goldman Sachs converted itself from an investment bank into a bank holding company, in part so that it could tap an FDIC loan guarantee programme. Remarkably, Bernanke allowed Goldman to continue to act as an investment bank, taking highly speculative positions even after it had borrowed $28bn with the FDIC's guarantee.

The rational in naming Ben Bernanke as the most important person of the year, is simply to provide him with official credibility in the face of the ruinous laissez-faire ideology that has held sway over Washington for the past thirty years. Wall Street has given the MSM its orders to present the fiction that Mr. Bernanke is the man who saved the world and who must naturally be given another term as FED chairman. The financial world that existed pre-Lehman Brothers no longer exists and the elites who destroyed the world economy, do not wish anyone to understand the scope of their mismanagement in hyping casino-capitalism, while destroying the American dream.

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Additional blog postings and links of interest:

Eliot Spitzer has "Nine Questions for Ben Bernanke," which to date, none have been adequately addressed by either Mr. Bernanke, the FED, or the feckless MSM.

Critics who said Bernanke should not be re-appointed: Nassim Taleb, Anna Jacobson-Schwartz, Senator Bernie Sanders (I-VT), and Ron Paul (R-TX) to name a few.

People who have advocated Bernanke's reappointment in the media with reservations are Nouriel Roubini and Paul Krugman.

Goldman Sachs PR Initiative

Every time Goldman Sachs waddles out a policy meant to assuage public criticism of their morally bankrupt behavior, they only expose their inherent inability to understand the scope of the animus that has been generated. The NY Times has an article outlining that Goldman Sachs top executives will forgo direct cash bonuses for deferred stock options that are contingent on the overall performance of the bank over the period of the next five years.

In 2007, [GS's CEO Lloyd Blankfein] was paid about $67.5 million, a Wall Street record. This year, he and 29 other top executives will receive bonuses that would be quite large, but they will be in the form of what Goldman called “shares at risk,” or stock that cannot be sold for five years and can be retracted if the executive does something that hurts the firm. Goldman has long paid a portion of bonuses in stock.

All this is just public relations, because for the majority of those engaged in Goldman Sachs casino capitalism scam, the winning never stops. For example, the majority of the investment bank's employees will still receive their record-sized bonuses this year, with the average employee receiving $700,000 USD. Despite the company being literally saved by the taxpayer, the crooks at GS will continue to for years to come, to hand out half of their profit to the grinning fiends on Goldman's payroll. To the general public shareholder they have said, "It would give [them] a say in determining compensation." However, any such vote will not be binding! Imagine that you tell your employee that he's not entitled to a bonus and he pats you on the head and says, "Thanks for your opinion, but if I want it I'll tell you what to say!"

To be fair, Goldman Sachs is not alone in this egregious behavior. Many of the largest entities that took TARP funds are rushing to repay their loans, so that the government will no longer be given the legal option of limiting executive compensation packages. Bank of America and Citibank have officially said they are moving in this direction. Given the extraordinary amounts secretly given to all these banks by the FED, it is impossible to determine how much money has actually been transferred between the government and Wall Street; however.

On the point of executive compensation in general, I have to say to those who bemoan that they have to pay these bankers massive salaries to preserve talent, you're a fool. First, if you blow up the global economy and push your company into defacto bankruptcy you should be fired. Investing is a zero-sum game. Making a bundle through casino-capitalism means someone else got screwed. In the recent Wall St. fiasco that 'someone' was everyday people and general investors who saw their 401K's disintegrate, their retirement funds nuked, and the value of their homes fall off the cliff. Furthermore, those same people who saw their personal wealth vanish, were forced to incur further debt by accepting government backed bailouts of the bankers who caused the mess in the first place.

Secondly, the executives of these companies aren't the company and they should not be treated as if they and they alone have the exclusive expertise and talent to meet shareholders demands. What should be evident, is Goldman's institutional influence within the shadowy halls of government, the offices of bank regulators, and in the boardrooms of multinationals is the primary reason why they have succeeded. Individuals, even CEO's, do not have this clout or ability, so why compensate them for what they do not possess? Recent history has shown that many executives who have left Goldman Sachs for other companies or other professions have fallen flat on their faces. Former GS CEO Robert Rubin's performance at Citibank should be recognized as a total catastrophe for shareholders of that company and Jon Corizine's (another GS CEO) single term as governor of NJ was so uninspiring, the citizens of the state decided they'd rather have a Republican running the state a mere ten months after Dubya left the White House.

Bankers Prepare for Open Revolution

Bloomberg has an article today on what may be the most interesting story of the year. The invertebrate vampire-squids of Goldman Sachs have been quietly seeking gun permits to protect themselves from the restless mobs and death-mail sending public. How is it that the proletarians could want to liquidate the robber-Barron's of the 21st Century? Surely, the masses know that Lloyd Blankfein, Goldman Sachs' CEO, and the squids are as Blanky said, "Doing God's work!"

The article reveals that Blanky and Company were fortifying their residences a year prior to the meltdown, by placing enhanced security fences and armed guards around their lavish estates, in excess to the norm. More importantly though, it blows the whistle on what the bailout was really about: saving the greedheads of casino-capitalism. As you see, this bullshit about efficient markets, innovative investing, and all that other gibberish spouted by the dunces on CNBC and virtually every financial bobble-head network, is just meant as high-fructose Kool-Aid for the cult-members as the real thieves take your money. Consider the following excerpt from the same Bloomberg article:

Henry Paulson, U.S. Treasury secretary during the bailout and a former Goldman Sachs CEO, let it slip during testimony to Congress last summer when he explained why it was so critical to bail out Goldman Sachs, and -- oh yes -- the other banks. People “were unhappy with the big discrepancies in wealth, but they at least believed in the system and in some form of market-driven capitalism. But if we had a complete meltdown, it could lead to people questioning the basis of the system.”

There you have it. The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.

I have long said, if the people want to live free of the incompetent rule of plutocrats and their moneyed trolls, then they need to have the guillotine brought out in public and let the heads roll. Its all happened before and will happen again. We only have to remember the New Testament to know the solution:

Jesus entered the temple area and drove out all who were buying and selling there. He overturned the tables of the money changers and the benches of those selling doves. (Matthew 21:12)

The Demon of 85 Broad St.: Goldman Sachs

Brian Griffiths, A Goldman Sachs International adviser, recently told a forum on investment ethics in the UK that, “We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.” You have to give it to these folks at Goldman Sachs; they are indisputably some of the most immoral creatures slithering up and down the financial food-chain.

McClatchy Newspapers has published a four-part series on Goldman Sachs investment strategies in the American housing market. The articles outline how the company grew unbelievably rich by,

making massive bets against the housing market while simultaneously selling off billions in soon-to-be worthless securities. In 2006 and 2007, the bank reportedly peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in US housing prices would send the value of those securities plummeting.

As impressive as Goldman Sachs earnings are, their true achievement isn’t making it big through casino-capitalism. No, its greatest accomplishment is creating a world-wide network of faithful former employees that are embedded throughout the regulatory and legislative branches of government, allowing them to place themselves at the center of a global financial system that has effectively co-opted democracy. The entire securitization game has been shown to be a complex scheme that utilizes outright fraud, deception, and market manipulation to achieve exorbitant profits for the demon bankers insulated at 85 Broad St. New York.

The articles elaborate how throughout the years leading up to the crash, “Goldman Sachs used its name to buy, bundle and sell some of the worst investments in the history of trading. It jumped into the subprime game with dubious mortgage lenders. And it played it ruthlessly, selling off toxic assets that carried bogus quality ratings and the assurance of its venerable name.”

McClatchy's investigation found that Goldman Sachs:

• Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.
  
• Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.
  
• Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.
  
• Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.

The conclusion one must realize is that Goldman Sachs is not serving its intended commercial and societal purpose of allocating capital to create an efficient market-place nor is it enhancing the public sphere by enriching productive companies. Their racket is and has been to generate maximum earnings solely for themselves at the detriment to society, by exploiting "so-called sophisticated investors", who in actual fact are just dumb insitutional players who knew less than them, and simply steal their money; even if they have to change the laws to do so.

As Dylan Ratigan says,

Now this method of "business" is only possible if the government continues to allow these crooked insurance contracts to be written in secret, allows them to hold little or no money in reserve for payment and allows them to sell enough coverage on enough vital national assets that if there is a default -- the taxpayer has no choice but to pay.

No meaningful legislative change will occur, because the US government and the demon bankers of Broad Street, are one and the same. Just see a few of the recent parties in government (Republican and Democrat) with ties to Goldman Sachs.

Adam Storch: Appointed the SEC’s first Chief Operating Officer on Oct. 15, 2009. This branch of government regulates the securitization industry, including mortgage backed CDO’s and related derivative products. The 29 year old Storch comes directly from Goldman Sach’s business intelligence unit.

Henry Paulson: Served as Treasury Secretary under President George W. Bush. Was CEO of Goldman from 1999 to 2006.

Robert Rubin: Served as Treasury Secretary under President Clinton. Previously, he was co-chairman of Goldman from 1990 to 1992.

Robert K. Steel: Served as Under Secretary of the Treasury for Domestic Finance, the principal adviser to the secretary on matters of domestic finance and led the department’s activities with respect to the domestic financial system, fiscal policy and operations, governmental assets and liabilities, and related economic and financial matters. Retired from Goldman as a vice chairman of the firm in 2004, where he worked as head of equities for Europe and head of the Equities Division in New York.

Mark Patterson: Chief of Staff to Secretary Tim Geithner. Was director of government affairs at Goldman.

Dan Jester: Key adviser to Geithner, who played a key role in shaping the takeover of Fannie Mae and Freddie Mac. Was strategic officer at Goldman.

The list goes on. For a comprehensive listing of the numerous figures in positions of government authority that were associated with G-S visit the following link.

US Q3 GDP Breakdown

Celebrations have broken out across the American nation, declaring the end of the Great Recession. Statistics published by the government claim that the nation grew at an annualized rate of 3.5%. Consumption, which is almost 71% of GDP contributed roughly proportionally to the increase in GDP. Investment as a whole, which has fallen to just about 11% of GDP amounted to approximately 35% of Q3 growth. However, a further breakdown of the data provides a revealing look at the continued lack of real improvement and growth in the American economy.

Auto Sales: 1.66%, or almost half, of the 3.5% increase in GDP can be attributed to "Cash for Clunkers" program. Upon termination, auto sales dramatically declined and returned to levels seen earlier in the recession. According to Reuters, "U.S. consumers are expected to buy only between 10 million and 10.5 million cars and light trucks this year, well below the pre-recession peak near 17 million hit in 2005." It is therefore certain that future vehicle sales will not have as much contribution as this quarter.

Housing Tax Credit: An $8,000 tax credit was offered to first time buyers of houses as an incentive. This program added another 0.53% to GDP. According to Bloomberg, "Many buyers accelerated purchases of new homes to take advantage of the $8,000 tax credit before it expires Nov. 30." Systematic fraud has been observed in the program. Out of the 400,000 people who participated in the program, at least 70,000 cases could have been fraudulent, as in 500 cases where children applied for the credit. In addition, sales of new homes decreased for the first time in six months, falling 3.6%. Year-over-year, new home sales were 7.8% lower and the year-over-year median sales price of a new home fell 9.1%. Foreclosure rates are up 5% in the Q3 and are at record highs in Nevada, Arizona and California. Altogether, the housing market is far from stabilized and little reprieve should be anticipated.

Military Expenditures: National defense increased 8.4 percent or 0.45% of GDP. This portion represents continued combat in Iraq, Afghanistan, and now Pakistan and other related Pentagon build-ups. In terms of real stimulus value, this is the worst of the lot. Under the Bush years, GDP was always inflated due to the immense cost and waste incurred by the GWOT. Iraq alone is still costing the US taxpayer, as of October 2009, nearly $8 billion dollars a month. Unlike infrastructure and other forms of long-term domestic investment in such things as people and the environment, military expenditures are a black hole. There is no wealth creation in producing bullets or tanks except to those who manufacture these implements of war.

Inventory: The final reason for this past quarter’s growth is through companies dumping inventory, though less aggressively than during the previous quarter. This too is hardly any reason to be dancing in the streets.

Thus, what can be discerned from the poor growth numbers is that the government’s attempts at pump-priming the economy, in hopes of restarting the engines of growth, have been inadequate and in the long-term, possibly fruitless as the recession continues to shed jobs, shutter real businesses, and foreclose on homes. The conceit of the consumer being king is dead; the bills are past due, consumer confidence is shot, and everyone is hoarding every penny they have.

At least the rat-bastards at Goldman Sachs are happy.

Banks and bonuses: Going overboard | The Economist

Banks and bonuses: Going overboard The Economist

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Goldman Sachs' (see my associated commentary on the company in the post below) "shareholders received $4.4 billion of profits during the first half of this year while staff were allocated $11.4 billion in pay and bonuses, equivalent to about half of the firm’s net revenues."

The article asks, who is really in charge of these so-called investment banks? Is it the shareholders or the employees? Goldman counters that they have to pay top dollar for their talent. As discussed in the previous two posts, where there is a compensation misalignment, profit will be made through deception, fraud, and criminal enterprise. The dominant philosophy of unbridled greed that has become the mantra of Wall Street bankers over the past two decades has not stopped and it continues to be as pervasive as ever.

The article questions:

Banks pay low dividends, and when they get into trouble the capital that shareholders have retained in the firm typically gets wiped out. Employees have taken money out of their firms each year. It may be time for the owners of banks to mutiny over the bounty.

In other words, the public always gets soaked and institutional investors get shafted, but the big-boys at Goldman Sachs smirk as they dream of yet another weekend at the Hamptons paid through casino-capitalism.

Everybody hates Goldman Sachs

“Our model really never changed, we’ve said very consistently that our business model remained the same” - Goldman Sachs CFO

One fine afternoon last October, George W. Bush, in a scene for the history books, tilted over the large oak table in the White House and said to Hank Paulson, "If money isn't loosened up, this sucker is going to go down." The public was told in no uncertain terms that if the American public didn't agree to saving the reptilian army of bankers that had brought about this disaster, that we would all go down with the Titanic. The deal was made, the money transferred, and like children waiting for Santa, the public expected that the banks would begin lending and the economy would right itself. It didn't happen. Instead Goldman Sachs hoarded the cash in their vaults and then disgorged themselves of their nimiety by giving their staff the largest bonus payouts in the firm's 140-year. The company is believed to have paid 973 bankers $1m or more in 2008, while this year's payouts are on track to be the highest for most of the bank's 28,000 staff.

What we now know is that "sucker" as Dubya put it at the time wasn't the US economy or the American public, but rather Goldman Sachs and the pirates of high-capitalism. Matt Taibbi, of Rolling Stone magazine, states that the public was hoodwinked to make a, "Political decision in the middle of an economic crisis to use the state as a crutch to prop up exactly one sector of the economy, and we chose exactly the wrong people."

Robert Reich, former secretary of labor under Bill Clinton, explains that,

Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street. Goldman is still wagering its capital and fueling giant bets with lots of borrowed money. While its rivals have pared back risks, Goldman has increased them. And its renewed success at this old game will only encourage other big banks to go back into it...

[That] Goldman has reverted to its old ways in the market suggests it has every reason to believe it can revert to its old ways in politics, should its market strategies backfire once again -- leaving the rest of us once again to pick up the pieces.

Paul Krugman further elaborates that what has been done is not in the public interest and in fact, has created the groundwork for an even greater economic catastrophe in the near future because,

The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand.

Max Keiser, broadcaster, former broker, and options trader, has the harshest and absolute best words I've seen or read in regards to Goldman Sachs,

They are literally stealing a hundred million dollars a day. Goldman Sachs is stealing every day on the floor of the exchange. They should be in the Hague. They should be taken on financial terrorism charges. They should all be thrown in jail.

http://www.zerohedge.com/article/max-keiser-goldman-sachs-are-scum

Would Goldman Sachs still be pulling in record profits if the government didn't bailout AIG, which at the time owed Goldman nearly $20 Billion, or given the fact that the FED gave them another $10 Billion through the TARP program and undefined additional millions (billions?) from other government programs, when the company converted itself to a bank holding company? The latter number is impossible to determine, because Ben Bernanke and the Federal Reserve have refused to disclose this information to the public; the very people who made the loan to these bankrupt bankers and greedheads!

What does this say about the American government or for that matter, Hank Paulson who was then secretary of commerce and former CEO of Goldman Sachs? Clearly, the primary objective of both the Democrats and the Republicans wasn't in getting Americans back to work, but instead in saving their wealthy donors/friends in high places. The banking industry and Goldman Sachs have gamed the system and the entire Bush and Obama administrations are part of this orchestrated fraud. Goldman Sachs has made fools of every tax paying American and are laughing all the way to the...