In this post I referred to an article by Matt Taibbi in Rolling Stone which described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
The scale and depth of their effrontery is so great that one is left with the impression that they don't care what anyone thinks anymore. And maybe they’re right. Maybe they are beyond control.
Think of it this way. At the height of the crisis a little over a year ago GS was essentially broke. The $15 billion in derivative contracts that they had insured with AIG were in effect worthless because AIG didn’t have any money. As we all know, the government, in the person of ex-GS CEO Hank Paulson, rescued AIG, which then immediately paid off GS in full. No 20 cents in the dollar shit for Goldman. In addition, with the government guarantee in place GS could now borrow more than 20 times their asset base at a rate of about 1% from the Feds’ printing machine.
Nice position to be in, especially when two of your main rivals (Lehman’s and Bear Sterns) had been allowed go bust (by the same people who rescued GS). And even more especially when TARP-related and other distressed assets were now available at a fraction of their original prices. Any fool could make hay in such circumstances, and whatever GS are, they’re not fools. The money started rolling in once again.
The fact that virtually all of the new multi-billion dollar profits come from trading (i.e. gambling), adding no value at all to the real economy is bad enough. But GS now plans to distribute billions in bonuses while the real American economy languishes in recession, businesses starved of cash and unemployment at record levels.
Throughout this crisis, before and since, the SEC and the Feds generally, were at best criminally negligent, at worst in on the scam. It’s a moot point whether the real story of what happened will ever emerge. But you would expect one thing at least to emerge from this whole sorry mess. That the Augean Stables of the SEC would be thoroughly cleaned out and that the new controllers there would be powerful, heavyweight and independent.
But what do we get? The appointment of a twenty-nine year-old nobody from GS as its enforcement division's first chief operating officer! All we know about Adam Storch is that he previously worked in Goldman's business intelligence unit. Oh wait! We also know that seven years ago he was sorting mail at Deloitte’s Buffalo office. Yes, that's the new fox in the hen-house. This appointment is so grotesque that to me at least it says that GS realises that it is simply unaccountable and doesn’t care what anyone thinks. It will continue to loot until there’s nothing left.
And there may be little or nothing left of the American economy in due course. Real unemployment heads towards 20% as manufacturing is outsourced to cheaper locations, while low-priced foreigners are brought in to boost profits and further reduce the share accruing to America’s middle and lower classes. Meanwhile the dollar continues its precipitous decline against what would before have been considered basket-case currencies, driving the national debt still further into the stratosphere.
In Europe this would lead to riots and peasants with torches heading for the castle. But the MSM in the US, almost all owned by mega multinational corporations, sing from the same song sheet in supporting globalisation and mass immigration. The politicians have been bought and paid for, so it’s hard to see where a solution will come from.
Meanwhile, as airline pilots subsist on $40,000 a year and food stamps, the people who caused the mess can resume raking in their multi-million dollar bonuses. And GS need have no worries. They form the nucleus of the Obama economic regime just as they did under Bush. The original heist was the brainchild of GS alumni Robert Rubin and Larry Summers, while the bankrupting of their main competitors and the disbursal of billions in taxpayers funds was arranged by GS alumnus Hank Paulson. Tim Geithner owes everything he has to Summers and Rubin and is seen as a ventriloquist’s dummy in their hands.
The vice-like grip of GS is even worse under the current administration. I began to research it but found so many that I gave up. Try it yourself! Obama has been bought more solidly than Bush.
Where will it all end?